The Biggest Seafood Chain in America Has Gone Downhill in the Last 5 Years

For many years, Red Lobster was considered one of the greatest restaurants in the country. As America’s biggest seafood chain, this was the place that you went to when you wanted to enjoy tasty seafood in a relaxed atmosphere without spending a lot of money in the process. People were excited about going to Red Lobster. It was a place that families went to for celebrations and employees went for work dinners. However, good things don’t always last.

If you’ve watched the news over the last several years, you may have seen that Red Lobster has been in some hot water, and they have even been at risk of going out of business. It’s a startling fact for many. But, how did we get here? Today, we’ll tell you about the glory days of Red Lobster, the factors that contributed to its downfall, and what the restaurant can do to reclaim its glory.

Red Lobster Began With Great Promise

When we say that Red Lobster was the biggest seafood chain of the past, we’re not kidding. The first restaurant opened its doors in 1968 with lines of people waiting around the corner. Everyone was amazed that they could get seafood inland, even if the ocean was hundreds of miles away. After they began opening more restaurants, the company was bought by General Mills. At the height, the company had over 55,000 employees and countless locations.

Their Menu Was Amazing

One of the aspects that made Red Lobster great was the large menu full of seafood and seafood-inspired goodies. Some of the classics included the Admiral’s Feast, Crabby cheese fries, fish and chips, and the huge Ultimate Feast, which had a little of everything. One of the biggest sellers were the warm and fluffy cheddar bay biscuits. Perhaps the most famous dish was the Ultimate Endless Shrimp meal. You could sit there and eat until you burst. Unfortunately, that offering was partly to blame for the restaurant’s demise.

A Fancy Restaurant

Perhaps the most exciting thing about going to Red Lobster was that many middle-class folks considered it to be a fancy restaurant. Like Olive Garden is for Italian food, Red Lobster is the equivalent of “high-quality” seafood. People went there for company retreats, anniversaries, first dates, and more. It was the place to go, and the restaurants made a lot of money for many years.

The Start of Red Lobster’s Downward Fall

Most experts believe that the biggest seafood chain started a downhill trajectory back in 2014. It was then that Red Lobster’s parent company, Darden Restaurants, was purchased by investors. As a result, the major corporation had to sell Red Lobster. In many cases, new ownership can mean trouble for a company, and this was no exception.

#1 Reason For Red Lobster’s Downfall: Debt

According to Forbes, although Red Lobster was among the more popular restaurants, that didn’t keep them from finding themselves in debt. Over the last several years, Red Lobster has been in debt between $1 billion and $10 billion. They owe many companies, including their distributor, Performance Food Group, over $24 million. That’s one of the main reasons why the company is filing for bankruptcy. They hope going through the bankruptcy process will reduce its debt load.

#2 Reason for Red Lobster’s Downfall: Competition

As more restaurants get into the seafood game, Red Lobster faces increased competition. Restaurants like Bubba Gump Shrimp and Joe’s Crab Shack have taken up a lot of the customer base. Red Lobster even blames companies like Chick-Fil-A, Sweetgreen, and Chipotle for taking their customers.

#3 Reason for Red Lobster’s Downfall: The Menu

Another reason for the downfall of America’s biggest seafood chain is due to the restaurant’s menu. There are plenty of tasty items there, but if the other competitors are selling the same things, then your company needs to change or die. Many companies, like Angry Crab Shack, have updated their menus to add new sauces and elements to attract customers. Red Lobster simply isn’t making enough adjustments.

#4 Reason for Red Lobster’s Downfall: The COVID-19 Pandemic

Things were rocky but okay for Red Lobster until 2020, when the COVID-19 pandemic came around. Once the disease hit the country, many people stopped spending money on dining for fear of what would happen to the country. Red Lobster was no exception to the rule. Things didn’t get much better after the pandemic either, as inflation, a tight labor market, and minimum wage hikes continued to threaten the industry.

#5 Reason for Red Lobster’s Downfall: Endless Shrimp

The ownership at Red Lobster knew they were in trouble, so they came up with the idea of extending their $20 “Ultimate Endless Shrimp” offer. However, it worked too well. Customers came in droves and ate a lot of shrimp. What was supposed to help ultimately hurt the company, and the promotion left them with a loss of $11 million in the third quarter of 2023.

Bankruptcy Was Part of the Solution

Hoping to remain America’s biggest seafood chain, the ownership of Red Lobster decided to file for bankruptcy. The idea was to sell parts of the company so they’re not paying out so much. The ownership was hopeful for the future, saying that they also received $100 million commitment from lenders.

Red Lobster Closes Restaurants

As part of their plan to cut costs, the company closed over 50 locations in 2024. That’s when the general population started to learn that something was wrong. There were rumors that Red Lobster would be closing completely. However, as of the time of this writing, there are still over 700 restaurants in existence.

CEO Turnover

Another aspect of the downhill descent of Red Lobster that isn’t typically mentioned is the turnover of several CEOs. Since 2021, there have been five different CEOs. With that much turnover, it’s hard to get ideas in motion.

Saving Red Lobster: Give the Customers What They Want

So, how can the biggest seafood chain regain its footing and be a success again? There are several strategies. One is to talk to the customers. There’s a reason fewer people are going to Red Lobster. The company needs to survey them and get answers. Then, actually implement what they learned.

Saving Red Lobster: Update the Menu

Red Lobster ownership needs to take a close look at the menu and make adjustments when necessary. It may be time to end the endless shrimp option that costs them so much money year after year. They could also follow the example of other restaurants and add new entrees, sauces, and other items that people would get excited to try.

Saving Red Lobster: Improve the Dining Experience

Although many people used to think that Red Lobster was fancy, they’re starting to reconsider. Too many dishes sit under the heat lamps, which leaves the food tasting old and uninviting. Perhaps an update to how the wait staff serves the customers. Either that, or maybe leaning further into the fine dining vibe, could be just what Red Lobster needs to become relevant again.