Shareholders of Red Lobster have filed a lawsuit alleging that former majority shareholder Thai Union Group exploited its control to push a permanent $20 endless shrimp promotion that caused massive losses. The suit, filed in Orange County, Florida, claims Thai Union forced uneconomic contracts that benefited itself as Red Lobster's exclusive shrimp supplier, leaving the chain $11 million in the red in a single quarter. Shareholders are seeking millions in damages and want to dissolve $32 million in transactions Thai Union allegedly pressured Red Lobster into in 2023. The promotion, made permanent in 2023 under interim CEO Paul Kenny, led to shrimp shortages and shifted customers away from higher-margin items. Red Lobster filed for Chapter 11 bankruptcy in May 2024, closed about 130 locations, and emerged under new leadership later that year.
Thai Union Group PCLLawsuit alleges Thai Union exploited control to push uneconomic shrimp promotion, causing losses and bankruptcy.
Endless shrimp promotion shifted customers away from higher-margin items, leading to massive losses and bankruptcy.