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Red Lobster staff dish on the toxic and demoralizing workplace and how Thai bosses destroyed the world's largest seafood chain
Staff at Red Lobster have opened up about the 'miserable' environment at the workplace and blamed Thai bosses for the decline of the world's largest seafood chain.
The company confirmed on Sunday it filed for Chapter 11 bankruptcy protection days after shuttering nearly 100 restaurants across America.
It has been struggling with rising leases and labor costs in recent years and also promotions like its iconic all-you-can-eat shrimp deal that backfired.
Now former workers at the seafood restaurant chain have claimed majority owner Thai Union contributed to a toxic work environment and destroyed Red Lobster.
'It was miserable working there for the last year-and-a-half I was there,' West Coast division vice president Les Foreman told CNN.
Staff at Red Lobster have opened up about the 'miserable' environment at the workplace and blamed Thai bosses for the decline of the world's largest seafood chain
Former Red Lobster executive Foreman worked at the company for 20 years before he was fired in 2022.
'They didn’t have any idea about running a restaurant company in the United States,' he said.
Thai Union blamed the pandemic and 'sustained industry headwinds, higher interest rates and rising material and labor costs' for the issues Red Lobster has faced.
But former employees claim it was the ineptitude of the bosses which led to its downfall.
They said dozen of Red Lobster leaders with a deep understanding of the brand were fired or resigned and Thai Union replaced them with its own executives.
A former leader claimed Thai Union CEO Thiraphong Chansiri visited the chain's headquarters in 2022 and brought along a feng shui consultant.
He said the consultant determined the offices in Orlando were 'bad Feng shui and no one should use them', and they later sat empty.
The former Red Lobster workers said the work environment at the headquarters became toxic and demoralizing before interim CEO Paul Kenny took over in 2022.
Kenny allegedly made derogatory comments about Red Lobster employees and criticized them at meetings, according to one source.
A previous executive claimed the former CEO commented on a woman's weight at a conference in Dallas two years ago.
'We need to institute an exercise program in this company,' he is accused of saying.
Red Lobster also cut two of its longtime shrimp suppliers in order to purchase more from Thai Union at a higher cost, according to the company's bankruptcy filing.
Thiraphong Chansiri, CEO of Thai Union - the majority owner of Red Lobster - in one of the company's factories in Thailand
'Thai Union exercised an outsized influence on the Company’s shrimp purchasing,' Red Lobster alleged in the document.
But Thai Union said the accusations were 'meritless' and it looked forward to the 'full representation of the facts'.
Former employees claimed they were pressured by representatives of Thai Union to buy more seafood from their company.
'Our suppliers were really upset that [Thai Union representatives] were in those meetings with them,' one person said.
There were a host of changes to the restaurant operations which led to a decrease in sales.
It began leaving the tails on shrimp in pasta and and eliminated sauté stations, according to a former employee.
Servers were also asked to cover 10 tables instead of three and a host was removed from the entrance during lunch hours.
Barry Fulghum, who rose to become an operations director from a dishwasher at Red Lobster in the 1970s, said: 'There would be times we would have one or two people working the kitchen line.
'What those cooks did on the line was amazing given the staffing situation they were dealt.'
The company confirmed on Sunday it filed for Chapter 11 bankruptcy protection days after shuttering nearly 100 restaurants across America
Red Lobster lost $11million following the introduction of its $20 'endless shrimp' promotion, according to bankruptcy filings.
The offer, launched last June as a permanent fixture on the menu, is almost identical to a deal in 2003 - and the problems it caused almost identical too.
Kenny had been warned that $20 was not enough to make a profit, a former employee said.
The seafood restaurant chain said in a court filing that it has more than 100,000 creditors and estimated assets between $1 billion and $10 billion. The company's estimated liabilities are between $1 billion and $10 billion.
The bankruptcy petition is signed by CEO Jonathan Tibus, a corporate restructuring specialist who took the top post at Red Lobster in March.
Restaurant liquidator TAGeX Brands announced last week that it would be auctioning off the equipment of over 50 Red Lobster locations that were recently closed.
The store closures span 21 states - reducing Red Lobster´s presence in cities like Denver, San Antonio, Indianapolis and Sacramento, California.
Workers at the Thai Union Frozen food processing plant just outside Bangkok clean and prepare fresh cooked shrimps
Three senior executives in the history of Red Lobster from left to right: Former CEO Edna Morris lost her job over an endless crab offer that went wrong in 2003. Ludovic Garnier, CFO of Thai Union Group - Red Lobster's current owners - blamed the endless shrimp promotion on losses of $11 million in three months. Jonathan Tibus was made CEO of the struggling chain in March in a bid to save it
Maintaining stability at the Florida chain has been problematic due to multiple ownership changes over its 56-year history.
Earlier this year, Red Lobster co-owner Thai Union Group announced its intention to exit its minority investment in the dining chain.
Thai Union first invested in Red Lobster in 2016 and upped its stake in 2020.
At the time of the January announcement on its plans to divest, CEO Thiraphong Chansiri said the COVID-19 pandemic, industry headwinds and rising operating costs had hit the dining chain hard and caused 'prolonged negative financial contributions to Thai Union and its shareholders.'
For the first nine months of 2023, the Thailand company reported a $19 million share of loss from Red Lobster.
Red Lobster´s roots date back to 1968, when the first restaurant opened in Lakeland, Florida.
The chain expanded rapidly since then and runs more than 700 locations worldwide.
However, it's been forced to file for bankruptcy after the $25 'endless shrimp' promotion.
The offer, launched last June as a permanent fixture on the menu, is almost identical to a deal in 2003 - and the problems it caused are almost identical too.
Back then, it was 'endless crab'. It was great for hungry seafood lovers but a disaster for the restaurant - by the time the plug was pulled after just seven weeks Red Lobster had lost $3.3 million.
'It wasn't the second helping on all-you-can-eat, but the third' that hurt profits, a Red Lobster executive said to analysts at the time in 2003.
This time, the deal was also wildly popular - with some customers staying for hours to see how many the could eat. One girl managed 108 in four hours.
'I set a new record at my local Red Lobster, this is my greatest achievement in life' the poster explained in her video.
More people began to take advantage of the offer than the company expected. But rather than pull the deal, bosses kept it running for six months - and the losses dwarfed the amount lost for endless crabs 20 years earlier.
Seafood lovers devouring plates of shrimps was the key reason that Thai Union lost $11 million in just three months soon after the deal began.
Former workers at the seafood restaurant chain have claimed majority owner Thai Union contributed to a toxic work environment and destroyed Red Lobster
Ludovic Garnier, the chief financial officer, said: 'We knew the price was cheap, but the idea was to bring more traffic in the restaurants.
'So we wanted to boost our traffic, and it didn't work.
'For those who have been in the US recently, $20 was very cheap. And the rationale for this promotion was to say we knew the price was cheap, but the idea was to bring more traffic in the restaurants.
'But something which was different from our expectation is the proportion of the people selecting these promotions was much higher compared to expectation,' he added.
Put simply, it was too cheap. Hospitality experts are puzzled that the chain didn't see how badly it could go wrong - especially since they were repeating a mistake.
'In the current environment, consumers are looking to find value and stretch budgets where they can,' Jim Salera, restaurant research analyst at Stephens, told the LA Times.
'At $20, it's very possible for a consumer to eat well past the very thin profit margin'.
The price went to $25 then $27, but the losses mounted. The following quarter, the company lost $12.5million. The total cost to Thai Union has been much higher.
Endless shrimp had been at Red Lobster for 20 years - but only offered for few weeks a year.
But Thai Union made it a permanent fixture on the menu last June.
Bosses at the Bangkok-based seafood producer saw it as a way to sell thousands of tons of shrimp it was catching in Asia - and also drive traffic to the Red Lobster restaurants it now owned in the US, which were seeing customer numbers down. They saw it as a win-win.
'If you were a large shrimp company based in Thailand, it would be a good idea,' a former Red Lobster executive told CNN.
Endless shrimp started at $20 but was too popular and cost millions of dollars
It wasn't profitable at the $20 price, or even when they put it up.
And it badly affected service. Restaurants had long wait times as customers stayed at tables for hours eating course after course of shrimp.
Chansiri said in November: 'We were expecting an increase of 20 percent in customer traffic, but the actual number was up to 40 percent.'