In what has become a cautionary tale of poor business strategy, Red Lobster’s new CEO, Damola Adamolekun, openly admitted that the company’s infamous “$20 Endless Shrimp” promotion played a significant role in pushing the restaurant chain into financial turmoil. The endless shrimp offering, which was supposed to draw in customers, ultimately led to chaos in the kitchen, stressed-out staff, and a staggering $20 million loss, all contributing to the company’s filing for bankruptcy earlier this year.
Adamolekun, who took over the helm in August 2024 at just 35 years old, has a monumental task ahead of him. After shuttering 100 locations and filing for Chapter 11 bankruptcy, Red Lobster’s fall from grace is a stark reminder of what happens when corporate leadership ignores warning signs. Adamolekun, previously the CEO of PF Chang’s, is now tasked with steering the Orlando-based chain back to financial health.
The downfall began in May 2023 when Red Lobster made its “Endless Shrimp” promotion a permanent fixture on the menu. What started as a limited-time deal in 2004, meant to bring in occasional surges of customers, turned into a logistical and financial nightmare when it became available year-round. The company’s leadership grossly underestimated how popular the deal would be, leading to an overwhelmed staff and a supply chain unable to keep up with demand.
“You stress out the kitchen. You stress out the servers. You stress out the host,” Adamolekun told CNN. “People can’t get a table. It creates a lot of chaos operationally.”
While the promotion brought customers through the door, it didn’t bring in profits. In fact, it cost Red Lobster a jaw-dropping $20 million, leaving the company scrambling to make up for the losses. The promotion created such operational chaos that it caused significant shrimp shortages and wreaked havoc on Red Lobster’s normal supply chain and planning processes. This disastrous decision was reportedly made by former CEO Paul Kenny, despite pushback from other management team members, according to court filings.
By the time Adamolekun took over, Red Lobster had already filed for bankruptcy protection, and its largest shareholder, Thai Union, had written off $530 million. The company closed more than 50 locations and auctioned off equipment to stay afloat. Despite the financial setbacks, Red Lobster continued to hold onto its high-profile Times Square location, which costs a hefty $2.2 million per year in rent.
Now, with only 545 locations remaining in the U.S., Adamolekun is optimistic about the future. Backed by a long-term investment plan and a $60 million commitment from a lender group led by Fortress, the new CEO believes he can lead the once-iconic chain back to stability. His goal is to avoid the mistakes of the past and find a way to run the business without resorting to loss-leader promotions like “Endless Shrimp.”
Though Adamolekun is open to bringing back the promotion someday, he made it clear it won’t return in the same reckless fashion. “I never want to say never, but certainly not the way that it was done,” he said. “We won’t have it in a way that’s losing money in that fashion and isn’t managed.”
With five CEOs since 2021 and a long history of ownership changes, Red Lobster’s road to recovery will not be easy. But if Adamolekun’s leadership can focus on sustainable growth rather than gimmicks, there may still be hope for this beloved American restaurant chain.
