The Big Flop - All You Can't Eat: Red Lobster's Last Supper with Lewberger | 74
Episode Date: February 10, 2025Bill Darden built Red Lobster from a single Florida restaurant into a billion-dollar empire. But after private equity vultures swooped in, they pushed endless shrimp promotions and installed ...toxic management that had workers wading through kitchen grease. Coupled with cringe-worthy viral campaigns, this is the story of how America's seafood sanctuary turned into an all-you-can-eat disaster.Be the first to know about Wondery’s newest podcasts, curated recommendations, and more! Sign up now at https://wondery.fm/wonderynewsletterListen to The Big Flop on the Wondery App or wherever you get your podcasts. You can listen early and ad-free on Wondery+. Join Wondery+ in the Wondery App, Apple Podcasts or Spotify. Start your free trial by visiting wondery.com/links/the-big-flop/ now.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
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People have told me that hands down the best food in any chain restaurant in the world
is the Cheddar Bay Biscuits at Red Lobster. Now, I cannot confirm or deny this because brace yourself, besties.
I have never been to a Red Lobster.
Tragic, I am part of the problem.
But even the power of a legendary biscuit
couldn't save the subject of today's big flop
from a world of pain.
And let's just say their troubles aren't shrimpy,
they're jumbo.
Talk about being boiled alive.
Without warning, Red Lobster has announced it's closing 99 restaurants across the USA.
When you saw endless shrimp, what did you think?
I said it's a very expensive product to give away endlessly.
Not a Red Lobster, it has officially fell for bankruptcy.
Y'all not f***ing your woman good enough to earn that trip to Red Lobster, that's what
happened. I'm not f***ing your woman good enough to earn that trip to Red Lobster. That's what happens! We are on a sinking ship.
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From Wondery and Atwill Media, this is The Big Flop, where we chronicle the greatest
flubs, fails, and blunders of all time.
I'm your host, Misha Brown, social media superstar
who loves a good bottom,
list meal deal,
and don't cross a gay man.
Now everybody on our show today,
we have the members of the three-man comedy band,
Lew Burger, I'm obsessed.
It's Keith Habersberger, Alex Lewis, and Huey Stonefish.
Welcome to the show, guys.
Hello, Misha.
Hello.
Thank you so much.
So happy to be here.
Before we get into Red Lobster, I guess first question,
what's your favorite sit-down chain restaurant?
Whoa, big question.
Well, we used to have a Chili's in my hometown.
They might still be there in my hometown of Syracuse.
And I always had friends that worked there.
And in terms of favorite,
what does it really mean to be favorite?
I guess where you have the best memories.
And I have a lot of memories of going
to this chain restaurant as a 17 year old.
So Chili's.
Nice.
My favorite sit down chain restaurant,
and maybe I'm a little biased because I'm from California. also my parents had their first date at one of these but my favorite is California Pizza Kitchen.
Oh yes.
I love California Pizza Kitchen and I mean it's where I discovered my love for the barbecue chicken
pizza. No onions, no cilantro and I think I think it's delicious and I love their tortilla soup.
Okay.
This is such a hard question to answer
because I've eaten almost all of them
and I could say most of them aren't very good.
I've eaten at Applebee's the most
because they were open the latest.
When we're on tour, sometimes you don't have a lot of choices.
So Applebee's is often open.
They have the good half-price everything sort of menu.
So I guess Applebee's, although I don't want to say
that Applebee's is good, but I guess I will venture
to say that it's my favorite, or at least my most visited.
Yeah, Huey, I think I'm actually from a little town
called Sodas that's very close to Syracuse.
Get out of here!
So I think we're kindred spirits because mine's also chilies.
I'm a triple dipper queen, okay?
Oh my god.
Nisha, I'm wearing my Upstate New York shirt right now.
Yes!
Wow.
Well, today we're going to take a crack at Red Lobster's buttery bankruptcy and learn
how a few greedy investors sucked red lobster dry.
Now, here's a trivia question.
Can you guess when the very first red lobster opened up?
1972.
Oh.
I'm gonna guess is yeah, late seventies or early eighties.
So let's go 81.
I was thinking like 83, 85 ish.
So I'll go, I'm gonna go 82 just by Price is Right rules
to beat Keith if it's up there.
Well, the first Red Lobster Inn,
as it was originally known, opened in 1968
in Lakeland, Florida. Wow.
Yeah, I should know that.
Yeah, we should all know that.
Its founder, a restaurant genius named Bill Darden, has been innovating in the restaurant
space for decades.
He opened up his first place, The Green Frog, in 1938, when he was only 19 years old.
Wow.
The Green Frog.
Are all his restaurants children's book titles?
Are they all colors and animals? I guess.
But the green frog, it was a luncheonette that served your basics.
Sandwiches, chops, steaks, and items from the briny deep.
From the briny deep.
Yarr.
What would you eat from the briny deep?
I don't...
I ate sushi, so that's briny deep.
Salted oysters.
Ooh, I do like an oyster.
But you know what I should say
before we really get into this?
I've never been to a Red Lobster.
What?
Ah, the Cheddar Bay Biscuits.
Also, their mashed potatoes used to be so good
and their chicken tenders were exceptional.
I submit the only good thing at a Red Lobster
is the Cheddar Bay Biscuit.
So before Red Lobster drowned in the Briny Deep, its beginnings were as hopeful and majestic
as the first light of dawn over the distant horizon.
Corporate lore says the Green Frog was desegregated in Georgia during Jim Crow, which would mean
Darden was way ahead of his time and a badass outlaw. Yeah.
But people who grew up around the green frog
say it's just a legend.
He hired black workers, but he didn't welcome black customers
to dine at the green frog at first.
Mm.
Either way, Darden's racial politics
helped him cultivate a loyal fan base with black Americans.
Wow.
And by the time Red Lobster opened in 1968,
it had black employees and proudly served black diners.
Now, in contrast, other businesses in Lakeland, Florida
chose to close rather than comply
with the recently passed Civil Rights Act.
Wow.
That's so screwed up.
Idiot losers.
Sounds a little bit Florida.
I guess that does sound Florida.
So when it opens, the concept of Red Lobster, according to Darden and his business partner,
is to bring fresh-ish seafood to the landlocked masses.
It's marketed as a harbor for seafood lovers.
You might be thinking Florida's not landlocked.
No, it's not.
But Lakeland isn't on the shore either.
Usually one of the things that I look for
when I'm getting like a fresh or even just like
a seafood experience is how close am I to actual seafood?
So the thought of opening one to answer that question
when the answer is very, very far away, you know, innovation.
Well, but we have Italian restaurants, and this isn't Italy.
Well.
We simply must.
We simply must help these people achieve culture.
Well, however fresh the food was, the masses, they eat it up.
Lines to get into that OG red lobster
start to form an hour before the doors open.
And I would like to remind everybody
that this happened long before social media existed,
which makes it even more impressive.
Yeah, right.
Do you remember lining up for anything exciting
pre-web 2.0?
I'm not a line guy.
It takes a lot to get me into a line.
I just, I hate, I hate to wait in line.
I really do.
When I was in like second grade,
I lined up to get my Harry Potter book signed by J.K. Rowling.
Wow.
Wow.
Oh, tough.
That's tough.
That didn't age well, but you know.
It didn't.
If anyone's looking to buy a first edition copy
of a signed Harry Potter book,
you can take it off my hands.
Well, to learn more about the early days of Red Lobster,
let's play a game.
Ooh, okay.
So let's call this game the popcorn shrimp quiz.
Okay.
Let's do it.
You're welcome, you're welcome.
So I'm going to give you some multiple choice questions and whoever gets the most correct
wins an all you can eat hush puppies for life prize, a completely real offer.
I do like that.
Wow.
Me too.
All right, first question.
An early dish at Red Lobster was called the Neptune Platter.
Which of the following dishes was not included?
A, frog legs, B, lobster, C, crab cakes, or D, crab claws?
Crab claws would be rather expensive to achieve.
I imagine they have frog legs in Florida,
because they have a lot of frogs.
Maybe that's an easy thing to get,
but that's certainly not an ocean dweller.
So that would be outside of Neptune's realm.
Are we on a team right now?
I'm going to say lobster.
No, we're all, it's every man for himself.
I'm saying lobster because why was it included
in the possibilities of questions
if it isn't the obvious answer?
We're at a red lobster, it's not included.
Lobster for Huey.
I was also sort of leaning lobster.
It feels like a trick question to me.
I don't know, I mean, you're not wrong with it.
The Neptune and frog legs thing.
Yeah, I'm going with frog legs and if I'm wrong,
actually they're wrong because frogs don't live in Neptune's realm.
So they're wrong, so I'm going with frog legs.
All right, well, the answer was...
Oh.
Lobster.
Oh! I'm two for two right now.
What? He only asked one question.
But I got the other one.
He was closest on the date.
Yeah, that's true. The funny one. He was closest on the date.
Yeah, that's true.
The funny thing is lobster wasn't on the menu at all.
Wow.
Right, it was too expensive.
Darden and his business partner thought Red Lobster
was a cool name, just like the green frog.
And yes, the platter did include frog legs,
as well as fried shrimp, oysters, flounder, scallops,
crab cakes, crab claws,
hush puppies, and a side.
Oh my God, order me two.
Bonus question, any guesses at how much it cost in 1968?
Five bucks.
Six fifty.
Four dollars and 25 cents.
Two dollars and 50 cents.
Damn it.
For that much food, even with inflation, that's about $23 today.
That's a deal.
That's not bad.
That's a deal.
That's a deal.
That's a deal.
All right.
Second question.
As part of the nautical theme of the restaurant, the waitresses had to wear kitschy outfits.
What were their uniforms inspired by?
A, pirates, B, sailors, C, sea captains, or D, mermaids?
Mermaids.
I think, I'm thinking sailors.
Because it's, it's cute sea without being too much.
What was C again?
Sea captains.
I'm doing that just because it's, I, that feels the funniest to me.
Well, Keith Keith ding ding ding
Sailors nice we do have a picture of their uniforms
Oh, I would love to see this so can you describe these? Oh, that's fun
So they're wearing a blue dresses that have nice midarm length
You know mid upper arm length sleeves classic sleeve length
I would say and then it has a nice red sort of scarf
on the big sort of collar that maybe leads to a hood,
but probably just goes to one of those long,
almost graduation gown-esque, like Vs on the back.
They look very Jamure.
Very Donald Duck-like, if I may.
Ah, yeah, little Donald Duck vibes.
Yeah, so dorkier chic, who's to decide?
All right, third question.
Red Lobster is so popular, it only takes them two years
to catch the eye of a larger company.
In 1970, which giant food corporation buys Red Lobster?
Was it A, Hormel Foods, B, Post-Consumer Goods,
C, The Campbell Soup Company, or D, General Mills?
Okay, I have not heard of Post Consumer Goods,
but I do know Hormel makes chili,
so I'm not gonna vote for them.
And then General Mills, I know, makes cereal,
so I'm also not gonna vote for them.
I'm going Post Consumerumer goods, PCG,
it's got a good feel to it.
So I kind of align with Huey there,
but I'm really not sure.
I'm going for the curve ball, Campbell's Soup.
Let's take Campbell's.
I feel like they make soup there,
they make clam chowder, it's like, it's right there.
That's true, the chowder.
Well, I'm here to tell you,
whatever the outcome of this question,
I would totally be on any of your trivia teams.
Thank you.
You were very thoughtful in your guesses.
But unfortunately, all of you are wrong,
and it was General Mills.
Oh!
That makes sense,
because they probably also make Captain Crunch.
Right, yeah.
All right, last question.
How many pounds of seafood has the chain served by 1983?
Is it A, 75 million pounds, B, 150 million,
C, 300 million, or D, 600 million?
I'm going C, 350 million.
Yeah, I mean, like that Neptune platter sounded like two pounds on its own.
It was two bucks. So I think Huey's answer is right.
I don't think they did 600 million.
I love when Keith answers with me.
Let's let, you know what? Let's make it a three-way Louberger C.
Oh, it's Louberger's platter, baby.
Louberger's platter, that's right. Well, no.
It was 600 million pounds.
That's crazy.
Of fresh-ish seafood.
And we did some, we crunched some numbers over here
at Big Flop.
That's 2,736,000,000 crab claws,
or if you prefer, 13,, 200 million jumbo shrimp,
or that's 27 billion popcorn shrimp.
Wow.
Wow.
It still wouldn't be enough to fill us.
Okay.
Okay.
Come on.
So, Darden, he is pretty proud of his creation.
I'm sure.
But also completely baffled by the rapid expansion.
He just can't believe it's so successful.
What's also great about Red Lobster is that employees, they also really love it.
It's one of those places where a humble dishwasher can climb the ladder over 50 years and become
an operations director.
It's a job you keep for life, basically, that grows with you as your family gets larger.
You know, formerly known as the American Dream.
Now, here's an excerpt from a 1989 New York Times article titled, Why They Smile at Red
Lobster.
It's about a true account of a cheerful training day exchange
between Red Lobster new hires and their manager.
So, Alex, if you can please read the narrator,
Huey, if you could read the teacher,
and Keith, could you read the trainees.
The scene at a Red Lobster restaurant
that opened recently here is a cross between a pep rally and a pop quiz
What's the first thing we do at the table smile booms the class?
And the second thing say something personal and the third describe the special features
Very good, and what would be our vegetables of the month? Broccoli and carrots! Comes the roaring reply.
And so, in a burst of energy, begins a new red lobster restaurant.
This is fan fiction.
This is not real.
Well, customers love the food and the pleasant waiters.
So the staff are treated nicely by seafood fanatics, which is a nice change.
Everybody's happy. Morale is high. The Cheddar Bay biscuits keep flowing. What more can you
ask for? So all's well at Red Lobster until 1994 when Bill Darden passes away.
Oh no. Ah, their fearless leader.
A year later, General Mills diversifies their holdings
and adds another restaurant to the mix, the Olive Garden.
Oh my word, here it goes, the downfall, come on.
So in honor of Bill Darden,
they named their new restaurant umbrella corporation
Darden Restaurants.
Now that would be a touching tribute
if General Mills could build
on Red Lobster's
pristine reputation.
But they can't.
So for the next few decades, it seems like they let business flounder.
Oh, Misha.
Come on.
You're welcome.
Then around 2010, prices for lobster skyrocket.
Now this happens for a few reasons.
People start eating more seafood in general
because they hear it's super healthy
and are for a moment longer, blissfully unaware
of overfishing and how bad it can be for the environment.
Also, as China's economy expands
and American chains like red lobster open locations there,
the local middle class gets a taste for the red stuff,
which pushes on the global supply of lobster.
The red stuff.
So the red stuff.
Low supply, high demand.
I mean, we know what that generally means.
So as prices go up, satisfaction drops.
And the Red Lobster fan base, AKA the Lobster Heads,
which I'm just guessing is what they're called
They find other places to gorge
So something needs to be done to retain and regrow the customer base here
But instead of reinvesting in the brand Darden restaurants looks elsewhere for profits
focusing on newly acquired chains like Longhorn Steakhouse and Capital Grill.
Ooh, that one didn't have as much
of a longstanding reputation as Olive Garden and Longhorn.
Yeah, I actually went there recently.
Yeah, maybe I want to change my answer
from the beginning to there.
Now, by 2013, Red Lobster is still a good place to work,
but investors are getting antsy and
demand that Darden restaurants make some changes.
Well, they panic.
And instead of fixing the brand, they sell it to a private equity firm called Golden
Gate Capital.
At first, it's great.
Golden Gate empties out its pockets and drops $2.1 billion to buy red lobster.
Oh my God, that's as many popcorn shrimp as they served in the 20-year period.
And still not enough to fill the three of us.
Okay, Alex.
But remember that number, 2.1 billion, because we'll need it for some comparison later in the episode. Now, on the one hand, Golden Gate invests a ton of money
into modernizing the restaurants as part of their Kitchen of the Future project, updating
the saute stations and point of sale systems. But to pay for those and to make a little
scratch, they do something that might be considered really sketchy. They sell the land that 500 Red Lobster restaurants sit on for
$1.5 billion.
Holy moly.
Hmm. That is sketchy. But they retain the Red Lobsters?
They own the buildings. They do not own the land.
That's strange.
So, most people probably think that the famous endless shrimp deal that recently made headlines is the
real reason for Red Lobster's big flop, but actually it starts with this real
estate deal. Because from that point on, the Red Lobster company has to pay rent
for their restaurants, an expense they did not have before, which means they for
sure better be profitable. Oh, yeah. Wow.
So what works in Red Lobster's favor
is that it cemented its reputation
with black consumers early on, thanks
to its welcoming policies.
And even in 2015, the chain boasts a slightly higher
percentage of black customers overall
than the makeup of the country, which is about 14%.
What would be great is if the brand could figure out
how to grow that base with some viral marketing.
But you kind of have to be very online to crack the code
and it doesn't seem like Red Lobster corporate
gets the new environment.
In February of 2016, Red Lobster catches a break.
For the first time in a while,
the chain starts trending on social media,
and it's all thanks to a song.
Can you guess what song it was?
Is it the Beyoncé song where...
I'm gonna take his ass to Red Lobster.
Yes, yes.
Beyoncé releases her now infamous surprise video
for the single Formation that breaks the internet,
or at least put some cracks
in the internet's foundation. So Keith, since you guessed it right, can you please read the lyrics
of the immortal bard? Of course I would be honored and I'm the right person to do it.
Beyonce home. I try to give her a setting. When he fuck me good,
I take his ass to Red Lobster,
cause I slay.
When he fuck me good,
I take his ass to Red Lobster,
cause I slay.
Very good.
Yeah.
How would you use that in a marketing campaign?
That's tough.
I would show two people in love,
like sort of like a Valentine's Day type commercial.
They're so in love, they're having such a nice time
and they end their meal at Red Lobster,
feeding each other lobster,
and then they both look directly into the camera and wink.
Uh-huh.
Yeah, I got excited with you, Eriara.
Yeah.
Why not just have Beyonce at Red Lobster or something?
Oh, I mean, that would be the ultimate.
Or like, they're in bed and they pull back the covers
to reveal Neptune's platter.
Yeah.
Neptune's, that would be good.
Or go with me on this.
Okay, we're going.
It's dirty.
You could have them eating together at the Red Lobster
and the man in this relationship
that's representing Beyonce's lover eats a clam in front of her sensually.
Ah, yes, of course.
Wow.
I mean, all great ideas, but they don't do any of those.
Okay.
No, they miss the boat.
Oh.
Oh, Misha.
Yes. Red Lobster's account does tweet,
Cheddar Bay biscuits, B-E-Y,
has a nice ring to it, don't you think?
That's pretty good.
That's not bad.
Yeah, not bad.
The problem was it took them eight hours
to come up with that,
which makes the lightning speed Twitterverse sort of angry. Like how uncool is this company that can't immediately come up with that, which makes the lightning speed Twitterverse sort of angry.
Like, how uncool is this company that can't immediately come up with the perfect
tweet to capitalize on an unexpected event?
I got to say, wow, an eight hour window.
I didn't know you had a time limit on quippy responses on the internet, but I guess you do.
Well, in a world of like, you know, look at the Wendy's Twitter handle.
I was just going to say that.
That's true. Yeah.
So speaking of the pandemic,
let's fast forward four years, our favorite time.
Like many dine-in restaurants, red lobster gets hit hard
as people hunker down and learn to make their own sourdough.
Even though these fancy quarantineistas
are definitely getting food delivered,
mid-range chain food isn't their go-to. Coconut shrimp
doesn't travel as well as say pizza or a nice curry that you can reheat. Another problem is that
Red Lobster's customers skew older than for other sit-down chains, and older folks take a bit longer
to go out in public unlike their bored and horny children do. And that eats away at Red Lobster's profits.
Plus, let's not forget all that new rent
the company has to pay,
which keeps squeezing the ever-living tartar sauce
out of Red Lobster corporate.
At some locations, they're spending 50%
of their revenue on rent.
Oh my God.
Oh, that's bad.
Gosh. It my god. Oh my god, that's bad. Gosh.
It gets worse.
At others, rent is being paid on non-existent restaurants.
What?
Because even once a chain fails and has to close,
the rent is still due.
Wow.
Oh!
Rough.
Oh!
So by this point, Golden Gate wants its golden parachute
and is eager to sell.
So enter Thai Union, one of the biggest frozen and canned seafood companies on planet Earth.
Wow.
Based in Thailand and spanning four continents, it employs 45,000 people worldwide.
Basically, if it is canned or caught in the ocean,
they might have a stake in it.
They own ubiquitous grocery store brands
like Chicken of the Sea and King Oscar,
and they sell pet food.
Okay. That's unfortunate.
In a blind taste test,
maybe you wouldn't know the difference.
Oh, no. That makes sense to me.
That's tough to hear.
So for all of Thai Union's success in ocean-based snacking, they've never owned a restaurant.
They've just supplied seafood to restaurants like Red Lobster, and they've been a huge
stakeholder in Red Lobster since 2016.
Nevertheless, they happily pay about $575 million for a controlling share in Red Lobster, one of their biggest clients.
All right, Huey, pop quiz.
Oh, boy.
Do you know what this is called in Econ 101?
Yes.
Buying.
Companies.
It is called vertical integration.
I'm pretty sure that's the same thing as buying companies.
I also would have accepted conflict of potential interest because the line is very thin.
Now, thankfully, Thai Union promises not to be involved in Red Lobster's daily operations
and more importantly, supply chain standards because, again, that's a potential conflict of interest.
It's like if a wheat farm bought Kellogg's.
Right.
But moral reasons aside, Thai Union keeping a distance is really, really smart because,
one, again, Thai Union has no experience running restaurants.
Two, the language and culture barriers between American and Thai companies are stark.
And three, Red Lobster already has a great corporate culture
with loyal workers and low turnover.
Mind your business.
So how long do you think it takes Thai Union
to break that promise?
One year.
Yeah, a year and a half.
I'm gonna say immediately.
Yeah, cause like, there's not much time left between
this time you're talking about and now.
Yeah, you were all in the right ballpark.
It was less than two years.
So between 2020 and 2021, Red Lobster seems profitable
and Thai Union seems satisfied.
Maybe the pandemic won't hit that hard after all.
Well Red Lobster, they even rehire 26,000 employees by the end of summer 2021.
Oh, that's nice.
And a well-regarded executive, Kelly Vallade, is installed as CEO and she brings on a strong
leadership team ready to roll up their sleeves. Then,
in 2022, everything implodes. Thai Union's CEO, Thira Pongchunseery, decides to visit Red Lobster
HQ in Orlando and brings his most trusted advisors, including a Feng Shui consultant.
Just please, can you guess the name of the Feng Shui consultant?
John Sanderson. Trey Sheik.
Energy Flowsinson.
They're named Angel.
I was close with Energy Flowsinson.
Yeah, yeah, yeah, Keith, you get that one. Yes. Angel declares that the executive offices are bad feng shui and should be abandoned.
But Angel isn't the worst of it. That would be Paul Kenny, a new board member and apparently
an agent of chaos. Kenny is Australian and is the former CEO of one of Asia's most successful fast food chains, Miner Food.
He's also part of the investor group that spearheads Red Lobster's acquisition by Thai Union in 2020.
He's very well liked by Thai Union and he's very, very well hated by the Red Lobster top brass.
Oh wow.
Yeah, because according to former employees, he's a complete asshole.
One account has him making a vice president move to the outermost ring of chairs in a
meeting because he didn't like her answer.
He also fat shames a woman during an award ceremony saying, quote, we need to institute an exercise program in this company
as this person is accepting her award.
Oh my goodness.
So wrong.
I'm so glad you haven't done any of that, Misha, to us.
No.
In March of 2022, just eight months into Velade's tenure as CEO, Kenny clashes with Velade and
rips into her management team.
He takes the position that no investment in Red Lobster is needed.
And less than two days later, Velade resigns.
Thai Union then installs Kenny as interim CEO and the Fox officially starts running the
hen house.
One by one, Vallade's leadership team, who have decades of experience, abandon ship,
and a few are even shoved overboard.
More and more Thai union loyalists become involved with Red Lobster under Kenny.
And scare culture takes over corporate life. Now, on their weekly Zoom calls, Kenny and Thai Union berate management
on how to cut costs and raise profits faster.
Their email executives demanding increases in sales, sometimes as high as 17 percent.
Oh, that's tough.
Two percent is normal under normal circumstances.
So 17 would literally be a miracle.
I mean, where's Angel when you need them?
So Thai union insists that wait staff be pared down,
forcing the remaining workers to pick up the slack.
We've heard this story before.
They want the few waiters left to upsell like crazy,
work themselves to the bone and stay cheerful at all times.
So how would you terrorize your employees
if you were an evil CEO?
Yeah.
This sounds great, honestly.
It's a good way to do it.
Yeah, make there be few of them and give them more work.
Well, they do it by surprise inspections.
Oh, boy.
Undercover boss style, but not the good ones.
Yeah, yeah. No awards given.
Managers start having nightmares about these unannounced visits.
Employees break down in tears from the stress.
Everyone does their best to try to spruce up their restaurants on shoestring budgets.
Servers are rehearsing company scripts and chefs need to prepare to be quizzed on recipes.
It's a lot.
But no matter how much work they do, no restaurant seems to ever meet the ultra high standards of the visiting execs.
At a conference, Thai Union CEO, Mr. Chan-Sri-Zee, presents big blown up pictures of the red lobster dishes he's tried and hated during the inspections.
Wow!
Wow. So, this is all what's going on in the boardroom, but like right now the Red Lobster diners
aren't aware of the drama, so how do you think Kenny can mess this up on the consumer side?
By like making a social media post of it or something.
Or just like telling them to allow for the unlimited shrimp, but then fat chain people
who eat too much shrimp.
Yeah, that's my guess. who eat too much shrimp. Right.
That's my guess, just by his previous actions.
Those are good.
Well, he starts changing things.
And these are very loyal customers.
Long time customers start realizing their side salads, which were free before, now cost
extra.
Oh boy.
Now, remember that other promise that Thai Union made not to get involved in the supply
chain?
Uh oh.
Yeah, that's not going to happen.
Thai Union was already Red Lobster's major shrimp supplier before the hostile takeover.
And now they decide to cut ties with all other suppliers of shrimp to Red Lobster.
Thai Union wants to sell Red Lob tons, literally tons of shrimp.
And for that to happen, they need red lobster to move that stuff out the door.
So Kenny and Thai Union have a bright idea.
In June of 2023, they announce ultimate endless shrimp.
All you can eat all day every day for just $20.
So you remember this, I'm assuming.
Yes, I sure do.
So before this permanent ultimate endless shrimp promotion,
there were endless shrimp that was an occasional treat
for customers and a temporary pain for restaurants.
But now, cooks and wait staff who are already down in numbers
have to run around loading folks up on
scampian skewers for practically free. And if they slow down, customers get antsy.
Yeah.
In Oklahoma City, a woman starts breaking plates when a waiter tells her she can't take endless amounts of shrimp home with her.
She's later arrested.
Good. Is this, I mean, is that bad or is it relatable?
Like how much do you like shrimp? Hold on. You can't be breaking plates because
you can't take home unlimited shrimp. Pretty standard that the unlimited stuff stays
there. You can't pack up your plate after a buffet. I think that's fairly common knowledge.
So I side against the woman in this scenario. Yeah, I would say it's bad and relatable.
Of course, we all want to be able to take home
the endless breadsticks at Olive Garden,
but we know going in that we're not able to do that.
Yeah.
But, you know, still, maybe things won't be so bad, eh?
Maybe once folks get used to it being on the menu,
they won't feel the need to take advantage, right?
Wrong.
No, wrong.
Like hungry sea birds, bargain hunting diners
descend on the restaurants and eat everything in sight.
I mean, they gulp this shit down,
which causes a strain on some restaurants more than others.
In addition to half a dozen shrimp options
like jumbo coconut shrimp and crispy dragon shrimp, diners get a round of coleslaw, french fries, mashed potatoes, and a baked potato or rice if three types of potatoes is just too crazy.
And of course they still get those complimentary cheddar bay biscuits.
Oh, that's a lot. Yeah. For 20 bucks. That's a good deal. You should just box up all of
that and take that home and only eat the shrimp while you're there. Good idea. Take all the
starches home. Yeah. Yep. Red lobster hates to see Keith coming. Yeah, I'm smart. I know exactly what
to do. Make sure those red lobster fries travel real nice. And you hide the shrimp in the baked potato and seal it back up.
Oh.
Oh.
Oh.
So a trend catches on social media
where folks try to see how much they can eat
on camera in one sitting.
Alex was part of that.
I was part of a problem.
Alex, you right next to Angel
and that lady who got arrested for breaking plates.
I know, I sat there eating all that shrimp
and it still wasn't enough to fill me up.
So this is a complete failure as a loss leader
since not even the occasional Mai Tai order
can offset the costs.
In high price locations, restaurants lose an average
of $3 a head on the promotion.
So despite the flood of new diners,
average profits go down.
And because of the new diners,
wait time to get into Red Lobster's balloons
and service becomes painfully slow.
It's hell on workers.
The kitchen staff is backed up,
waiters keep leaving in droves
and managers can't hire new workers fast enough.
Here's an account from a former service manager in Utah
about the chaos he endured.
Alex, could you please read Malcolm Clarke's quote
from the New York Times article,
Greed, Gluttony, and the crackup of Red Lobster.
I do 16 interviews over the weekend and hire them all.
Three would show up.
If we were lucky, they'd last a week or two.
A bunch quit the same night they started.
And I totally understood.
We were hiring these kids and treating them like animals.
Wow.
My very first job when I moved to New York City
was promoting comedy club tickets.
Oh wow.
And I lasted 45 minutes.
Yeah, that's tough. And I lasted 45 minutes.
Yeah, that's tough.
That's a tough job.
It's a tough tough to walk by the person doing that job
because I don't want to see the show.
So for Red Lobster corporate, this promotion is a money pit.
They lose $11 million on this promotion
and $76 million in total for the year of 2023.
Oh no.
Oh, tough.
And that was just last year.
This story is wrapping up to a close.
What is going to happen next?
I am on the edge of my seat here, Misha.
Well, remember, Thai Union, they're still making money.
They want people to keep shoveling shrimp down their gullets.
Because of that vertical integration,
the more shrimp Red Lobster needs to order,
the more Shrimp Thai Union can sell.
Wow.
Meanwhile, the quality they send to the restaurants
keeps getting worse and worse.
Managers notice it's frostbitten like it's been sitting in
storage for months. It's almost like Thai Union is trying to clear out their inventory, or at least
that's what the Red Lobster managers start to whisper to each other. According to a prominent
conspiracy theory, employees think it's possible that Thai union CEO Thira Pongchansiri and
Paul Kenny decided months earlier that Red Lobster was beyond saving.
Wow.
Uh-huh.
So perhaps they'd be using their supply chain monopoly as a way to sell off as much
shrimp as possible before Red Lobster fails entirely.
Whatever the case.
By September of 2023, just three months
into the bottomless shrimp promotion,
they find out the hard way that there is in fact a bottom.
Ha ha ha.
Red Lobster's newest CEO stops paying bills,
hoping the company can make some money in December
to cover them then.
But the money doesn't come in.
So managers unable to pay for repairs
are helpless in emergencies.
At that Utah location where the service manager can't
find enough staff, he also has to deal with a backed up grease
drain.
But he can't afford to fix it because plumbers are
more expensive on weekends.
So the kitchen workers have to wade through an inch of gross oily water for three days.
That's gnarly.
Oh my, if you're only listening to this podcast, our mouths were agape.
That's a fire hazard.
Like that's a kitchen.
Well no, because they got water in there.
Yeah.
Oh yeah. That's recent water. Well, no, because they got water in there. Yeah, oh yeah, that grease and water,
they're best friends.
But I mean, still, would you still
be happy to get unlimited shrimp if you knew the kitchen was
a disaster zone?
Yes.
I mean, no.
How do you feel, Alex?
Unlimited shrimp is still a pretty good deal.
Yeah.
I feel fine after.
Well, in December, Red Lobster defaults on its debts.
In January of 2024, Thai Union divests from the company and refuses to invest another
penny to cover its debts.
Thai Union takes a $530 million loss.
At this point, Red Lobster is officially seen as a zombie brand.
Spooky.
Do you know what a zombie brand is?
It's a brand that when you go there, it turns you into one of them.
And in some lore, they're really smart and can move fast.
In some lore, they're really dumb.
But either way, they're going to try to eat you and turn you into them.
Yeah.
No, it's basically half dead, but maybe someone can revive it.
Ah, just needs the right person to come in those doors.
And that person, in late March, another CEO, is a turnaround specialist named Jonathan Tibbis,
who takes the reins of Red Lobster and begins trying to salvage whatever's left.
who takes the reins of Red Lobster and begins trying to salvage whatever's left. Bankruptcy seems like the only option. In May, Red Lobster files for Chapter 11 protections,
and at that point they owe about $1.1 billion in outstanding obligations.
The filing also reveals that even though sales increased a little bit between 2020 and 2021,
overall Red Lobster's annual guest count dropped by 30% since 2019.
Yeah, so 140, aka 20% of the restaurants immediately close.
And those employees who lose their jobs, they find out when they show up to work and the
doors are shuttered.
Oh!
Yeah, that's how it always is though.
I know.
Oh, goodness.
I had a roommate who worked at Bennigan's when all of them closed at the same time.
And he was in college and it was bad because he was like, how am I going to get my last
paycheck?
Suddenly he, you know, we have rent, people have rent, they have lives to lead. So I saw firsthand somebody deal with that exact circumstance.
One time I tried to, I showed up to Alex's house for rehearsal and his doors were closed
and I thought they were telling me Louberger was over, but I was just there on the wrong day.
Well, after decades of serving families affordable seafood and trading its workers well, Red
Lobster becomes just another brand crushed by corporate mismanagement and stripped of
its succulent meat.
I mean, reputation.
So let's do a little Where Are They Now?
Red Lobster was recently acquired by a Manhattan-based investment firm Fortress Investment Group
for an insulting $375 million.
Wow.
Golden Gate had paid almost six times that amount
a decade earlier.
But Fortress, they had no competition for the bid.
Tirupong Chansiri is still the CEO of Thai Union.
And whenever he's asked about his biggest career failure,
he just changes the subject.
Which must be nice to move past something like that so easily.
Whatever happens next, employees can breathe a sigh of relief that Paul Kenny will never be back.
And the new boss, a chill 35-year-old CEO named Demola Adomalekin promises to not bring back endless shrimp either.
Because quote, I know how to do math.
I've seen that quote going around and you know, respect.
Good job.
Respect.
I mean, at least he clarifies, not anytime soon.
If Red Lobster does bring back endless shrimp,
he doesn't want to seem like he lied.
Now without the famous promotion,
Adam O'Lakin still needs to get people in the door somehow.
And his plan is to implement what he unofficially calls
the affordability section,
where diners can find $15 and $20 entrees.
Yeah, that's pretty good.
He's also bringing back hush puppies
and working on a better tartar sauce.
Oh wow.
He promises to never charge for those cheddar bay biscuits.
Alright.
These are hilarious updates.
We're working on a better tartar sauce.
Yeah.
I'm like, okay, great.
Cool.
Yes.
That was my biggest concern. So here on The Big Flop,
we try to be positive people and end on a high.
So are there any silver linings that you can think of
that came from Red Lobster and all that?
Well, I mean, I think it's always good to see an example
of why you don't let vertical integrations happen
or monopolies happen
because they typically
end up being bad for both.
If they are successful, you'll typically get sued at some point by a government.
And if they don't work, then you lose $500 million.
So I think it's good every so often for us to see a big giant make mistakes and fall
so that other people don't do it because otherwise it would lead to bigger issues.
Sure. Another good thing, though this happened early on in Red Lobster's career and it seems like
this was in its heyday and a lot of bad things happened, you know, the fact that they tried to be
racially inclusive and culturally inclusive and that that was a boon for them that that really worked out It's that that's a great lesson to us all open your arms. Maybe the most important
Silver lining after hearing the ones that you guys just did
I think you know there are red lobsters open and knowing that those cheddar bay biscuits are always gonna be free
I mean, that's that's something to keep you going at the end of the day
And you think there just might be enough of them
to fill the three of us.
Thank you.
We're Lube Rugger.
Good night, everyone.
Bye.
Well, now that you all know about what broke red lobster,
would you consider this a baby flop, a big flop,
or a mega flop?
This is a mega flop of mega proportions.
That's a big flop.
I'm gonna say big flop because it's not quite a mega flop
because it does still,
there are still operating red lobsters.
I mean, they don't even own the land.
They still gotta deal with that unless that was part of it.
And to go from a Beyonce lyric to a bankruptcy, that's bad.
Wow.
Come on people.
Well, thank you so much to our shrimp-ly fantastic guests.
Oh, come on.
Keith Habersberger, Alex Lewis, and Huey Stonefish
for joining us here on The Big Flop.
And of course, thanks to all of you for listening.
If you're enjoying the show, please
leave us a rating and review.
We'll be back next week with another flop.
When it came to being a businesswoman, she wanted to be on top.
We're talking the business flops of supermodel Tyra Banks.
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