How Thai Union’s Takeover Led to Red Lobster’s Downfall

When Thai Union Group became the majority shareholder of Red Lobster in 2020, assurances were given that the seafood conglomerate would not interfere with the chain’s operations. However, this promise was short-lived, leading to significant changes and ultimately pushing Red Lobster into bankruptcy.

In 2020, Thai Union acquired a 49% stake in Red Lobster, promising not to meddle in daily operations or supply chain decisions. Despite these commitments, by 2022, Thai Union representatives were embedded in Red Lobster’s Orlando headquarters, significantly influencing management and operations. Thai Union’s finance chief, Ludovic Garnier, confirmed their deeper involvement in a 2022 analyst call.

This increased involvement led to substantial changes, primarily focused on integrating Thai Union’s shrimp supplies into Red Lobster’s menu. These changes resulted in an oversupply of Thai Union-sourced shrimp, a move seen as damaging by former executives and industry analysts. Red Lobster’s bankruptcy filing on Sunday includes plans to sell the business to its lenders and receive financing to continue operations.

Former Red Lobster employees and senior leaders attribute the chain’s decline to Thai Union’s poor management. Despite Thai Union blaming external factors like the COVID-19 pandemic and rising costs, insiders argue that Thai Union’s lack of experience in running a U.S.-based restaurant chain was the pivotal factor.

Red Lobster’s once-stable corporate culture deteriorated as Thai Union-appointed executives replaced veteran leaders, leading to rapid turnover and a toxic work environment. Thai Union CEO Thiraphong Chansiri’s visit to Red Lobster’s headquarters in 2022, accompanied by a feng shui consultant, exemplified the cultural clashes and unconventional management approaches.

Paul Kenny, a member of the Thai Union-led investor group, took over as interim CEO in 2022, further exacerbating internal issues. Kenny made controversial decisions, including severing ties with long-time shrimp suppliers in favor of Thai Union products, leading to higher costs and operational disruptions.

One of Kenny’s most criticized decisions was turning the popular $20 “Ultimate Endless Shrimp” promotion into a permanent menu item. Despite warnings from Red Lobster leaders that the pricing was unsustainable, the promotion was heavily marketed, resulting in financial losses and service issues. The move led to an $11 million loss and was widely mocked, including on Comedy Central’s “The Daily Show.”

Under Kenny’s leadership, cost-cutting measures such as reducing dining room investments and increasing prices alienated customers, resulting in a 30% drop in customer count since 2019. Thai Union’s attempts to sell Red Lobster culminated in a bankruptcy filing, with Thai Union taking a $530 million loss on its investment.

In response to the bankruptcy filing, Thai Union maintains that the process will allow Red Lobster to restructure its financial obligations and reach its long-term potential. However, former employees and industry analysts remain critical of Thai Union’s handling of the iconic seafood chain, highlighting the missteps that led to its current predicament.