Red Lobster Bankruptcy: Wall Street Wrecked the Chain, Not Endless Shrimp

Red Lobster is on the brink of bankruptcy, not primarily due to its "Endless Shrimp" promotion, but due to deeper financial strains. The seafood chain, beloved for its cheddar biscuits, has been grappling with high labor costs and expensive leases. Despite increasing customer traffic with the promotion, the financial losses have deepened, with significant operating losses reported in recent quarters.

The root of Red Lobster's troubles extends beyond poor promotions to issues like unstable leadership and the impacts of private equity ownership. The chain, which was sold by Darden to Golden Gate Capital in 2014, has suffered from a series of financial maneuvers, including the sale and leaseback of its real estate, which added to its financial burdens. These challenges, compounded by a changing consumer base and competitive pressures, have left Red Lobster struggling to find a viable path forward in a tough industry landscape.