Elon Musk expressed disappointment upon learning about Red Lobster's bankruptcy. The seafood chain announced its Chapter 11 filing on Sunday, stating that its restaurants would continue normal operations during the process. This news followed a recent closure of over 50 branches across the US.
"Too bad (sigh). I have some fond memories from a long time ago of eating at Red Lobster," Musk remarked on X in response to a post by podcaster Trung Phan about the chain's financial woes.
There was no immediate comment from representatives for Musk or Red Lobster when BI reached out after hours.
Red Lobster has been known for its "Ultimate Endless Shrimp" special, running for over 18 years. Last summer, the promotion became a permanent fixture, allowing unlimited shrimp for $20.
However, the promotion led to significant financial losses. Red Lobster reported losses of $11 million and $12.5 million in the third and fourth quarters of 2023, respectively.
Ludovic Garnier, CFO of Thai Union Group and an investor in Red Lobster, attributed the heavy losses to this endless shrimp promotion during an investor meeting in November.
The company later increased the price of the promotion to $22, then $25, in response to the losses.
Jonathan Maze, editor in chief of Restaurant Business Magazine, critiqued the strategy. "If anything, the Endless Shrimp deals are probably as much a symbol of just either desperation or poor management or both," he told BI's Emily Stewart.
The broader food and beverage industry faces similar challenges. McDonald's CFO Ian Borden noted in July that customers were spending less due to a "challenging macro environment including rising interest rates and elevated costs."
Starbucks also reported underwhelming performance, with CEO Laxman Narasimhan explaining last month that customers are becoming more selective with their spending due to depleted stimulus savings.