Elon Musk is mourning the loss of Red Lobster too
The seafood restaurant chain said on Sunday that it had filed for bankruptcy.
Apu Gomes via Getty Images; Richard Levine/Corbis via Getty Images
- Red Lobster filed for bankruptcy on Sunday and Elon Musk is sad to see them go.
- "Too bad (sigh). I have some fond memories from a long time ago of eating at Red Lobster," he said.
- The seafood chain incurred significant losses after its Endless Shrimp deal backfired spectacularly.
Elon Musk wasn't happy when he found out that Red Lobster is filing for bankruptcy.
On Sunday, the seafood chain said in a statement that it had filed for Chapter 11 bankruptcy. Red Lobster said its restaurants will "remain open and operating as usual during the Chapter 11 process."
The development comes just a week after it said that it was closing over 50 branches in the US.
"Too bad (sigh). I have some fond memories from a long time ago of eating at Red Lobster," Musk said in an X post on Monday.
The mercurial billionaire was responding to an X post by podcaster and writer Trung Phan, which detailed Red Lobster's financial troubles.
Representatives for Musk and Red Lobster didn't immediately respond to requests for comment from BI sent outside regular business hours.
The seafood chain is best known for its "Ultimate Endless Shrimp" promotion, which it has been running for more than 18 years. As part of the deal, customers could gorge themselves with as much shrimp as they wanted for just $20.
Last summer, the company decided to turn the limited-time offering into a permanent menu item. This meant that customers could get their shrimp fix every day.
The move ended up backfiring spectacularly, with Red Lobster reporting operating losses of $11 million and $12.5 million in the third and fourth quarters of 2023 respectively.
In November, Ludovic Garnier, the chief financial officer of Thai Union Group — a Red Lobster investor — told investors that the promotion was "one of the key reasons for the losses we generated in Q3 2023."
Red Lobster eventually raised the price of its promotion to $22 and then $25.
"If anything, the Endless Shrimp deals are probably as much a symbol of just either desperation or poor management or both," the editor in chief of Restaurant Business Magazine Jonathan Maze told BI's Emily Stewart.
Red Lobster's lurch toward bankruptcy comes at a tough time for the food and beverage industry, as companies struggle to draw in customers amid a rising cost of living.
In July, McDonald's CFO Ian Borden told investors that customers were ordering less and and switching to value-menu items to save money. This, he said, was because of a "challenging macro environment including rising interest rates and elevated costs."
"The consumer is price weary. Everybody is fighting for fewer consumers or consumers that are certainly visiting less frequently," Borden said in an earnings call last month.
Likewise for Starbucks, whose CEO Laxman Narasimhan who said last month that the coffee chain's performance "did not meet our expectations."
"Many customers are being more exacting about where and how they choose to spend their money, particularly with stimulus savings mostly spent," Narasimhan said.