Red Lobster files lawsuit after bankruptcy over failed promotion

Despite emerging from bankruptcy nearly two years ago, the financial fallout from one of the restaurant industry's most controversial promotions continues to ripple through the company.

What was originally intended to bring diners back through the door during a period of slowing consumer spending instead became a defining symbol of the chain's financial collapse. The promotion has since been blamed for millions of dollars in losses, operational challenges, restaurant closures, and now a high-profile lawsuit.

After nearly six decades of building a loyal following through affordable seafood, signature biscuits, and value-focused promotions, Red Lobster is now seeking to hold former executives and a longtime business partner responsible for decisions it says accelerated the company's decline.

Red Lobster sues over Endless Shrimp promotion

Red Lobster's creditors filed a lawsuit in Orange County, Florida, in May against former CEO Paul Kenny and Thai Union Group, the chain's former investor and seafood supplier.

According to the complaint, the defendants promoted the $20 "Ultimate Endless Shrimp" offer despite knowing it would cause significant financial harm, while benefiting financially from Red Lobster's increased shrimp purchases.

The creditors' lawsuit alleges Kenny and Thai Union removed members of Red Lobster's management team and blocked the company from sourcing shrimp from competing suppliers, forcing the chain to purchase larger quantities from Thai Union at inflated prices.

Related: Popular Mediterranean restaurant files for Chapter 11 bankruptcy

The complaint also alleges that employees warned executives that offering unlimited shrimp at the promotional price would not be profitable. Despite those concerns, management allegedly continued expanding the promotion.

"When it was clear that the Everyday $20 Ultimate Endless Shrimp offering was wreaking havoc on Red Lobster and its balance sheet, Kenny doubled down," the lawsuit states. "He responded by continuing the offering-and generating tens of millions of dollars more in overpriced shrimp orders for Thai Union-and ultimately left Red Lobster with a massive oversupply."

The complaint, filed in Orange County Circuit Court, seeks a jury trial to determine damages.

How much did the Ultimate Endless Shrimp promotion cost Red Lobster?

Red Lobster introduced its Everyday Ultimate Endless Shrimp promotion in 2023, allowing customers to order unlimited servings of shrimp dishes, including Garlic Shrimp Scampi, Coconut Shrimp, and Shrimp Linguini Alfredo, for about $20 during every visit. The price was later raised to approximately $25.

According to Thai Union, the promotion was designed to boost restaurant traffic as consumers pulled back on discretionary spending amid higher menu prices.

The strategy increased customer traffic by roughly 4% during the quarter, but the additional sales were not enough to offset the cost of serving unlimited shrimp.

According to the creditors' lawsuit, the promotion ultimately cost Red Lobster "tens of millions of dollars."

Beyond the direct financial losses, the complaint alleges the promotion created widespread operational challenges, including shrimp shortages, increased employee turnover, and strained restaurant operations. It also attracted customers who otherwise would have visited later in the year, reducing the effectiveness of seasonal promotions.

Thai Union also paid a steep price. In January 2024, the company exited its investment in Red Lobster, recording a non-cash impairment charge of approximately $530 million.

A month later, Thai Union sent Red Lobster a letter seeking about $27 million in damages, alleging the restaurant chain had overordered shrimp that had been produced largely to support the promotion.

Michael Nagle/Bloomberg via Getty Images

Red Lobster's Chapter 11 bankruptcy and turnaround efforts

Red Lobster filed for Chapter 11 bankruptcy protection in May 2024, after accumulating nearly $300 million in debt.

According to court filings reviewed during the bankruptcy proceedings, several factors contributed to the company's financial distress, including rising operating costs, weakening consumer traffic, and substantial losses from the $20 Everyday Ultimate Endless Shrimp promotion, which alone contributed to an $11 million quarterly loss.

Thai Union was also named in Red Lobster's bankruptcy filing, which raised allegations similar to those outlined in the creditors' most recent lawsuit.

More on Red Lobster by Fernanda Tronco:

• After bankruptcy, iconic seafood chain closes flagship restaurant
• Red Lobster brings back all-you-can-eat shrimp
• Nostalgic seafood restaurant chain exits Chapter 11 bankruptcy

As part of its restructuring, Red Lobster closed about 130 restaurants before emerging from bankruptcy later that year under new owner RL Investor Holdings LLC.

The company appointed Damola Adamolekun as CEO in August 2024, tasking him with stabilizing operations after a period of executive turnover and repositioning the seafood chain for long-term growth.

Since then, Red Lobster has focused on reducing costs, streamlining operations, renegotiating supplier agreements, and reviewing underperforming restaurants. Those efforts have included additional workforce reductions and restaurant closures as management works to restore profitability.

Red Lobster brings back Endless Shrimp

Despite identifying the promotion as one of the factors behind its bankruptcy, Red Lobster brought back Endless Shrimp for a limited time at participating restaurants nationwide in April 2026.

The dine-in promotion was priced between $24.99 and $29.99, depending on the location, a notable increase from the original $20 version that became the focus of the company's lawsuit.

According to Red Lobster, the promotion was reinstated due to sustained consumer demand and was structured differently to better balance guest value and profitability.

"This is about putting our guests first and bringing back something they truly love," said Red Lobster CEO Damola Adamolekun in a statement. "Endless Shrimp has been a part of Red Lobster's legacy for 20 years and our guests have never stopped asking for it. We're excited to bring it back, for a limited time, in a way that works for our business today and honors what made it special from the beginning. Because when our fans talk, we listen."

The company had previously tested a more limited version of the promotion in 2025, called Ultimate SpendLESS Shrimp, which featured fewer shrimp options and tighter controls designed to preserve margins.

Because Red Lobster is now privately owned, it no longer publicly reports earnings.

However, management has shared limited financial updates. In a February 2026 interview with The Wall Street Journal, Adamolekun said sales had increased by roughly 10% compared with the previous year while acknowledging that many restaurants still require operational improvements and additional investment.

Industry data suggests the turnaround remains a work in progress. According to Technomic, systemwide sales declined 6.2% in 2025, underscoring the competitive pressures the company continues to face.

Even as Red Lobster works to rebuild under new ownership. The creditors' lawsuit underscores that the financial and legal consequences of the decisions that preceded its bankruptcy are still unfolding.

Related: After bankruptcy, iconic seafood chain closes flagship restaurant

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This story was originally published July 2, 2026 at 4:00 PM.