Red Lobster Had to Close So That Rich People Could Get Paid
Red Lobster’s bankruptcy isn’t a story about the recklessness of having endless shrimp on offer — it’s a story of how private equity firms bled a restaurant chain dry, leaving workers and diners adrift.
A Red Lobster restaurant on May 14, 2024, in Fremont, California. (Justin Sullivan / Getty Images)
Red Lobster has reached the bottom of the treasure chest and filed for bankruptcy. While some locations will stay open while the lawyers and accountants sort things out, other locations will be shuttered — some already have been — and assets will be sold off as part of its “restructuring.” Us diners are bracing to lose a great, affordable chain.
As the restaurant announced its bankruptcy filing, the mainstream take was “blame the endless shrimp.” That was the hook, anyway. If you read behind the headline, you’d see there’s more to it. The pandemic crushed restaurants, small and large, including Red Lobster. Inflation, exacerbated by the pandemic, further compounded the challenges, as fewer people opted to dine out after the shutdowns. While the chain was already poorly managed and in decline before COVID-19 arrived, all anyone wants to talk about is the endless crustaceans. The story, of course, is more complex.
It’s Not About Endless Shrimp
The endless shrimp line is a convenient and easily digestible reason for Red Lobster’s sinking fate, and it’s sort of true. Behind it, however, lies a much more insidious story. As Cory Doctorow notes, the actual reason for the seafood chain’s woes is private equity and “another hedge-fund, bust-out scam.”
This article is for subscribers only. Please login or subscribe to access our full archives and beautiful print and digital magazine starting at just $3 a month.