In May, seafood chain restaurant Red Lobster closed 50 locations and voluntarily filed for bankruptcy under Chapter 11 after years of stagnating sales for the iconic brand that even Beyonce gave a shout out to in her 2016 megahit song, Formation.
But as it turns out, Beyonce isn’t the only one that can appreciate Cheddar Bay biscuits, almost renamed “Cheddar Bey Biscuits” in her honor.
Eventually, the hype Beyonce had brought to the chain came to pass. The struggling restaurant chain was back in a rut.
Were Endless Shrimp Too Successful?
To get more customers in its doors, Red Lobster introduced a $20 Endless Shrimp deal to bolster sales. Once a limited-time offer, the company made the deal permanent in June of 2023 — a costly mistake.
The $20 Endless Shrimp deal was wildly successful by measure of popularity. However, it seems the casual dining chain underestimated just how many shrimp customers could consume in one sitting.
According to the bankruptcy filing, less than a year later, “this decision created both operational and financial issues for the Debtors, costing the Debtors $11 million and saddling the Company with burdensome supply obligations…”
Related: McDonald’s Tests Limited-Time $5 Meal After Pricing Out Core Audience
Red Lobster’s Private Equity Woes
But Red Lobster’s woes can’t be chalked up to a too-successful promotion. Like many American businesses, Red Lobster fell victim to private equity corporate raiders that bought stake in the company gutted it for profit.
Golden Gate Capital Group bought a stake in the all-American restaurant in 2014. Shortly after, the private equity firm forced the sale of all Red Lobster’s real estate. They pocketed $1.5 billion in proceeds.
Red Lobster’s Public Fan #1
Red Lobster was forced to pay rent on locations that it previously owned outright, a $200 million dollar a year expense the company hadn’t previously had, compounding the loss of its most valuable asset – the land it owned.
Now, Red Lobster is forced to rent the locations it used to own at above market rate while also assuming costs for repairs, taxes, and insurance. Ultimately, the $11 million dollar loss on the Endless Shrimp Deal was the least of Red Lobster’s problems.
On June 3, Public Enemy rapper and reality TV personality Flavor Flav went to Red Lobster and ordered every item on the menu. He posted a photo of himself with the feast on the table with the caption “FLAVOR FLAV::: took my family to @redlobster and ordered the whole menu,!!!”
Flavor Gone Viral
The post gained traction and amassed more than 50,000 likes.
“Some heroes wear clocks,” one post commenter said.
Catching all the tagging and hype, the marketing team at Red Lobster commented on the post.
“It’s flavor time, boyeeeeeeee!” (Flavor Flav is widely credited with coining the phrase “Yeaaaahhh boi!”)
Less than a week later, the iconic wrapper and nostalgic seafood chain restaurant officially announced a partnership, and released a joint commercial with a Flavor Flav voiceover promoting new menu items just in time for Crabfest.
Flavor Flav’s Faves
As part of the partnership. Flavor Flav designed a plate of his favorite menu items. Flavor Flav’s Faves Signature Meal includes: Maine Lobster Tail, Snow Crab Legs, Garlic Shrimp Scampi, Bacon Mac & Cheese, and a choice of one side — all on one plate.
Moreover, Flavor Flav did a voiceover on Red Lobster’s most recent commercial promoting Crabfest.
Whether or not Flav can make an impact on Red Lobster’s bottom line remains to be seen. B
But even celebrity endorsements from Beyonce and Flavor Flav are up against Goliath when it comes to private equity.
