Red Lobster may need tens of millions more to stay afloat, Bloomberg says

Red Lobster’s efforts to attract customers with cheap deals could backfire, with a retail expert warning the strategy could attract the wrong customer as losses continue to mount.

The Florida-based seafood chain — which filed for bankruptcy in 2024 — relied heavily on promotions such as $20 seafood boils and lobster rolls to drive traffic.

Although the discounts generated buzz and helped boost sales, they weren’t enough to offset deeper financial problems, according to a Bloomberg report.

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The company has lost money in four of the last five quarters and may need tens of millions of dollars in additional financing to stay afloat, Bloomberg reported, citing sources.

Sales rose 12.5% ​​in February, with monthly revenue improving year-over-year, but those gains were not enough to offset ongoing losses, the report said.

Red Lobster is facing financial pressures as it works to stabilize its operations and attract customers with aggressive promotions and menu offerings. (Michael Nagle/Bloomberg via Getty Images)

A major issue is Red Lobster’s expensive long-term leases, which CEO Damola Adamolekun called the “most important structural piece” the company is working on as part of its turnaround.

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At the same time, Red Lobster is also bringing back its fixed-price, all-you-can-eat “endless shrimp” offering, as FOX Business recently reported — a move that sparked debate on social media.

“When your main business card is ‘look how cheap we are,’ you end up attracting a certain buyer.”

“Shrimp keeps coming back, exactly what bankrupted them last time,” one user wrote.

“History repeat or redemption arc? Anyway, I’m eating well tonight.

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“They went bankrupt, took a break to think about it, and chose violence again,” another user added.

Others pushed back against the idea that the promotion caused the bankruptcy.

“If you think Red Lobster harvested endless shrimp, you have a child’s understanding of how these businesses work,” one person wrote online. (iStock)

“Private equity drove them to bankruptcy,” one person wrote.

“They sold the land the restaurants were on.”

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Another said: “If you think endless shrimp is what carried Red Lobster, you have a child’s understanding of how these businesses work.”

Red Lobster’s reliance on discounts could be part of the problem, said Bob Phibbs, a retail consultant in New York.

Red Lobster is bringing back its all-you-can-eat “endless shrimp” prix fixe offering – which is drawing mixed reactions. (Michael Nagle/Bloomberg via Getty Images; iStock)

Phibbs said big promotions can become “unsustainable” and attract lower-spending customers.

“When your main business card is ‘look how cheap we are,’ you end up attracting a certain buyer,” Phibbs told Fox News Digital.

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“You can attract that buyer, but you have to have a higher level to balance it,” he added.

Phibbs pointed to higher-margin items such as desserts and bar deals as ways to offset deep discounts.

Red Lobster CEO Damola Adamolekun, pictured right next to rapper Ice Cube, is leading the chain through a bold rebranding. (Gerardo Mora/Getty Images for Red Lobster x BIG3)

“[If] promotions that kill margins become the main items sold, [it’s] unsustainable,” he said.

“For Red Lobster to move forward, it must renovate its aging locations, have a new level of service and attract the most profitable customers.”

Phibbs added: “I think Adamolekun is on the right track, but will the market give it time to attract this new consumer?

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Fox News Digital has reached out to Red Lobster for comment.

“We are always attentive to what our customers are asking for,” a Red Lobster spokesperson previously told FOX Business. “We are grateful for the enthusiasm and encourage customers to continue to share their feedback with us. We are listening.”