June 20, 2024

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Former Red Lobster executives describe ‘miserable’ business environment and Thai company’s overhaul before filing for bankruptcy

Former Red Lobster executives describe ‘miserable’ business environment and Thai company’s overhaul before filing for bankruptcy

US News

Former Red Lobster executives and senior leaders in a new report describe the “miserable” business environment after a major Thai seafood company went under the bus, leading to the company’s sudden collapse.

The Orlando, Florida-based chain filed for Chapter 11 protection on May 19 after closing nearly 100 locations unexpectedly last week.

The filing comes four years after Thai Union – which owns a 49% stake in Red Lobster – became the company’s largest shareholder and was involved in day-to-day operations.

Former employees claim the Thai union’s incompetence led to the company’s destruction, according to CNN.

“It’s been miserable working there for the last year and a half that I’ve been there,” said Les Foreman, a West Coast division vice president who worked at Red Lobster for 20 years and was fired in 2022. He told the network. “They had no idea about running a restaurant company in the United States.”

Red Lobster filed for bankruptcy on May 19. AP

The Thai Football Association has blamed the Covid-19 pandemic, high interest rates and labor costs for its financial struggles.

After the Thai federation became the largest shareholder, it began hiring its own CEOs, forcing several long-respected employees to be quickly fired or resign, senior leaders told CNN.

The company has had five CEOs in the past five years amid change.

Paul Kenny has been Red Lobster’s interim CEO for nearly 1.5 years. Red Lobster Seafood Company

When Thai Federation CEO Thiravong Chansiri visited Red Lobster’s Orlando headquarters in 2022, he brought in a feng shui consultant who determined that the executive offices had “bad feng shui” and could not be used, a company leader told the outlet.

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The environment at the company became toxic during the Thai consortium’s takeover of the company, especially when Australian interim CEO Paul Kenny became president of the company in 2022, according to CNN. Kenny was part of the Thai consortium-led investor group that bought a majority stake in Red Lobster.

During meetings, Kenney would openly criticize and belittle employees, according to former Red Lobster leaders who worked closely with him.

Kenney made the decision in May 2023 to implement the $20 unlimited shrimp offering as a permanent menu item “despite significant opposition from other members of the company’s management team,” the filing said.

The filing says Kenney shut down two longtime shrimp suppliers — competitors of Thai Union — to buy more Thai Union shrimp at high costs.

Thiraphong Chansiri, CEO of Thai Union – Red Lobster’s majority shareholder. Thai Federation

Red Lobster is “investigating whether Mr. Kenney’s decision-making circumvented the company’s normal supply chain and demand planning.”

Tibus also revealed in the filing that the company is investigating Thai Union’s role in its collapse, alleging that the Thailand-based seafood company “exerted significant influence over the company.” [company’s] Buy shrimp.”

Kenny’s leadership has had a profound impact on operations at Red Lobster locations as a result of a number of cost-cutting measures that impacted the dining experience.

One employee told CNN they started leaving the shrimp tails in the pasta, and eliminated frying stations in the kitchens to cut labor costs.

Servers began covering 10 tables instead of three, and hosts were removed during lunch hours — in the name of customer service.

There were fewer managers and cooks than ever during this period, according to Barry Fulghum, who worked his way up to director of operations after starting as a dishwasher at Red Lobster in the 1970s.

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The restaurant’s exhausted staff has fewer managers and cooks than ever before, said Barry Fulghum, who started out as a dishwasher at Red Lobster in the 1970s, worked his way up to become director of operations, and retired last year.

“Sometimes we have one or two people working the kitchen line,” he said. “What these chefs did on the line was amazing given the staffing situation they were dealing with.”

The result was lower customer enthusiasm and lower revenues.

Red Lobster has 36,000 employees and owes them $16.7 million in unpaid wages, according to the filing.

Red Lobster said its remaining restaurants will be open and operate as usual during the bankruptcy proceedings but plans to close additional locations.

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