Thai Union put $575M into Red Lobster, then wrote off $530M and walked away

In 2016, Thai Union Group — the Bangkok-based seafood supplier behind Chicken of the Sea — put $575 million into Red Lobster: $230 million for a 25% equity stake and $345 million in preferred shares convertible into another 24%, for up to 49% of the US chain. Golden Gate Capital, which had bought Red Lobster from Darden for $2.1 billion in 2014, stayed majority owner and had already sold the chain's real estate in a $1.5 billion sale-leaseback — Red Lobster no longer owned most of its restaurants, it rented them, and the lease carried 2% annual increases baked in.

In 2020, Thai Union led an investor group, including a consortium of restaurant executives called Seafood Alliance, to buy out Golden Gate Capital's remaining stake entirely. Thai Union kept adding capital to a company still paying rent on buildings it used to own — a fixed cost that would not shrink when a pandemic, and later inflation, cut into how many people walked through the door. By 2023 that rent bill had climbed to roughly $190 million a year, about 10% of revenue, with $64 million tied to underperforming locations alone.

Red Lobster's cash fell from $100 million to under $30 million in six months, and a permanent $20 all-you-can-eat shrimp promotion added an $11 million quarterly operating loss on top. On 16 January 2024, Thai Union's board announced it would exit the investment and take a THB 18.5 billion (about $530 million) non-cash impairment charge, citing Covid-19, industry headwinds, higher rates and costs that had left Red Lobster delivering 'prolonged negative financial contributions.'

Red Lobster filed for Chapter 11 bankruptcy on 20 May 2024, listing between $1 billion and $10 billion in liabilities and closing more than 50 restaurants immediately, with the total reaching around 130 by the time it exited bankruptcy under new owner RL Investor Holdings that September. Thai Union's $575 million had bought most of a company that spent eight years paying down a real-estate decision it never made.