It has been long held that “success has many fathers, but failure is an orphan.” The bankruptcy of Red Lobster has turned that on its head. 

When the venerable restaurant chain sought protection of the courts it was thought that an ill-fated marketing promotion – “endless shrimp!’ – was the cause. How can you take what was an effective, occasional loss leader that filled the tables and make it permanent? We should probable keep an eye on the Applebee’s “dollarita” now, too!

But the real causes of bankruptcy began at least 15 years earlier when the chain was sold to a private equity firm. That began a common tale; the methodical sale and lease-back of real estate that turned assets into debt, then sold again, this time to a seafood company looking for distribution. 

Stalled marketing and unchanged restaurants in the name of cost-cutting, staffing “efficiencies”, little creative marketing and an unchanging menu in the face of changing tastes added up to trouble. 

When someone had the idea of “endless shrimp!” to drive traffic, diners came…and they ate. A plan to drive traffic wasn’t the reason for the bankruptcy, but it was the last thing people saw as Red Lobster closed its door. In this case, this failure had many fathers; and mothers, too.

Bad business decisions are like the best financial decisions – accretive. They build one on top of the last until the weight is too much to bear. And now 58,000 people who had jobs last month have no clue about next month. 

It may be too soon to right an epitaph for Red Lobster. Afterall, Chapter 11 gives the company the chance to reorganize and move forward. And the spirit is willing. “This restructuring is the best path forward for Red Lobster,” Red Lobster CEO Jonathan Tibus said. We will see if it is an endless path.