Did making endless shrimp a permanent part of the menu sink Red Lobster? How did Canada’s largest restaurant chains fare in 2023? What do Krowne’s expansion plans entail? We answer these questions and more in This Week in Foodservice.

Did making endless shrimp a permanent part of the menu spell the end of Red Lobster? That appears to be one prominent line of thought making the rounds in light of Red Lobster’s bankruptcy filing.

The chain’s infamous endless shrimp promotion was a successful limited-time offer. But the tides turned when the chain’s largest shareholder, which, not coincidentally, is a canned seafood company, pushed to make it a permanent part of the menu, per multiple published reports, including this one from CNN. The move resulted in Red Lobster eliminating two other suppliers but not lower costs for the chain, the story notes.

But an Eater story says Red Lobster’s troubles ran deeper and longer than this decision. It attributes the chain’s challenges to mismanagement and several other factors in the chain’s demise.

The Eater story points out Red Lobster has had five CEOs since 2021. And following Darden’s 2021 sale of Red Lobster to private equity firm Golden Gate Capital, the new owners sold off the chain’s real estate. That meant the locations now had to pay rent to their parent company. And then in 2020 Thai Union became Red Lobster’s largest investor, which led to the endless shrimp promotion becoming permanent.

Overall, Red Lobster has faced some choppy waters of late and now the company intends to use the Chapter 11 bankruptcy proceedings to “drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets.”

As part of these filings, Red Lobster has entered into a stalking horse purchase agreement that will result in the sale of its business “to an entity formed and controlled by its existing term lenders. Red Lobster restaurants will remain open and operating as usual during the Chapter 11 process, continuing to be the world’s largest and most-loved seafood restaurant company.” The company has been working with vendors to ensure that operations are unaffected and has received a $100 million debtor-in-possession financing commitment from its existing lenders.

Foodservice News

• Sales among the top 200 Canadian chains grew by 9.7% in 2023, per data from Chicago-based Technomic. The top 200 Canadian chains totaled sales of $44 billion in 2023, which was $3.9 billion more than in 2022. These chains saw their number of locations grow by 2.8% in 2023, which is the largest increase observed since 2016, per Technomic.
• Restaurant Brands International Inc. completed its previously announced acquisition of Carrols Restaurant Group, which is the largest Burger King franchisee in the U.S. The deal totaled $1.0 billion. RBI will invest $500 million to accelerate the reimaging of more than 600 Carrols restaurants before re-franchising the majority of the acquired portfolio to new or existing smaller franchise operators over the next seven years.
• Foodservice equipment manufacturer Krowne broke ground on a two-year, $20 million expansion plan, per a company release. This month Krowne plans to open a new corporate headquarters that the company says will “function as a hub for innovation and collaborative endeavors.” Overall, the project will add more than 350,000 square feet of manufacturing and distribution space. As part of the first phase of this plan, Krowne acquired two facilities in New Jersey which will add 120,000 square feet to the company’s operations. As part of this strategic plan, Krowne intends to invest in a variety of manufacturing-related technologies, including robotics.
• CAVA opened a food production and packaging facility in Verona, Va. The fast-casual chain will use the $35 million facility to manufacture CAVA’s dips, spreads and salad dressings. This facility can support up to 750 restaurants and the expansion of CAVA’s packaged food business, per a company release. This is CAVA’s second food production and packaging facility. The first is in Laurel, Md.
• Growth Chains: Fast-casual Indian chain Curry Up Now opened a location in Durham, N.C., its first in the Tarheel State. Tex-Mex chain Fajita Pete’s opened a location in Pittsburgh. This is the third of eight new locations the chain plans to open in 2024 and the first of four planned for Pittsburgh. Mason's Famous Lobster Rolls opened a location in Milan, Italy. This is the fast-casual chain’s first international unit and 30th systemwide. Perkins Restaurant & Bakery inked a 10-unit development deal that will bring the family-dining chain to California. C-store chain Wawa opened its first North Carolina location. The unit is in Kill Devil Hills.

Economic News

• U.S. retail and foodservices sales totaled $705.2 billion in April 2024, which the U.S. Bureau of Labor Statistics described as “virtually unchanged” from the previous month. This does, however, represent a 3% increase from April 2023. Total sales for the February 2024 through April 2024 period were up 3.0% from the same period a year ago. Sales at eating and drinking places came in at $93.87 million in April, up slightly from March’s level of $93.67 million. Foodservice and drinking place sales were up 5.5% from April 2023. Economists had projected a 0.4% increase for April, per a Yahoo! Finance story.
• The Consumer Price Index increased 0.3% in April, the U.S. Bureau of Labor Statistics reported. This is 0.1% less than March’s increase and less than the 0.4% economists had projected, per Reuters. Combined, the indexes for shelter and gas accounted for more than 70% of April’s increase. Grocery prices (also known as food at home prices) declined 0.2% while restaurant prices (also known as food away from home) increased 0.3%. For the 12-month period ending in April, restaurant prices grew 4.1% compared to 1.1% for grocery prices.
• Initial jobless claims decreased by 10,000 for a total of 222,000 for the week ending May 11, 2024, per data from the U.S. Department of Labor. The 4-week moving average was 217,750, an increase of 2,500 from the previous week.
• Housing starts declined 3.0% in April compared to the previous month, per the U.S. Census Bureau. The 1.44 million permits issued were 2.0% less than April 2023. Single‐family authorizations in April were at a rate of 976,000; this is 0.8% less than March. These declines represent another indication that the increased mortgage rates are having an impact on the housing market, per a Reuters report.