robus
Lowcountry Low Roller
Welcome to 5e. Where the DM is actually responsible for their game.
The encounter isn’t bad and it isn’t bad design. You made a mistake. Happens.
I dunno, there is zero foreshadowing that the PCs are getting in over their heads:
The way to the hideout is clearly marked, there's one guardian on the route. The goblin guards are sleeping and will probably remain that way, doors are all unlocked. A couple of folks otherwise preoccupied. This is the poorest excuse for a secret hideout I've seen in a while.

Still shouldn't result in a TPK, but it doesn't make a whole lot of sense IMHO.