Red Lobster Misjudged Diners' Hunger for Endless Shrimp

Unexpectedly popular promotion was main reason for $11M 3Q loss, company says
By Rob Quinn,  Newser Staff
Posted Nov 30, 2023 4:41 AM CST
Updated Dec 3, 2023 10:40 AM CST
Red Lobster Misjudged Diners' Hunger for Endless Shrimp
"Avoid grabbing the extra biscuit to leave room for endless amounts of shrimp," Red Lobster advised customers when it launched the promotion.   (Getty Images/nadisja)

Visitors to Red Lobster this summer and fall might have wondered how the chain was able to sell all-you-can eat shrimp for $20 every day and still turn a profit. It turns out that they couldn't. Red Lobster made "Ultimate Endless Shrimp," which used to be a Monday-only deal, a permanent menu fixture in June but it was more popular than the chain expected, leading to an $11 million third-quarter loss, CNN reports. The plan was to boost traffic to the chain's restaurants during the second half of the year, when they tend to be quieter. It worked to some extent—traffic was up 4% year-on-year—but the 670-restaurant chain hoped more customers would pick different menu items.

"We knew the price was cheap. But the idea was to bring more traffic in the restaurants," Ludovic Garnier, chief financial officer of Red Lobster owner Thai Union Group, told investors this month. He said the proportion of customers choosing the deal "was much higher compared to expectations." Customers who chose the deal could select two dishes from a list that included coconut shrimp and shrimp linguini Alfredo, the New York Times reports. When customers finish those, promotional materials said, "they can order additional shrimp selections until their cravings are fully satisfied."

Red Lobster didn't take the promotion off the menu after its unexpected popularity, but it raised the price to $22, then $25. "We want to keep it on the menu," Garnier told investors, per Restaurant Business. "And of course we need to be much more careful regarding what are the entry points and what is the price point we are offering for this promotion." (More Red Lobster stories.)

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