Red Lobster Endless Shrimp Was Too Successful

During the slower third and fourth quarters, Red Lobster, owned by Thai Union, launched a customer favorite — the Ultimate Endless Shrimp deal. This 18-year-old promotion was made permanently available on the menu in June. For just $20, customers could enjoy unlimited shrimp, an offer that proved more popular than anticipated.

“We knew the price was cheap. But the idea was to bring more traffic in the restaurants. On this promotion, we don’t earn a lot of money. At $22 we don’t. The idea was to bring some traffic.”

Ludovic Garnier, Thai Union CFO, via CNN Business

The number of customers taking advantage of Red Lobster’s endless shrimp led to an unexpected $11 million loss for the seafood restaurant company during its third quarter performance this year. Not even Thai Union’s CFO could have predicted just how many customers would flood Red Lobster’s 670-unit chain for this deal as much as they did.

Traffic did increase by 2% compared to the previous quarter and 4% year over year, confirming the promo’s effectiveness. However, the profitability was not as high as expected. The company has thus increased the price incrementally from $20 to $22, now settling at $25, demonstrating the need for adjustment in the ever-evolving business landscape.

“We want to keep it on the menu. 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.”

Ludovic Garnier, Thai Union CFO, via Restaurant Business Online

This scenario underscores the delicate balancing act that restaurants face today, as they strive to attract budget-conscious customers without compromising profitability. This is yet another setback for Red Lobster, which has been grappling with dwindling sales and escalating expenses. The chain has shuttered several outlets and has been actively engaged in renegotiating rents for remaining locations.