Red Lobster Lost an Obscene Amount of Money on ‘Endless Shrimp’ Deal
Seafood lovers rejoiced when Red Lobster announced back in June that it would be making its popular Ultimate Endless Shrimp limited-time promotion a permanent part of its menu. But the chain underestimated patrons’ appetites, and as a result the all-you-can-eat offering is expected to be a big contributor to the chain’s projected $20 million loss this year.
During a recent earnings call, Ludovic Regis Henri Garnier, CFO of Red Lobster’s parent company, Thai Union Group, said that the chain posted an operating loss of more than $11 million in the third quarter, and was on track to take a $20 million loss for the year. The Thailand-based seafood company cast blame on the chain’s Ultimate Endless Shrimp deal.
“We knew the price was cheap, but the idea was to bring more traffic in the restaurants,” Garnier told investors earlier this month, according to Restaurant Business Magazine. “So we wanted to boost our traffic, and it didn’t work.” He said that the company didn’t expect customers to order the meal as often as they evidently did.
“We want to keep it on the menu,” he added. “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.”
Initially advertised for $20, the meal allows guests to choose from a variety of shrimp entrees, including Garlic Shrimp Scampi, Parrot Isle Jumbo Coconut Shrimp, Shrimp Linguini Alfredo, and Popcorn Shrimp. Guests choose three options to start and when ready, they can order additional plates. The meal also comes with a side as well as unlimited Cheddar Bay Biscuits.
However, amid the plummeting losses, Red Lobster has raised the price to $25.
“Ultimate Endless Shrimp has been an iconic promotion and a guest-favorite tradition at Red Lobster for more than 18 years,” said Patty Trevino, Red Lobster’s Chief Marketing Officer, when it was first announced that it would become a permanent menu item. “Knowing how much our guests love and look forward to the return of Ultimate Endless Shrimp each year, we decided it’s time to make this guest favorite available all day, every day.”
You can say that again.