Red Lobster’s Endless Shrimp Deal Turns Costly

In the world of seafood dining, Red Lobster has been a household name for many years. Known for its delectable seafood offerings and unique promotions, the restaurant chain has continuously sought innovative ways to attract customers. One such promotion, the “Endless Shrimp” deal, has been a staple for over 18 years. However, recent developments have led to a surprising twist in this long-standing tradition.

The Simple Plan

Traditionally, Red Lobster’s third and fourth quarters have seen a decline in business. To counter this trend, Thai Union, the parent company of Red Lobster, devised a straightforward plan – introduce a new promotion that would entice customers to dine at their establishments.

For a mere $20, customers were offered the opportunity to indulge in unlimited servings of shrimp. This promotion aimed to draw more patrons into the restaurants, reviving the sagging business during the latter part of the year. The idea seemed simple yet effective, but it would soon take an unexpected turn.

The Unexpected Success

The “Ultimate Endless Shrimp” deal, as it was aptly named, gained immense popularity among seafood lovers. Red Lobster enthusiasts flocked to the restaurants to partake in this feast of crustaceans. The promotion allowed guests to begin with two servings of shrimp and continue ordering more, with a diverse range of options, including coconut shrimp, linguini alfredo, and grilled shrimp skewers.

The results were astonishing. Red Lobster witnessed a 2% increase in traffic compared to the previous quarter and a remarkable 4% rise compared to the previous year. However, the unexpected success of the promotion would bring its own set of challenges.

A Costly Success

In a surprising turn of events, Red Lobster found itself in a conundrum due to the overwhelming response to the “Ultimate Endless Shrimp” deal. While it indeed brought more customers through the doors, the proportion of customers choosing to participate in the promotion exceeded all expectations.

CFO Ludovic Garnier of Thai Union acknowledged the issue in a recent earnings call, stating, “On this promotion, we don’t earn a lot of money. At $22, we don’t. The idea was to bring some traffic.” The success of the promotion had unintended financial consequences, resulting in a roughly $11 million loss for Red Lobster in the third quarter of 2023.

The Necessary Adjustments

To sustain this iconic promotion, Red Lobster has had to make some strategic adjustments. Initially priced at $20, the promotion was first increased to $22 and has now settled at $25. Garnier emphasized the need for careful consideration regarding the entry and price points for such promotions.

“We need to be much more careful regarding what is the entry point and what is the price point we’re offering for this promotion,” Garnier stressed. Red Lobster’s goal remains to strike a balance between attracting customers and ensuring the financial viability of the “Ultimate Endless Shrimp” deal.

In the world of culinary promotions, Red Lobster’s “Ultimate Endless Shrimp” has proven to be both a blessing and a challenge. While it has undeniably drawn more customers to the seafood chain, its immense popularity has come at a cost. Red Lobster’s ability to adapt and adjust its pricing strategy will determine whether this beloved promotion continues to tantalize taste buds for years to come.

For those who relish the idea of endless shrimp, the experience now comes at a slightly higher price, but the promise of unlimited shrimp remains as enticing as ever.