Red Lobster’s ‘Ultimate Endless Shrimp’ Deal Could Cost Them $20 Million
In the hopes of attracting more customers during the summer and fall, Red Lobster made the decision to add their popular ‘Ultimate Endless Shrimp’ deal to their regular menu. For just $20, customers could eat as many shrimp as they wanted, leading to an uptick in customer traffic for the restaurant.
However, it seems that the deal may have been too popular for the restaurant’s own good. According to a recent financial report from Thai Union Group, a seafood supplier that owns a significant stake in Red Lobster, the restaurant suffered a staggering $11 million operating loss in the third quarter. Thai Union Group’s chief financial officer, Ludovic Regis Henri Garnier, attributed the financial loss to the overwhelming success of the Ultimate Endless Shrimp deal, saying that the proportion of people selecting this promotion was much higher than expected.
It’s clear that the deal brought in more customers, but it seems that many of them were only interested in the Ultimate Endless Shrimp, leading to financial difficulties for the restaurant. In response to the losses, Red Lobster has increased the price for the Ultimate Endless Shrimp to $25 in an attempt to improve their operating costs. However, they are still expected to lose nearly $20 million this year, according to Thai Union Group’s financial report.
This isn’t the first time that Red Lobster has suffered financially from an ‘endless’ dish promotion. In 2003, the restaurant lost millions of dollars after underestimating how many crabs people typically eat in one sitting.
Despite these losses, Red Lobster has no plans of abandoning their promotion of unlimited shrimp, as it is one of their signature dishes. Garnier stated that, while they want to keep it on the menu, they need to be much more careful regarding the entry and price points for the promotion in the future.
It’s clear that unlimited food promotions can be a double-edged sword for restaurants, bringing in customers but also potentially leading to significant financial losses. Red Lobster will have to carefully consider their approach to such promotions in the future to prevent further financial setbacks.