For decades, Red Lobster has been the ultimate in fast-casual seafood dining. But a recent corporate decision to offer as much endless shrimp as patrons could eat has proven to be a catastrophe: Americans ate so much shrimp that it cost the company $11 million.
According to The Washington Post, the news came during an earnings call in November with Ludovic Regis Henri Garnier, the CFO of Red Lobster stakeholder Thai Union Group. “We knew the price was cheap, but the idea was to bring more traffic in the restaurants,” Garnier said during the teleconference. “So we wanted to boost our traffic, and it didn’t work.”
Actually, it did. Restaurant Business, which was first to report the shrimp concern, notes that in 2023, Red Lobster observed a 4 percent increase year-over-year in customers. But that wasn’t enough to surmount the losses on its shrimp offer, which cost $20 and offered a bottomless bowl of crustaceans along with their signature cheddar biscuits.
The deal, which launched in June as a permanent menu special after years of intermittent appearances, proved so popular that Red Lobster fans took to social media to trade strategies for consuming more shrimp. The Takeout author Dennis Lee advised on shrimp strategy back in 2018. “When my server comes to retrieve my empty plates, I politely decline,” Lee wrote. “I prefer they remain at my table, stacked ever higher as the night progresses, as evidence of my conquest.” Lee also suggested wearing sweat-wicking clothing and sticking with the comparatively lighter sesame-ginger shrimp skewers.
People’s endless appetite took the company by surprise, according to Garnier. So much was consumed that the company reported $11 million in losses for the third quarter in 2023 and is expected to lose $20 million overall for the year, numbers it blames in part on its exceedingly generous plates and diners passing up other, more profitable menu items to keep gorging on shrimp.
Thai Union Group CEO Thiraphong Chansiri had previously stated his company would not tolerate an unprofitable Red Lobster and could back away from the chain if its fortunes don’t improve. The group does a brisk business with Chicken of the Sea canned tuna and pet food, with the latter expected to be a big earnings driver in 2023.
Surprisingly, Red Lobster isn’t completely abandoning the offer. It remains on the menu, but the chance to consume endless shrimp will now cost diners $25.
[h/t The Washington Post]