Red Lobster’s popular endless shrimp deal ate into its profits

Red Lobster’s Ultimate Endless Shrimp Deal Causes Profit Drop

Red Lobster’s popular all-you-can-eat shrimp promotion, the Ultimate Endless Shrimp deal, has proven to be a hit with customers, but it has also caused a drop in third-quarter profit for the restaurant chain. Originally priced at $20, the deal was raised to $25 due to its overwhelming success.

The Thai Union Group, which owns a large stake in the chain, reported an $11 million operating loss in a third-quarter earnings call this month, partially attributing it to the popularity of the shrimp promotion. The company had hoped the promotion would increase traffic at its U.S. locations during the traditionally slow fall and winter months, but the unexpected high response led to unforeseen financial losses.

Ultimate Endless Shrimp had already been a long-standing favorite at Red Lobster for over 18 years, but the decision to offer it “all day, every day” instead of just on Mondays led to a surge in demand. Patrons were given the option to choose two shrimp dishes from a menu that included shrimp Alfredo and grilled shrimp over rice.

While the promotion did lead to a small increase in traffic compared to the previous year, the number of people selecting the deal surpassed expectations, resulting in a higher proportion of patrons choosing the promotion. This unexpected trend contributed to the operating losses experienced by Red Lobster.

In response to the overwhelming demand, the company raised the price of the promotion to $22, and eventually to $25, but maintained that they wanted to keep it on the menu. The company had hoped that while diners were initially drawn in by the deal, they would also be enticed by other menu items, but many customers remained loyal to the endless shrimp.

The unexpected impact of the shrimp promotion has prompted the company to reevaluate the pricing strategy and make careful considerations for future promotions. Despite the financial setbacks, the company acknowledged that the revamped offer did attract more guests, although the results were not as anticipated.

Overall, the unforeseen success and subsequent financial losses caused by the Ultimate Endless Shrimp deal have highlighted the need for greater caution and insight when planning and implementing promotional offerings.

Historic Background:
Red Lobster’s Ultimate Endless Shrimp promotion has been a part of the restaurant’s menu for over 18 years and has been a guest favorite staple. This long-standing tradition was reintroduced as an all-day, every-day deal in the hopes of boosting traffic during traditionally slow seasons.

In conclusion, the unexpected response to the Ultimate Endless Shrimp promotion has led to both increased traffic and unforeseen financial losses for Red Lobster. The company continues to navigate the aftermath and adjust their promotional strategies moving forward.