Red Lobster's 'Ultimate Shrimp' Deal Backfires as Cash-Strapped Americans Eat Chain Into $11 Million Loss
Who would’ve thought that Red Lobster would underestimate the demand for fried and breaded shrimp?
An “Ultimate Endless Shrimp” all-you-can-eat deal offered at the seafood chain’s locations has become a source of financial losses for the company, according to USA Today.
The Ultimate Shrimp deal enables customers to choose two varieties of shrimp — of which they would be served an unlimited amount of servings.
The business strategy behind the deal backfired, according to the CFO of the chain’s parent company, Ludovic Regis Henri Garnier.
Garnier disclosed the thousand cuts by shrimp in a conference call with corporate investors, according to Restaurant Business Magazine.
“We wanted to boost our traffic, and it didn’t work.”
“We want to keep it on the menu. 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.”
Red Lobster’s parent company reported an $11.3M operating loss last quarter “in part due to customers taking advantage of its Ultimate Endless Shrimp deal — where $20 (now $25) bought you as much shrimp as you could stomach in one sitting.” 🇺🇸🇺🇸🇺🇸🇺🇸🇺🇸https://t.co/igBUnueBxC pic.twitter.com/YNGQXbPV5M
— Scott Lincicome (@scottlincicome) November 29, 2023
Some fans of the promotion lacked remorse for eating into Red Lobster’s profits.
I was a big part of this, I once took a quick nap in a booth so I could keep eating more shrimp
— Hunter Dale (@hunterdale6) November 30, 2023
The deal — introduced in June — did succeed in driving a 4 percent increase in traffic to Red Lobster locations, at a cost to the company’s profits.
The company is expecting to incur a $20 million overall loss for the year, and $11.3 million this quarter.
Ultimate Shrimp stays on the menu, for now — although its price point has been increased to $25.
Garnier described Red Lobster’s difficulties in appealing to inflation-hit customers increasingly mindful of costs while maintaining the company’s overall profitability.
The CFO indicated that Red Lobster had brought in corporate consultants to aid in the long-term economic strategy of the chain.
“We are really monitoring very closely the situation in order to improve the operation and the efficiency and the marketing of Red Lobster.”
“And then on the flip side, we also have the support from the advisors to see, what are we doing in the mid-term and also in the long-term with the business?”
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