How Red Lobster's endless shrimp deal cost the company millions: 'It didn't work,' CFO says
The "Ultimate Endless Shrimp" deal reeled in too many hungry customers at Red Lobster and now the company is turning the tide after reporting millions in operating losses.
In June, the seafood restaurant chain turned its historically limited-time shellfish special into a permanent menu fixture for diners to enjoy. The special offered diners the option to choose two types of shrimp dishes, unlimited, for just $20, with a side of Red Lobster's famous Cheddar Bay Biscuits.
While the move certainly accomplished getting more hungry customers into restaurants -- 4% year over year -- the company posted an operating loss of over $11 million in its third quarter, with the discounted offer contributing to that loss, according to Red Lobster's Thailand-based parent company, Thai Union Group.
Last month, Thai Union Group reported that Red Lobster had "higher losses from operations than expected" in its third quarter of 2023. On its latest earnings call, the company's CFO Ludovic Regis Henri Garnier said Thai Union Group wasn't aware the initial deal price was so cheap.
"We wanted to boost our traffic, and it didn't work," Garnier told investors, as first reported by Restaurant Business. "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."
The seafood company cited "Ultimate Endless Shrimp" as a key factor in the financial misstep and has since raised the price of the deal to $25 at all 670 restaurants.
All in, Thai Union said it expects a $20 million loss for 2023.
Restaurants have long had to grapple with getting seats filled and the thin margins from overhead operational costs, which became glaringly apparent in the thousands of closures that took place during the COVID-19 pandemic, and again as food costs and inflation created more price-conscious consumers.
Red Lobster did not immediately respond to ABC News' request for additional comment.
How Red Lobster's endless shrimp deal cost the company millions: 'It didn't work,' CFO says originally appeared on goodmorningamerica.com
