Red Lobster’s “Ultimate Endless Shrimp” deal attracted many customers, but it also led to significant operating losses for the company. The seafood restaurant chain has since adjusted the price of the promotion to $25.
In June, Red Lobster made its limited-time shellfish special a permanent menu item. The “Ultimate Endless Shrimp” deal allowed customers to choose two types of shrimp dishes, with unlimited refills, for just $20. The meal also included Red Lobster’s popular Cheddar Bay Biscuits.
While the promotion increased customer traffic by 4% year-over-year, Red Lobster’s parent company, Thai Union Group, reported an $11 million operating loss in the third quarter. The discounted shrimp offer contributed to this loss.
The Price Point Problem
Thai Union Group reported that Red Lobster had “higher losses from operations than expected” in the third quarter of 2023. During an earnings call, CFO Ludovic Regis Henri Garnier stated that the company was unaware that the initial price of the deal was too low.
Garnier explained to investors that the goal was to boost traffic, but the promotion “didn’t work” as intended. He emphasized the need to carefully consider the entry points and price points for such promotions in the future.
The Current Price of Endless Shrimp
Red Lobster has raised the price of the “Ultimate Endless Shrimp” deal to $25 at all 670 of its restaurants. This change aims to address the financial losses associated with the original promotion.
Thai Union Group anticipates a $20 million loss for 2023, partly due to the challenges with the “Ultimate Endless Shrimp” promotion.
Restaurant Pricing Challenges
Restaurants face constant pressure to attract customers while managing overhead costs. The COVID-19 pandemic led to numerous restaurant closures, and rising food costs and inflation have made consumers more price-conscious.
Red Lobster’s experience with the “Ultimate Endless Shrimp” deal highlights the importance of carefully balancing promotional offers with profitability.
The Takeaway
The “Ultimate Endless Shrimp” deal at Red Lobster is now priced at $25. While the initial $20 price attracted customers, it proved unsustainable for the company. Red Lobster hopes that the increased price will allow them to continue offering the popular promotion while improving their financial performance.
