Some deals are shrimply too good to be true.
In an effort to boost visits to their restaurants, Red Lobster expanded their all-you-can-eat shrimp deal in the U.S., but it ended up tanking their profits to the tune of US$11 million.
Ultimately, the $20 Ultimate Endless Shrimp deal was too good for Americans to pass up, the company said, and it was “one of the key reasons for the losses we generated in Q3 2023,” Ludovic Garnier, global chief financial officer of the chain’s owner Thai Union Group, told investors during its November earnings call.
“The price point was $20 and you can eat as much as you want,” explained Garnier. “For those who have been in the U.S. recently, $20 was very cheap. And the rationale for this promotion was to say we knew the price was cheap, but the idea was to bring more traffic in the restaurants.”
And while the company succeeded in its goal of bringing more diners into their locations – Garnier explained that traffic rose about two per cent compared to the second quarter and by four per cent over 2022 – the insatiable American appetite for shellfish and a good deal was just too much for the company to justify continue offering.
Ultimate Endless Shrimp has been in the company’s arsenal for more than 18 years, but up until June it was only offered one day a week. The guest-favourite deal was added as a permanent addition to the menu over the summer and shrimp lovers could dine on $20 no-limit shrimp seven days a week.
And it wasn’t just shrimp out of the shell that was on-offer. Guests could choose from mix-and-match options like coconut shrimp, shrimp linguini alfredo, popcorn shrimp, sweet chilli shrimp and more.
In response, Red Lobster has been increasing its prices incrementally on the one-in-a-krillion deal, first from $20 to $22, and now settling at $25.
“It’s one of the iconic promotions for Red Lobster, so we want to keep it in the menu but, of course, we need to be much more careful regarding, what is the entry point and what is the price point we’re offering for this promotion,” Garnier said.
It is unclear if Canadian locations of Red Lobster contributed to the reported losses. Currently, Red Lobster in Canada also offers a $25 Ultimate Endless Shrimp deal seven days per week.
Red Lobster did not immediately respond to Global News’ request for additional comment.