Red Lobster Endless Shrimp 2023 Promotion Creates Unexpected Challenges

$20 All-You-Can-Eat Deal Backfires, Contributing to Red Lobster's Third Quarter Loss

Red Lobster's much-loved "Ultimate Endless Shrimp" promotion for 2023 has proven both too popular and too cheap for the seafood chain's corporate parent, Thai Union Group.

In an unexpected turn of events, Red Lobster 's much-loved "Ultimate Endless Shrimp" promotion for 2023 has proven both too popular and too cheap for the seafood chain's corporate parent, Thai Union Group. The $20 all-you-can-eat shrimp deal, initially aimed at boosting traffic during the slower third and fourth quarters, ended up causing more significant losses than anticipated.

Red Lobster's Chief Financial Officer, Ludovic Garnier, revealed that the promotion's popularity exceeded expectations, with a higher proportion of customers opting for the budget-friendly option than the company had foreseen. While the strategy successfully attracted customers and increased market share, the profit margins on the promotion were lower than expected, creating a financial challenge for the renowned seafood chain.

Garnier explained that shifting consumer spending habits, driven by a growing budget-conscious mindset, played a role in the unexpected surge in popularity for the "Ultimate Endless Shrimp" deal. Unfortunately, this shift meant that customers, who might have otherwise ordered more lucrative menu items, opted for the unlimited shrimp offering instead.

"We knew the price was cheap, but the idea was to bring more traffic into the restaurant," Garnier stated. In response to the unexpected demand, Red Lobster gradually raised the price of the shrimp item from $20 to $22 and now $25.

While the company is committed to retaining the iconic promotion on its menu, Garnier emphasized the need for careful consideration of the entry and price points for future promotions. Despite the adjustments, Red Lobster experienced more significant losses in the second half of the year than initially anticipated by Thai Union Group.

Combined with challenges in other divisions, Thai Union Group now expects a larger loss for the year than originally projected. In 2016, Thai Union Group invested in Red Lobster and, alongside a group of investors, acquired the remaining stake from Golden Gate Capital in 2020.

In March, Bloomberg News hinted that Thai Union Group could divest its share in Red Lobster unless there was a notable upswing in its performance.