Endless Shrimp Is Financially Ruining Red Lobster

Food and Wine ^ | Stacey Leasca

[nickcarraway]

Not every deal is a good deal.

Yes, you can, in fact, have too much of a good thing. And it appears Red Lobster is learning that the hard way.

In an earnings report call in early November, Ludovic Regis Henri Garnier, the CFO of Thai Union Group, which owns Red Lobster, announced that its Ultimate Endless Shrimp deal, which is normally a limited-time offer but was added to the daily menu in June, was exceedingly popular — so popular that it caused the restaurant chain to post an operating loss of more than $11 million in the third quarter of 2023.

"We knew the price was cheap, but the idea was to bring more traffic in the restaurants," Garnier told investors, according to Restaurant Business. "So we wanted to boost our traffic, and it didn't work."

Red Lobster Is Launching a Line of Frozen Seafood Products, and Yes, It Includes the Biscuits To be fair, according to the earnings call, the chain of 670 restaurants did experience a 4% year-over-year growth in its number of customers thanks to the deal, but the deal's $20 price tag for patrons to get two different types of shrimp was just too little to make up the difference. So now, it's upped the price to $25.

"We want to keep it on the menu," Garnier added. "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."

Now, for $25, guests can choose two shrimp-centric options, and, as Red Lobster noted in a June press release, "When  they are ready for more, they can order additional shrimp selections until their cravings are fully satisfied." The meal choices include Garlic Shrimp Scampi, Coconut Shrimp, Shrimp Linguini Alfredo, Walt's Favorite Shrimp, and Garlic Grilled Shrimp Skewer. And every meal comes with a choice of side, along with the restaurant's famed Cheddar Bay Biscuits.

Sadly, this shrimp debacle could be putting Red Lobster in real trouble. According to Restaurant Business, the restaurant's parent company had expected its losses to hover around $17 million earlier this year, but a better-than-expected second quarter boosted that number to just $14 million. Now, however, those losses are expected to total around $20 million. In early 2023, Thai Union had threatened to abandon Red Lobster altogether over its losses, which at the time had only hit $9.8 million.

As Thai Union's chief executive officer Thiraphong Chansiri, said in an interview in March, "Thai Union has never prolonged any bad businesses," adding that it had shut down other unprofitable factories before.

[HamiltonJay]

We are losing money on every sale...

That’s okay, we’ll make it up on volume.

Honestly will see if it turns into anything for red lobster.

Lets face it Denny’s completely turned its trajectory around when it started that 1 day a year free meal thing.

Losing money short term if it does show long term growth may pay off... However, I am kind of hard pressed to believe that is going to happen.

I’m not a seafood guy, so Red Lobster is never on my list to consider.. about the only thing other than the steak that is on their menu that I would ever order would be the Popcorn Shrimp. If I was ever forced to eat there.

I think Red Lobster is like many of those types of businesses, the target market needs more value than they are able to give or the price points they charge... they aren’t high end places, and they aren’t low end places... but their prices have crept up while the quality and value has declined.

That overall is nearly always a disaster long term.

I’d put places like Olive Garden, And many of the fast casual dining places in the same boat. When it costs 70-80 with tip if not more for 2 parents and 2 kids to eat a nothing special meal (fast casual places)... why not stay home save up the extra 20-30 and hit a nice restaurant.. another time?

And places like Red Lobster, unless you stick to the cheapest options you are dropping at least $100 for a family of 4 with tip... you can get more value for that price and better food somewhere else in most areas.

[Carriage Hill]

“two-headed shrimp”

Referencing all the toxic chemicals (and waste) in those farm pond tanks, mutating anything ‘living in that death soup’.