The deal was just too good!
The restaurant chain Red Lobster lost a reported $11 million in the third quarter of 2023, and the company’s CFO is blaming part of the financial woes on its all-you-can-eat shrimp deal.
Only meant to be offered in June, the “Endless Shrimp” offer was soon made permanent on the Red Lobster menu, offering guests as much shrimp as they wanted for just $20.
But while the offering may have been made to entice restaurant-goers, with foot traffic increasing 14% after the deal returned, it also created a financial headache for the chain, according to financial reports from July through Sept. 30.
CFO Ludovic Garnier spoke at the company’s quarterly meeting, where he partially blamed the Endless Shrimp for the company’s recent struggles.
“Something that was different from our expectation is the proportion of the people selecting this [Ultimate Endless Shrimp] promotion was much higher compared to expectation,” Garnier said.
However, Red Lobster was already having issues after facing a $5.4 million financial loss in the second quarter, and the shrimp deal seems to have only made it worse, according to the owner of the Red Lobster chain, Thai Union Group.
More people began ordering the shrimp deal than they had anticipated, especially as some took to social media to show off how much shrimp they ate.
The company’s yearly loss is expected to be near $20 million.
“Of course, we know on this promotion, we don’t earn a lot of money at $20. We don’t,” the group CFO said, according to footage of the meeting. “The idea was to bring some traffic. We get some traffic increase, not to the level we were expecting, but still we are growing compared to last year and compared to the previous quarters. But bottom line in terms of financial performance, it did not deliver what we were expecting.”
But Red Lobster is backing down, instead opting to bump its shrimp deal to $25 as it tries to make back some of the money it lost in the first three quarters of this year.
Garnier said they “believe it’s a very strong” and “iconic” promotion for the chain.