Red Lobster Just Lost A Lot Of Money On Endless Shrimp

Red Lobster's Ultimate Endless Shrimp promotion is one of my favorite things in the world. I mean, come on, all-you-can-eat shrimp at an affordable price? Getting the biggest bang for your buck is practically an American sport, and when Endless Shrimp was permanently added to Red Lobster's menu earlier this year, it felt like Christmas morning. To the customers, at least. From a business perspective, things haven't been so rosy. In fact, Red Lobster is anticipating a $20 million loss this year, and some of those many, many shrimp might be to blame.

Rick Cardenas, CEO of Olive Garden's parent company, Darden Restaurants, said back in 2021 that Olive Garden's famed Never Ending Pasta Bowl had "a negative impact" on the business and its profit margins in recent years. Despite that, it's still around today. We might now be seeing that same "negative impact" at Red Lobster, now that anyone can order Endless Shrimp at any time.

Trade publication Restaurant Business reports that traffic at Red Lobster has grown 4% year-over-year, but it has posted an operating loss of more than $11 million in the third quarter alone. That's a lot of cheddar (bay biscuits). Red Lobster's owner, Thai Union Group, says that Ultimate Endless Shrimp was a big factor in the loss.

In an earnings call earlier this week, as reported by Restaurant Business, Thai Union CFO Ludovic Regis Henri Garnier told investors, "We knew the price was cheap, but the idea was to bring more traffic in the restaurants."

Though the company considered Endless Shrimp a loss leader (much like the Costco hot dog combo), Garnier said that the company wasn't expecting such high demand for endless servings of shrimp. So many people opted for the promotion, in fact, that Red Lobster has been forced to raise the price from $20 to $25.

The new price is admittedly much more in line with Red Lobster's non-endless shrimp plate offerings, which range from $18-$29 at my nearest location. However, speaking as a diner, I believe that the increase is high enough to make Endless Shrimp feel like much less of a deal. And maybe that's the point: the company doesn't want quite so many people ordering it and (literally) eating into profit margins.

"We want to keep it on the menu," Garnier said on the call. "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 Thai Union believes it will reach a $20 million loss for all of 2023, as opposed to its previously anticipated $17 million. It's clear that many people took Endless Shrimp as seriously as I do. But if Red Lobster ends up tinkering with its best deal ever and deliberately making it less compelling, will the same number of customers still stream through the door?

I'm not so convinced. Most of the entrées at the location near me cost anywhere between $18 to $50 (yikes), and if you're adding beverages, tax, and tip, that is some serious cash to throw down. Especially when there are other chain restaurants to choose from.

It's looking like maybe we should stay in tonight and cook a bunch of shrimp scampi for ourselves. Hell, you can even make the Cheddar Bay Biscuits at home using a Red Lobster licensed box mix. Saving money might not sound as exciting as going out, but at least the amount you spend on dinner won't leave a bitter taste in your mouth.