Red Lobster with over 700 stores in the US
Losses from 'Unlimited Shrimp Refill for $20' Menu
More Customers, More Losses... Operating Loss Expected to Reach 26.1 Billion Won This Year
'Unlimited Shrimp Refill for Just $20 (About 26,000 KRW)'
This is the promotional phrase for the menu item "Ultimate Endless Shrimp" at the casual restaurant Red Lobster, headquartered in Orlando, Florida, USA. In June, the company changed its policy to offer this menu item all day, every day, instead of only on Mondays and special events. The goal was to attract more customers and increase sales. The "Ultimate Endless Shrimp" menu had been the most popular choice among customers visiting the restaurant for over 18 years.
Red Lobster actively promoted this menu using the phrase "irresistible." At first glance, the results seemed like a huge success.
Each store was crowded with customers, and a "mukbang battle" broke out on social media. Posts boasting about the amount of shrimp eaten at one time appeared, and some netizens even shared tips on how to eat more shrimp.
However, the "unlimited shrimp refill" succeeded only in increasing sales but actually caused operational losses.
According to multiple media outlets including The Washington Post (WP) and The New York Times (NYT), Red Lobster's operating loss in the third quarter reached $11 million (about 14.4 billion KRW). Thai Union Group, a seafood supplier that owns a large stake in Red Lobster, recently reported in its financial statement that the restaurant business suffered losses.
Thai Union Group's Chief Financial Officer (CFO), Ludovic Regis Henri Garnier, told investors last month, "The proportion of customers choosing the Ultimate Endless Shrimp menu was much higher than we expected, resulting in financial losses," adding, "This menu was one of the 'key reasons' for the third-quarter operating loss." Initially, Red Lobster expected that customers attracted by this menu would also show interest in other menu items, but too many customers only ordered the "Ultimate Endless Shrimp" menu.
Ultimately, the company acknowledged its miscalculation and raised the price of this menu to $25. Although the price increased slightly, Red Lobster's total operating loss for this year is expected to reach $20 million (about 26.1 billion KRW).
Red Lobster does not plan to eliminate the loss-causing Ultimate Endless Shrimp menu. CFO Garnier told the NYT, "Because this menu is one of Red Lobster's signature promotions, we want to continue offering it going forward."
Red Lobster has experienced losses from unlimited refill promotions in the past as well. WP reported that in 2003, Red Lobster introduced an unlimited crab refill menu and lost millions of dollars.
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