Massive Loss from 'Unlimited Shrimp Refill for $20' Menu
Price Increased from $20 to $25 but Loss Remains
Red Lobster, the largest seafood dining chain in the United States, has finally entered bankruptcy proceedings due to declining sales and other reasons. Last year, the company introduced a menu allowing customers to eat unlimited shrimp for just $20 (about 27,000 KRW) to attract customers, but this became a cause of massive losses.
Red Lobster, which offered a menu allowing customers to eat unlimited shrimp for just $20 (about 27,000 won) to attract customers, has entered bankruptcy proceedings. The photo is not directly related. [Image source=Getty Images]
On the 20th (local time), CNN, AP News, and others reported that Red Lobster, which grew into the world's largest seafood dining chain by supplying affordable shrimp and lobster to the American middle class, has filed for bankruptcy. The company stated that its debt exceeds $1 billion (about 1.3645 trillion KRW), while its cash on hand is less than $30 million (about 4.09 billion KRW).
Currently, Red Lobster operates 551 locations in the United States, 27 in Canada, and 27 stores in Mexico, Japan, Ecuador, and Thailand. The company employs about 36,000 people in the U.S. and Canada alone. Notably, Red Lobster once saw a surge in sales after being mentioned in the lyrics of Beyonc?’s 2016 song "Formation." However, recently, Red Lobster has experienced a decline in customers due to inflation and poor management.
Red Lobster stated that rising rent and labor costs, along with changing consumer preferences, have intensified its management difficulties. The headquarters reported that the number of customers visiting stores has decreased by about 30% compared to 2019.
In particular, last year's unlimited shrimp promotion aimed at attracting customers has been pointed out as a cause of millions of dollars in losses. Initially, in May last year, the company offered the "Ultimate Endless Shrimp" menu, allowing customers to eat unlimited shrimp for just $20. Originally, this was available only on Mondays and during special events, but Red Lobster made it a permanent menu item to attract more customers and increase sales.
However, demand exploded as some customers competed on social media to see how many shrimp they could eat at once, which turned into a negative factor for the company. Red Lobster had expected that customers drawn by this menu would also order other items, but customers only sought the "Ultimate Endless Shrimp" menu. Eventually, the company admitted its miscalculation and raised the price of this menu to $25 (about 34,000 KRW), but the losses were substantial.
The exterior of the Red Lobster restaurant in Austin, Texas, on the 20th. [Image source=Getty Images·Yonhap News]
Red Lobster explained, "With inflation pressures reducing dining out and rising labor costs, the company’s finances were burdened," adding, "Rent, which accounts for the largest portion of expenses, was set at a high level." They further elaborated, "In May 2023, we launched a limited-time promotion offering unlimited shrimp dishes for $20, which was later converted into a permanent promotion, resulting in costs of $11 million (about 15 billion KRW)."
Meanwhile, Red Lobster was founded in 1968 by restaurateurs Bill Darden and Norman Brinker and gained popularity as a relatively affordable seafood restaurant. Its signature dishes include cheddar biscuits and popcorn shrimp. At one point, it ranked 24th in sales within the U.S. and prospered, but it has faced difficulties due to a decline in customers as low-income consumers cut back on spending.
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