Red Lobster is upping the price of its Ultimate Endless Shrimp promotion after taking a significant financial hit.
The Orlando, Florida, U.S.A.-based operator of more than 700 restaurants globally, which is owned by Samut Sakhon, Thailand-headquartered seafood giant Thai Union, posted a loss of THB 395 million (USD 11.2 million, EUR 10.3 million) in Q3 2023 after a solid performance in Q2 2023.
In June 2023, the company announced it was making its all-you-can-eat shrimp deal a permanent fixture of its menu, instead of offering it at a limited time throughout the year.
While traffic at Red Lobster grew 4 percent during the promotion, according to Restaurant Business, Thai Union CFO Ludovic Regis Henri Garnier said during an investor call it the USD 20 (EUR 18) price tag for the deal was too low.
“We knew the price was cheap, but the idea was to bring more traffic in the restaurants,” Garnier said.
As a result of the failed promotion, Thai Union revised Red Lobster’s loss guidance for this year from THB 500 million (USD 14 million, EUR 13 million) to THB 700 million (USD 19 million, EUR 18 million).
To tackle increasing losses, Red Lobster management has enlisted the services of management consulting company AlixPartners for operational guidance. It is also receiving advisory services from Guggenheim Partners, which it has collaborated with in the past, Bloomberg reported. And in March 2023, the Bangkok Post reported Thai Union was considering an exit from Red Lobster after multiple years of losses.
Thai Union reported its company-wide sales in Q3 2023 dropped 16.8 percent to THB 33.9 billion (USD 963.6 million, EUR 880,600 million) from “an extraordinary high baseline” in 2022. It saw lower sales volumes across all categories and a drop in the average selling price of its products. The company attributed its losses to industry-wide challenges, including elevated material and labor costs and high interest rates.
However, Garnier said in response to the results, the company has bumped up the price of its Endless Shrimp promotion to USD 25 (EUR 23).
“We want to keep it on the menu. 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,” Garnier said.
Additionally, to further stem its losses, Red Lobster has introduced a new promotion to bump up sales and traffic through the holiday season. Its Lobster and Shrimp Celebration is aimed to bring winter holiday celebrations into its restaurants.
The promotion features a Lobster and Shrimp Holiday Feast that includes Maine-sourced lobster tail meat and shrimp in an orange-rosemary holiday sauce. The dish is served with mashed potatoes, new cheddar bay stuffing, and the choice of one side.
Another new dish, Lobster and Cheddar Bay-Stuffed Shrimp, features a roasted Maine lobster tail paired with shrimp topped with a savory brioche, biscuit, bacon, and mushroom stuffing, all served with a choice of two sides. And the new Lobster and Shrimp Overboard also includes Maine lobster tail, along with lobster and shrimp linguini, and a grilled shrimp skewer. It is served with the choice of two sides.
"I think our understanding of the business is much deeper compared to what we had before," Garnier said. "And before, it was really managed by our other partners. But now, since the beginning of the year, we really started up in the management."
Red Lobster has closed eight restaurants in 2023, following the closure of five of its restaurants in 2022, five in 2021, and four in 2020, according to Eat This, Not That. In September 2023, it hired Horace Dawson as its CEO, a role that had sat vacant for a year after the company cycled through two leaders in eight months.
“We are really monitoring very closely the situation in order to improve the operation and the efficiency and the marketing of Red Lobster,” he said. “And then on the flip side … we also have the support from the advisors to see, what are we doing in the mid-term and also in the long-term with the business? … So this right now is the focus we are working on.”
This isn't the first time Red Lobster has struggled with an all-you-can-eat promotion. In 2003, then-CEO Edna Morris was fired after an Endless Crab pilot promotion that offered unlimited snow crab backfired, costing the company USD 3.3 million (EUR 3 million).
Photo courtesy of Red Lobster
