Red Lobster says unlimited shrimp promotion was too popular and too cheap

The casual restaurant chain's corporate parent says a $20 all-you-can-eat shrimp deal contributed to bigger losses for the company

Red Lobster
Stephen M. Dowell/Orlando Sentinel/Tribune News Service via Getty Images

Red Lobster's parent company, Thai Union Group, disclosed earlier this month that the seafood chain took an unexpectedly large loss in the third quarter of the year because its $20 shrimp promotion wasn't very profitable and was more popular than the company anticipated.

"The proportion of the people selecting this promotion was much higher compared to expectation," Chief Financial Officer Ludovic Garnier said in Thai Union Group's investor and media presentation Nov. 7.

Red Lobster has had an all-you-can-eat shrimp promotion for years, but this year it changed the shrimp deal from a limited-time offer to a permanent one. The company wanted to boost traffic in the third and fourth quarters of the year, when its business tends to slow down.

Garnier said the strategy worked, bringing in customers and bolstering Red Lobster’s market share. But the improvement wasn’t as large as the company expected, and combined with the low margins on the surprisingly popular deal, that presented a problem.

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