Red Lobster raises price of unlimited shrimp promotion to boost profits
Red Lobster faced unexpected losses in the third quarter as its $20 all-you-can-eat shrimp promotion, intended to boost business during slower periods, proved more popular and less profitable than anticipated. Thai Union Group, Red Lobster’s parent company, reported the setback, revealing that the promotion’s attractiveness exceeded expectations, leading to higher participation.
While the strategy successfully increased customer traffic and market share for Red Lobster, the profit margins fell short of projections. Chief Financial Officer Ludovic Garnier noted that cost-conscious U.S. consumers tended to opt for the cheaper “Ultimate Endless Shrimp” deal, impacting the company’s overall revenue.
In response, Red Lobster incrementally raised the price of the unlimited shrimp from $20 to $25, aiming to strike a balance between maintaining an iconic promotion and ensuring profitability. Despite the adjustment, the unexpected popularity of the deal, combined with broader challenges in other divisions, contributed to Thai Union Group revising its expected annual loss.
Investing in Red Lobster in 2016, Thai Union Group, alongside other investors, acquired the remaining stake in 2020. With performance concerns, there were earlier speculations in March 2023 that Thai Union Group might consider selling its stake if improvements were not realized.
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