Red Lobster endless shrimp promo backfires, results in millions in losses

[Brian Lutz]

https://www.msn.com/en-us/money/compani ... r-AA1kDCwo

Red Lobster, in an effort to drive traffic, has been running their $20 Endless Shrimp promotion on a daily basis for the past several months. The promotion has been successful in driving traffic to the restaurants (resulting in a 4% increase in customers year over year) but the costs of the promotion have also resulted in a $11 million loss for the most recent quarter. The price for the promo has already been raised to $25, but they expect to report a $20 million loss for the fiscal year.

[storewanderer]

That they failed to identify this and terminate the promotion seems to be interesting.

I wonder if the chain is really floundering and is just using this as a scrapegoat.

Shrimp prices have declined 40%+ in 2023 as compared to 2022 due to increased imports. I am sure that shrimp price decline is what gave them the bright idea to run this promotion in the first place. One of the few foods that has seen major deflation.

Panda Express has also been pushing shrimp more, due to how cheap it got to obtain it, they have been running a spicy shrimp (in addition to the everyday honey shrimp).

[SamSpade]

Interestingly, it's been hard to spot in the TV ads, but the chain was already running a higher price point in some states (PNW was one of them) and localities (good ol' Times Square).

[ClownLoach]

That they failed to identify this and terminate the promotion seems to be interesting.

I wonder if the chain is really floundering and is just using this as a scrapegoat.

Shrimp prices have declined 40%+ in 2023 as compared to 2022 due to increased imports. I am sure that shrimp price decline is what gave them the bright idea to run this promotion in the first place. One of the few foods that has seen major deflation.

Panda Express has also been pushing shrimp more, due to how cheap it got to obtain it, they have been running a spicy shrimp (in addition to the everyday honey shrimp).

This has scapegoating written all over it. This is an old promotion they run all the time, and as you said it is a food that is declining in price. So they went into this knowing what it would cost them. I highly doubt it was "so successful" but still a "loss leader" that caused a negative for the year. The math doesn't add up either, a 4% traffic increase does not sound significant as there were still many people last year who were still avoiding restaurants and other public places out of COVID and inflation concerns. I would think that a promotion responsible for actual traffic increases this year would be mid double digits or more.

[storewanderer]

That they failed to identify this and terminate the promotion seems to be interesting.

I wonder if the chain is really floundering and is just using this as a scrapegoat.

Shrimp prices have declined 40%+ in 2023 as compared to 2022 due to increased imports. I am sure that shrimp price decline is what gave them the bright idea to run this promotion in the first place. One of the few foods that has seen major deflation.

Panda Express has also been pushing shrimp more, due to how cheap it got to obtain it, they have been running a spicy shrimp (in addition to the everyday honey shrimp).

This has scapegoating written all over it. This is an old promotion they run all the time, and as you said it is a food that is declining in price. So they went into this knowing what it would cost them. I highly doubt it was "so successful" but still a "loss leader" that caused a negative for the year. The math doesn't add up either, a 4% traffic increase does not sound significant as there were still many people last year who were still avoiding restaurants and other public places out of COVID and inflation concerns. I would think that a promotion responsible for actual traffic increases this year would be mid double digits or more.

Shrimp prices continue to depress. This past week the Safeway units in NorCal almost all have entire giant coffin freezer endcaps full of 2lb bags of Waterfront Bistro Large Shrimp at a 5.98 price (2.99/lb) which is an incredible price for a walk in sale. In the past I've seen them run this as a Digital Offer $5/2lb bag limit 1 on Friday but never what seems to be a no limit promotion at such a hot price running the entire week. Regular retail is over $20.