Endless shrimp was a successful annual limited-time offer for Red Lobster for 20 years. The new major shareholder in Red Lobster is Thai Union, a canned seafood company based in Bangkok. Thai Union saw the promotion as a way to get rid of the huge amounts of shrimp it was catching and made it an everyday item. (Thai Union became Red Lobster’s largest investor in 2020. ).
Sunday, Red Lobster filed for bankruptcy. This brings to light Thai Union’s part in the never-ending shrimp mess. Red Lobster said it is investigating the circumstances of that promotion, which Red Lobster management opposed.
The filing said that Thai Union chose the CEO of Red Lobster and got rid of two of its breaded shrimp suppliers. This gave Thai Union exclusive rights to supply shrimp to the chain.
That caused prices to go up, and it wasn’t in line with how the company usually chooses suppliers based on expected demand, the chain said in its filing.
Red Lobster said in the filing that Thai Union’s decision caused operational and financial problems for the company and put heavy supply obligations on it.
Endless shrimp alone didn’t doom Red Lobster. Analysts and former leaders of the chain say that the American seafood icon was brought down by a number of things, such as bad management by Thai Union and handoffs between investors and corporate parents.
“Some operational decisions made by former management have hurt [Red Lobster’s] finances in recent years,” the company said in its bankruptcy filing.
Over the past 20 years, fast-casual chains like Chipotle and quick-service chains like Chick-fil-A have grown very quickly and become very popular. This has put pressure on Red Lobster. Red Lobster has had trouble adding Millennials to its core Baby Boomer customer base for years because it hasn’t spent enough on marketing, food quality, service, and restaurant upgrades.
“Red Lobster was the foundation of casual dining. In a previous interview with CNN, Alex Susskind, a professor of food and beverage management at Cornell University, said, “They were powerful and well-known, and they changed the way Americans eat seafood.”
But the company didn’t build on that foundation, Susskind said. “Red Lobster had incredible popularity among Baby Boomers. They didn’t bring in a newer generation. ”.
Red Lobster’s Endless Shrimp promotion has become the stuff of legend. For a flat fee, customers can eat unlimited shrimp until their hearts and stomachs are content. It’s an incredible deal that seems too good to be true. But as the old saying goes, there’s no such thing as a free lunch. So how much does Endless Shrimp really cost Red Lobster and its customers? Let’s break it down.
A Brief History of Endless Shrimp
Red Lobster first launched Endless Shrimp in 1994 as a limited-time promotion Customers loved it so much that it became an annual summer event In 2021, Red Lobster decided to make Endless Shrimp a permanent menu fixture instead of just a seasonal special.
Initially priced at $15.99 Endless Shrimp was a smash hit. People flocked to Red Lobster to get their fill of unlimited garlic shrimp scampi Parmesan-crusted shrimp, and more. The chain reported that Endless Shrimp made up nearly 25% of entrées sold.
But the success came at a price. That same quarter, Red Lobster’s profits plummeted by $11 million compared to the previous year. It became clear that the low cost of Endless Shrimp wasn’t sustainable.
How Much Does Endless Shrimp Cost Customers?
In 2022, Red Lobster bumped up the Endless Shrimp price to $19.99. However, that still wasn’t high enough to offset the costs. So in 2023, the price increased again to the current rate of $24.99.
Here’s the complete breakdown of Endless Shrimp pricing history:
- 1994 debut: $8.99
- 2021 relaunch: $15.99
- 2022: $19.99
- 2023: $24.99
The nearly $10 price hike over three years shows how Red Lobster is still tweaking the math on Endless Shrimp. While customers grumbled about the rising cost, most agreed the deal remained tempting. Paying $25 for unlimited servings of shrimp is hard to pass up.
However, the actual cost varies depending on how much shrimp you can eat. Light eaters may end up paying much more per piece than they would for a normal shrimp entrée. On the other hand, big eaters can take full advantage of the all-you-can-eat offer and get their money’s worth.
How Much Does Endless Shrimp Cost Red Lobster?
From the restaurant’s perspective, every Endless Shrimp order hurts their bottom line. Shrimp is one of the most expensive proteins, costing an estimated $4-9 per pound wholesale.
Let’s say the average customer eats 1 pound of shrimp on an Endless Shrimp order. For Red Lobster, the shrimp costs $4-9 to buy. But they are only charging $25 for unlimited portions. You don’t have to be a math whiz to see how the losses add up quickly.
The more shrimp that customers eat, the more money Red Lobster loses. Experts estimate that diners typically consume 2-3 pounds before tapping out. For a big eater who eats 3 pounds, Red Lobster loses $12-21 on that single Endless Shrimp order.
Endless Shrimp also impacts costs in other ways:
- Extra labor for more frequent table visits and cleanup
- Increased food prep and kitchen costs
- Higher waste from uneaten leftovers
- Lost revenue from customers filling up on shrimp rather than ordering additional menu items
Add it all up across thousands of restaurants, and it becomes clear why Endless Shrimp took a $11 million bite out of Red Lobster’s profits. They likely still lose money on the deal, just less than before the price increases.
Is Endless Shrimp Worth It for Customers?
Whether Endless Shrimp is “worth it” comes down to your goals and eating habits. Here are some things to consider:
If your goal is to eat a lot of shrimp for cheap, Endless Shrimp is a good value. All-you-can-eat shrimp dinners at other restaurants easily cost $40-50. At $25, Red Lobster’s deal can’t be beat.
If you want to sample different shrimp dishes, Endless Shrimp allows you to try a variety of preparations like fried, grilled, scampi and more. Ordering multiple shrimp entrées a la carte would cost much more.
If you have a small appetite, you may end up overpaying for what you eat. You can get a dozen shrimp for around $15 at Red Lobster, so Endless doesn’t make sense if you only eat 1-2 servings.
If you want a satisfying, low-calorie meal, Endless Shrimp lets you fill up on protein and minimize carbs and calories. But beware — unlimited french fries may prove tempting!
If you love shrimp and want an amazing deal, Endless Shrimp is as good as it gets. Just pace yourself and avoid getting sick from shrimp overdose!
No matter how you look at it, Red Lobster is losing money by selling Endless Shrimp at such a low fixed price. Whether it’s worth it or not for customers depends on individual appetites and preferences. Big eaters still get an incredible bargain, while light eaters may be better off ordering a la carte.
Will Red Lobster Get Rid of Endless Shrimp?
The steep losses suggest Endless Shrimp’s days could be numbered. But Red Lobster insists they are happy with it as an ongoing promotion.
When Red Lobster recently announced a $3 price hike for Endless Shrimp, they assured customers it was not going away. They framed it as a reasonable increase to cover rising costs. Red Lobster’s profit margins may be thinner, but Endless Shrimp still drives traffic and gets people in the door.
Realistically, Red Lobster will likely keep gradually raising the price every year or two. This lets them inch closer to profitability while keeping sticker shock low. Customers grumble, but so far continue to bite.
Red Lobster also tweaked the promotion to improve economics. Some locations now serve Endless Shrimp only on weekdays, excluding more profitable weekends. They also swapped in cheaper shrimp dishes to reduce losses on the priciest options.
As long as customers remain willing to pay higher prices for Endless Shrimp, Red Lobster will probably keep dishing it out. The quantity may shrink and the cost may rise, but the value remains tough to replicate elsewhere.
In the end, Red Lobster built an iconic brand around Endless Shrimp. The losses sting but removing it altogether could hurt worse. Like a fisherman clinging to an old favorite fishing hole, Red Lobster isn’t ready to give up on Endless Shrimp just yet.
So for now, seafood lovers can keep enjoying the unlimited shrimp sensation. Just know that Red Lobster is sacrificing profits to keep the promotion alive. Every plate of Endless Shrimp served costs them dearly. But the customer satisfaction and loyalty are the priceless rewards that make it all worthwhile. That’s the kind of stewardship we can all get behind.
Owned by General Mills
In 1968, the first Red Lobster opened in Lakeland, Florida, about an hour south of Orlando. At that time, casual dining was just getting started.
The brand was started by southern restaurateurs Bill Darden and Charley Woodsby. Darden owned several Howard Johnson’s restaurants, one of the first casual dining concepts.
“Our motto was informal and family prices,” Woodsby later said. They saw an opportunity to bring seafood to landlocked people at more affordable prices than fine-dining restaurants.
“In most of middle America, you couldn’t get decent seafood. “Red Lobster made it popular for everyone,” said Jonathan Maze, editor-in-chief of the trade magazine Restaurant Business. “Red Lobster was part of this casual dining revolution. ”.
Just two years into Darden and Woodsby’s venture, General Mills acquired the brand. General Mills owned brands like Betty Crocker, Wheaties, and Cheerios. The company also wanted to get into the restaurant business with Red Lobster’s five simple restaurants.
By the early 1970s, with General Mills’ advertising muscle behind it, Red Lobster opened restaurants across the South.
Red Lobster rose quickly and was the first casual dining chain to advertise on network television, according to a Harvard Business School study. Red Lobster also developed the first national seafood distribution system in the 1970s.
“Many diners preferred their seafood fried in those days, and Red Lobster’s hush puppies could be considered an early ‘signature item,’” Joe Lee, the first general manager at Red Lobster and later its president, said in a journal article. “Families were welcomed with high chairs and a 59-cent child’s plate.”
By 1978, Red Lobster had 236 restaurants and $291 million in sales. It had 372 restaurants and $834 million in sales in 1985.
In 1995, General Mills split off its restaurant business into a new company called Darden Restaurants, which was named after Bill Darden, the founder of Red Lobster. At first, the company had the well-known chain Red Lobster and the new chain Olive Garden, which General Mills started in 1982.
But Red Lobster fell behind its sister brand Olive Garden under Darden.
By 2008, Olive Garden’s sales had eclipsed Red Lobster’s. Darden also acquired fast-growing chains such as Longhorn Steakhouse, Capital Grille and Yard House.
“Darden stopped investing in Red Lobster. “Things slowly got worse,” Les Foreman told CNN. From 2002 to 2022, he was director of operations and divisional vice president at Red Lobster. Red Lobster’s sales began declining and Darden prioritized investments in its other brands.
Darden soon faced pressure from activist investors pushing the company to split in two.
Darden responded to activist pressure by announcing plans in 2013 to sell Red Lobster, separating the chain from the rest of its business.
The following year, Darden sold Red Lobster to Golden Gate Capital, a private equity firm, for $2.1 billion. To help fund the deal, Red Lobster spun off its real estate assets in a transaction known as a sale leaseback agreement. Red Lobster had long owned its own real estate but would now be paying rent to lease its restaurants.
In the restaurant business, sale leasebacks are very common. However, Red Lobster ended up losing money because it was stuck with leases it couldn’t pay.
“That produced cost pressures on Red Lobster that they’ve never had before,” said analyst John Gordon. “It became a problem. ”.
While this was going on, fast-casual and quick-service restaurants grew thanks to lower prices, thousands of new drive-thru restaurants, and online delivery. These chains pressured the casual dining sector.
According to Technomic, a restaurant research firm, casual dining has gone down from making up 33.6 percent of all restaurant sales in 2013 to 31.1 percent in 202023.
Red Lobster’s controlling shareholder Thai Union also hurt the brand, say former employees and analysts.
Thai Union was a top supplier of shrimp to Red Lobster for more than 20 years. In 2016, Thai Union took a $575 million minority stake in the brand. In 2020, Thai Union deepened its financial interest in Red Lobster.
Thai Union saw an opportunity to grow its business and also become a bigger supplier to Red Lobster.
To save money on labor, it also tried pushing Red Lobster’s waitstaff to the limit by going from having waiters cover three tables to having 10 waiters cover 10 tables.
A lot of Red Lobster executives left when Thai Union took over, which caused a lot of turnover in the C-suite. Red Lobster hired a new CEO, CMO, CFO, and CIO in 2021 and 2022. All left the company within two years.
Then came the all-you-can-eat shrimp mishap last year.
Thai Union CEO Thiraphong Chansiri said in November, “We were expecting an increase of 2020% in customer traffic, but the actual number was up to 2040%.”
Two months later, Thai Union said it was pulling its money out of Red Lobster, which cost it $530 million. As well as “sustained industry headwinds, higher interest rates and rising material and labor costs,” the company said the pandemic was to blame. ”.
“I’m going to stop eating lobster,” Chansiri said this year. Ad Feedback Ad Feedback
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Fear & Greed Index
Last summer, Red Lobster made $20 endless shrimp a permanent menu item.
Endless shrimp was a successful annual limited-time offer for Red Lobster for 20 years. The new major shareholder in Red Lobster is Thai Union, a canned seafood company based in Bangkok. Thai Union saw the promotion as a way to get rid of the huge amounts of shrimp it was catching and made it an everyday item. (Thai Union became Red Lobster’s largest investor in 2020. ).
The change cost Red Lobster $11 million.
Sunday, Red Lobster filed for bankruptcy. This brings to light Thai Union’s part in the never-ending shrimp mess. Red Lobster said it is investigating the circumstances of that promotion, which Red Lobster management opposed.
The filing said that Thai Union chose the CEO of Red Lobster and got rid of two of its breaded shrimp suppliers. This gave Thai Union exclusive rights to supply shrimp to the chain.
That caused prices to go up, and it wasn’t in line with how the company usually chooses suppliers based on expected demand, the chain said in its filing.
Red Lobster said in the filing that Thai Union’s decision caused operational and financial problems for the company and put heavy supply obligations on it.
Thai Union did not immediately respond to CNN’s request for comment.
Endless shrimp alone didn’t doom Red Lobster. Analysts and former leaders of the chain say that the American seafood icon was brought down by a number of things, such as bad management by Thai Union and handoffs between investors and corporate parents.
“Some operational decisions made by former management have hurt [Red Lobster’s] finances in recent years,” the company said in its bankruptcy filing.
Over the past 20 years, fast-casual chains like Chipotle and quick-service chains like Chick-fil-A have grown very quickly and become very popular. This has put pressure on Red Lobster. Red Lobster has had trouble adding Millennials to its core Baby Boomer customer base for years because it hasn’t spent enough on marketing, food quality, service, and restaurant upgrades.
“Red Lobster was the foundation of casual dining. In a previous interview with CNN, Alex Susskind, a professor of food and beverage management at Cornell University, said, “They were powerful and well-known, and they changed the way Americans eat seafood.”
But the company didn’t build on that foundation, Susskind said. “Red Lobster had incredible popularity among Baby Boomers. They didn’t bring in a newer generation. ”.
The Truth About Red Lobster’s Endless Shrimp
How much is endless shrimp at Red Lobster?
Price, of course, is one of the most important considerations for most people when they’re dining out. Endless Shrimp is priced at $20, which is easily the best deal on Red Lobster’s menu. Take, for example, the two-entree combo platter, which comes with two sides.
What is Red Lobster’s ultimate endless shrimp?
The conceit of Ultimate Endless Shrimp is fairly simple: For a flat fee of $25 per person — at the time of publication and up from its original price of $20 — you can eat as much shrimp as your crustacean-loving heart desires.
How does Red Lobster’s endless shrimp promotion work?
Here‘s a quick rundown of how Red Lobster‘s Endless Shrimp promotion works: You pay a fixed price that covers your meal, including shrimp and sides. The price is often $17.99 – $24.99 depending on location. You‘ll get unlimited plates of grilled, fried, or sauteed shrimp prepared in different styles.
Is Red Lobster ® ultimate endless shrimp SM coming back?
ORLANDO, Fla., June 26, 2023 /PRNewswire/ — Red Lobster ® is kicking off summer with an announcement that is sure to excite shrimp lovers everywhere – guest-favorite Ultimate Endless Shrimp℠ is here to stay! Gone are the days of anxiously awaiting the return of Ultimate Endless Shrimp℠.