Red Lobster’s Popular Endless Shrimp Deal Ate Into Its Profits

Red Lobster’s “irresistible” all-you-can-eat shrimp promotion has indeed proved hard to resist.

The Ultimate Endless Shrimp deal has been so popular that it helped cause a drop in third-quarter profit for the restaurant chain, which had to raise the price to $25 from $20.

Thai Union Group, which owns a large stake in the chain, said in a third-quarter earnings call this month that the deal was in part to blame for an $11 million operating loss.

Red Lobster hoped the promotion would bolster traffic at its U.S. locations through fall and winter, when its restaurants tend to be the emptiest.

Ultimate Endless Shrimp had already been a Red Lobster “guest-favorite” staple for over 18 years. But the restaurant took it a step further this summer, offering the previously seasonal deal “all day, every day” instead of just on Mondays.

Patrons could choose two shrimp dishes from a menu that includes shrimp Alfredo served on a bed of linguine and a skewer of grilled shrimp over rice.

“And when they are ready for more,” an announcement for the promotion stated, “they can order additional shrimp selections until their cravings are fully satisfied.”

The offer did in fact lead to a small bump in traffic compared with last year, according to Ludovic Garnier, the chief financial officer of Thai Union Group.

“But something which was different from our expectations is the proportion of the people selecting this promotion was much higher compared to expectation,” Mr. Garnier told investors this month.

He said Ultimate Endless Shrimp was one of the “key reasons” for Red Lobster’s operating losses in the third quarter.

The miscalculation, which was first reported by the trade journal Restaurant Business, prompted the company to raise the price to $22 from $20, and then ultimately to $25.

“It’s one of the iconic promotions for Red Lobster, so we want to keep it on the menu,” Mr. Garnier said. “But of course we need to be much more careful regarding what is the entry point and what is the price point.”

Still, he credited the revamped offer for the increase in the number of guests — though, he explained, the company expected to see more of an upside.

They hoped the diners lured into their local Red Lobster by the deal would also be wooed by other menu items.

But too many were faithful to the endless shrimp.

“And that was completely unexpected, very different from all the numbers we have seen before,” Mr. Garnier said.

Too many, perhaps, heeded the advice listed in Red Lobster’s own promotional material: “Insider tip: avoid grabbing the extra biscuit to leave room for endless amounts of shrimp.”

Susan Beachy contributed research.