Here’s a tip: If you want to make money in the restaurant biz, don’t underestimate how much food people will inhale if they’re offered an “all you can eat” scenario.
Red Lobster’s decision to change its Ultimate Endless Shrimp deal from a limited-time offer to an everyday option resulted in a loss of more than $11 million in a single quarter, reports Restaurant Business News.
The chain’s owner placed the blame squarely on the deal, which allowed customers to order two different kinds of shrimp and eat as much as they wanted for just twenty bucks. The deal also came with a side and unlimited amount of Red Lobster’s famous Cheddar Bay Biscuits.
The CFO of the company that owns the 670-restaurant chain said it just “didn’t expect” customers to choose the shrimp deal as often as they did. Duh.
“We knew the price was cheap, but the idea was to bring more traffic in the restaurants … and it didn’t work,” the exec noted.
Red Lobster has now hiked up the price to $25, but it may be too late: After the “shrimp debacle,” as the publication puts it, the chain is expected to lose more than $20 million for the year.