CNN – In 2003, Red Lobster ran an “Endless Crab” promotion. The all-you-can-eat deal backfired spectacularly.
Red Lobster misjudged just how many seafood lovers would pour into restaurants around the United States and fill up their stomachs with pounds of sweet, juicy crab legs drenched in lemon and dipped in melted butter.
While it was a delicious deal for customers, it was terrible for the company: Red Lobster lost $3.3 million in seven weeks.
“It wasn’t the second helping on all-you-can-eat, but the third” that hurt profits, a Red Lobster executive said at the time to analysts.
Fast forward 20 years, and Red Lobster made a nearly identical mistake, but with shrimp — and under foreign ownership that caused a cascade of problems for the company.
Last summer, Red Lobster turned $20 endless shrimp into a permanent item on the menu, instead of a traditional limited-time offer.
The deal was once again too popular, and Red Lobster was unprepared for its customers’ insatiable lust for discounted shellfish.
Red Lobster’s major shareholder Thai Union, a Bangkok-based canned seafood company, lost $11 million. “We need to be much more careful,” a Thai Union executive said.
“They didn’t have the right management company in place,” said John Gordon, a restaurant industry analyst.
Endless crab and endless shrimp deals alone didn’t doom Red Lobster — they were just two missteps in a long spiral for a chain that was once an industry pioneer.
Red Lobster is now reportedly considering filing for bankruptcy protection to restructure its debt and shed some of its 650 US locations. The chain has tapped a restructuring expert as its chief executive, a possible indicator of an impending bankruptcy.
Red Lobster and Thai Union did not respond to CNN’s requests for comment on this article.
The American poster child for seafood was dragged down by a range of factors …
