The Thai Union Group, an investor in Red Lobster, reported a significant operating loss for the restaurant chain in the third quarter.
This loss, amounting to 395 million Thai baht (approximately $11.3 million), was partly attributed to Red Lobster's Ultimate Endless Shrimp promotion.
Introduced in late June at U.S. locations, this deal allowed customers to enjoy unlimited servings of two shrimp varieties for $20, a change from its previous temporary availability.
The impact of this promotion on Red Lobster's financial performance was highlighted by Group CFO Ludovic Garnier during a quarterly analyst meeting.
"Something that was different from our expectation is the proportion of the people selecting this [Ultimate Endless Shrimp] promotion was much higher compared to expectation," Garnier said.
"Of course, we know on this promotion, we don’t earn a lot of money at $20. We don’t," the group CFO said, according to footage of the meeting. "The idea was to bring some traffic. We get some traffic increase, not to the level we were expecting, but still we are growing compared to last year and compared to the previous quarters. But bottom line in terms of financial performance, it did not deliver what we were expecting."
According to Ludovic Garnier, Red Lobster experienced a 2% increase in customer traffic compared to the previous quarter and nearly a 4% rise compared to the same period last year, partly due to the shrimp promotion. He later mentioned in the call with analysts that he believed the chain's guest count might have declined in that quarter if it weren't for this deal.
Red Lobster increased the price of their promotion, initially to $22 and later to $25, as stated by Garnier.
He expressed his belief in the strength of the promotion, saying, "We do believe it’s a very strong promotion. It’s one of the iconic promotions for Red Lobster, so we’re going to keep it on the menu."
He also emphasized the need for cautious pricing, noting the company should be "much more careful" about it.
The financial effects of the deal were previously covered by Restaurant Business Online.
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