Red Lobster is offering customers plate after plate of “endless” shrimp scampi, lightly fried shrimp and shrimp linguini alfredo at a time when the seafood chain might need a boost in business.
The promotion comes as restaurants enter one of the slowest parts of the year in the weeks after Labor Day, said San Diego-based restaurant analyst John Gordon.
Red Lobster isn’t the only restaurant trying to drum up more business with special deals, but Orlando-based Olive Garden has so far not brought back its unlimited pasta special.
Beyond the seasonal slowdown, Red Lobster shareholder Thai Union informed the Stock Exchange of Thailand in an Aug. 24 document that it was providing “financial assistance” by guaranteeing part of Red Lobster Master Holdings’ credit facility.
That aid will not be more than $65 million, or about 25% of the outstanding credit balance, according to the document.
“While we do not have Red Lobster’s day-to-day sales, given the financial filing (from Aug. 24) it is expected that this promotion will be important to Red Lobster going forward,” Gordon said.
When asked by the Orlando Sentinel for sales or profit information on the “Ultimate Endless Shrimp” deal first offered in 2004, the privately held company did not release figures.
Running through Nov. 6 at Red Lobster, the deal costs $21.99, but the price is higher in some states and in Canada. The price tag does not include drinks, tax or tip.
Customers start with two shrimp dishes and then order more shrimp items one at a time. The meal comes with a side and the 700-restaurant chain’s unlimited Cheddar Bay Biscuits.
“Red Lobster’s Endless Shrimp promotion is a guest favorite promotion – one that we get a lot of requests for throughout the year,” chief marketing officer Patty Trevino said in an email.
Gordon said there is a delicate balancing act: Generally, such deals have a lower profit margin than a normal menu entrée. The goal of these big offers is to bring in more customers.
“The restaurant operator wants to generate many additional customers so as to offset the gross margin loss on the promoted item,” he said.
Red Lobster’s promotion is far from the only deal right now that could boost restaurant business during the slow season.
Visit Orlando’s Magical Dining Month is running through Oct. 2, offering three-course dinners at participating restaurants like Kabooki Sushi and The Ravenous Pig for $40 per person, before tax and tip. That deal cost $35 in 2019 and 2020.
But not everyone is jumping in.
Orlando-based Darden Restaurants CEO Rick Cardenas said last year the company did not know if or when it would bring back Olive Garden’s Never Ending Pasta Bowl. Darden sold Red Lobster in 2014.
Never Ending Pasta Bowl, which gave customers in 2019 unlimited servings of pasta starting at $10.99, didn’t take place in 2020 because of the coronavirus pandemic. Cardenas said last year its “profitability wasn’t as high as the guests that we’re doing today.”
“We decided to reduce that, the dependency on Never Ending Pasta Bowl, this year because we didn’t need to drive volume into our restaurants,” Cardenas said.
Then in January, Cardenas addressed the bargain’s fate again.
“I wouldn’t be surprised if promotions come back at Olive Garden, probably not nearly as many as they were before, maybe a little longer duration, but at a different kind of economic model,” Cardenas said.
Back at Red Lobster, the endless shrimp also comes at a time when the chain is dealing with turnover among its top executives.
Longtime leader Kim Lopdrup retired last year, but his replacement Kelli Valade resigned in April, eight months after taking over from Lopdrup in August 2021. She quickly moved on to become CEO and president of South Carolina-based Denny’s.
David Schmidt, who started in March as the chief financial officer at Red Lobster, left this month to become president of Keke’s Breakfast Cafe. Denny’s bought Keke’s earlier this year, and Schmidt will report to Valade there.
