Red Lobster Says Q3 Losses , Are the Result of Popular , Unlimited Shrimp Deal.
NBC reports that Red Lobster's parent company has disclosed the company's unexpectedly large Q3 losses.
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NBC reports that Red Lobster's parent company has disclosed the company's unexpectedly large Q3 losses.
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According to Thai Union Group, the losses were the result of Red Lobster's $20 shrimp promotion, which was more popular than anticipated.
The proportion of the people selecting this promotion was much higher compared to expectation, Ludovic Garnier, Chief Financial Officer at Thai Union Group, via NBC.
This year, the company changed its annual all-you-can-eat-shrimp deal from a limited-time offer to a permanent one.
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The company said the decision was meant to boost traffic when business tends to slow in the third and fourth quarters of the year.
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While the strategy did bring in more customers, bolstering the company's market share, low margins from the popular deal presented a problem.
The company responded to the promotion's surprising popularity by raising the price from $20 to $22 and now to $25.
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It’s one of the iconic promotions for Red Lobster, so we want to keep it in the menu but, of course, we we need to be much more careful regarding what is the entry point and what is the price point we’re offering for this promotion, Ludovic Garnier, Chief Financial Officer at Thai Union Group, via NBC.
Thai Union Group invested in Red Lobster in 2016 and obtained the rest of the company from Golden Gate Capital in 2020 with a group of other investors.
In March, Bloomberg News reported that Thai Union Group would seek to sell its stake in the restaurant chain if performance fails to improve
