Seafood Restaurant’s Jumbo Shrimp Miscalculation Costs 11 Million Dollars
If you’re one who enjoys “all you can eat” restaurant specials, you may be a diner who thinks “This restaurant isn’t making any money on me.” When it’s “all you can eat” it’s unlimited, but the restaurant usually relies on those who don’t eat a lot to help them turn a profit. This allows them to compensate for those who act like an “all you can eat” is an “eat as much as you possibly can until you can’t walk.”
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Red Lobster, which has locations in East Brunswick, Trenton, South Plainfield, and Bridgewater, New Jersey, learned this the hard way. The lesson is literally costing them a fortune. If you want to make money as the owner of a restaurant, you can not underestimate how much food people will chow down on if you offer that “all you can eat” thing.
Red Lobster made the decision to change its “Ultimate Endless Shrimp” “all you can eat” deal from a limited-time offer to an everyday option. That fateful decision resulted in a single-quarter loss of more than $11 million. That’s a lot of shrimp!
According to Restaurant Business News, Red Lobster placed the total blame on the “all you can eat” deal. It allowed their patrons to choose from two different kinds of shrimp and eat as much as they wanted for just twenty bucks. Bad idea! The meal also included an “all you can eat” unlimited amount of Red Lobster’s famous Cheddar Bay Biscuits. Maybe Red Lobster thought that customers would fill up on biscuits and not eat as many shrimp. If they did, they thought wrong.
The CFO, Ludovic Regis Henri Garnier of the company that owns the restaurant chain said it just “didn’t expect” customers to choose the shrimp deal as often as they did. I guess he made a big mathematical miscalculation. He said, “We knew the price was cheap, but the idea was to bring more traffic to the restaurants, and it didn’t work.”
Red Lobster has now raised the price to $25, but it may be too late. After the “shrimp debacle,” RBN says that the restaurant chain is expected to lose more than $20 million this year.
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