Look, we all make mistakes. Some of us leave the oven on, some of us text our ex. But most of us aren’t billion-dollar national restaurant chains, so our blunders don’t cost millions. Red Lobster — once the largest seafood chain restaurant in the world — unfortunately can’t say the same.
Back in 2003, Red Lobster launched its “Endless Crab” promotion, offering all-you-can-eat crab legs to hungry, seafood-loving, discount-loving guests. The promotion quickly turned into a financial fiasco, with the company losing approximately $3.3 million over just seven weeks . The problem seems too obvious to have been unpredictable: Customers were consuming more crab than anticipated, and the high market price of crab made each additional plate a costly endeavor. With pricing built around the prediction that guests would order one or two plates, and a majority of customers ordering three or more plates, the losses flooded in quickly.
You may be thinking, “Wait, wasn’t it endless shrimp?” You’re right — Red Lobster also ran an endless shrimp promotion in 2023 that was thought to have contributed to its bankruptcy. You’re wondering how the chain could’ve made this blunder twice, and we don’t blame you. The truth is, there were numerous factors at play.
How crab cost Red Lobster hundreds of millions
Red Lobster’s 2003 Endless Crab debacle was a perfect storm — not only were customer appetites underestimated, but so were wholesale crab prices. But customer behavior was unpredictable for more reasons than one. First, no one accounted for how slow crab is to prepare and eat. This limited table turnover and increased wait times, likely leading to customer dissatisfaction. And, customers got kinda greedy. Not only did they order a lot, but they wasted a lot. One Redditor claims that the restaurant they worked at during the promotion was forced to dump several gallons (!) of uneaten crab daily, since customers were leaving uneaten bits on their plates, but continuing to order more.
In the end, after bleeding a whopping $3.3 million, Red Lobster was forced to end the Endless Crab promotion early. Stakeholders understandably lost trust in the company and began dumping shares, rubbing salt in the already briny wound. The ripple effect sent parent company Darden Restaurants’ value plunging by nearly half a billion dollars. And, of course, after the strikingly similar failure of the Endless Shrimp promotion, Red Lobster eventually filed for bankruptcy in 2024.
Signs suggest Red Lobster may finally be learning. The company’s 2024 Lobsterfest promotion is only available to a limited number of customers, has more portion-controlled offerings, and fewer truly “endless” options. While the damage may already be done, these changes hint that Red Lobster is perhaps avoiding a third helping of the same mistake.
