What Really Happened To Red Lobster's Endless Snow Crab Promotion?
"I'm still angry that they didn't give me enough time to make it happen," Edna Morris, the one-time president of Red Lobster, said, referring to her task to bring the brand back to its roots. Having been hired in 2002, she was, as Restaurant Business explains, asked in 2003 to step aside to let someone else take a crack at it.
This is a fair sentiment. However, the piece does gloss over the fact that Morris' tenure as president oversaw the Endless Crab Promotion that almost drove the company to bankruptcy. USA Today described the 2003 promotion as what the name suggests. For $22.99, you could eat as much snow crab as you could cram within yourself. The idea, however, overlooked two facts.
First, the price of snow crabs was rising. This was due to the stringent quotas that the U.S. government had imposed on the farming of crab to keep the crustacean supply sustainable. With a fewer number of crabs in the market, the cost for each crab naturally went up, reaching $5 a pound (via USA Today). Even when it raised its prices in an attempt to reflect this change, Red Lobster's promotion ran on slim margins. Second, people really like their crabs. "It wasn't the second helping, it was the third that hurt," Joe Lee, chief executive, explained to investors. "And the fourth," agreed Dick Rivera, Morris' predecessor and successor to the president's position at Red Lobster (via USA Today). Too much was eaten for Red Lobster to profit from the high fee.
The ruination did not spoil Red Lobster's appetite
The losses Red Lobster accrued from this blunder were enormous. The New York Post reported that the company lost $405.9 million in stock in a single trading session and $3.3 million in profits. The piece did explain that as Edna Morris' background was in steakhouses, her experience with all-you-can-eat buffets had focused on foods more filling than crab meat. In the end, the blame fell on her.
The more unfair aspect of her firing/coerced leaving is that the year afterward, Red Lobster experimented the same format with shrimp. Mel Magazine notes that because shrimp is both cheaper and more filling than crab, it makes for a better all-you-can-eat item. The Endless Shrimp for $15.99 has since become a staple deal for the brand. One wonders whether any executives at the seafood restaurant might have known before the snow crab debacle that shrimp would have made the better choice. If they did, they should have left with Morris. If they didn't, they should have left with Morris as it shows they don't know their own brand. Either way, Morris can righteously chafe at the thought that Red Lobster has refined an idea that so spectacularly blew up in her face.