The blame for the failed offer fell on the chain’s president Edna Morris. In that time the company had lost $3.3 million dollars and the debacle was blamed for triggering a sell-off of shares in Red Lobster’s then-parent company Darden Restaurants, which saw its own stock value fall by $405.9 million in the wake of the Endless Crab promotion. Franchise owners were given permission to increase the price from $22.99, but when this failed to stop losses the Endless Crab campaign was ended early. With the tightly regulated US and Canadian crabbing industry unable to increase catches to supply the growing demand and bring down the wholesale price of snow crab, Red Lobster had to take action to try to turn the situation around. This led to customers spending much longer than usual inside Red Lobster restaurants while they ordered loss-making plate after loss-making plate of crab, causing queues of frustrated customers to build up in many Red Lobster restaurants and preventing the chain from selling its other profit-making dishes. A further issue was that crab legs are difficult and time-consuming to eat, with customers having to crack open the shells to get to the meat inside. To make matters worse the promotion had inexplicably been scheduled at a time when snow crab quotas were relatively low and wholesale prices were correspondingly high, with the newspaper USA Today reporting that wholesale prices were already at an expensive $4 per pound when the offer started and increased as it continued. Commercial fishing for snow crab is highly regulated and must observe strict quotas. Red lobster’s problems began when Endless Crab proved wildly popular (hardly surprising as crab was one of the chain’s most popular dishes) and the vast majority of customers ordered significantly more than three plates of crab. The company would make a profit if a customer ordered only one or two plates, but the offer became loss-making once a third plate was ordered. Endless Crab was meant entirely literally – customers could order as many plates of the popular snow crab dish as they wanted for the set price of $22.99. In the summer of 2003, Red Lobster announced its Endless Crab special offer at the 679 restaurants it had at the time. The incident also highlighted how issues in the supply chain and wholesale price of seafood can adversely affect seafood retailers, and also led to questions being asked about the impact which all-you-can-eat seafood special offers have on wild stocks. In 2003 Red Lobster offered an Endless Crab all-you-can-eat special which cost the chain millions of dollars and is today seen as a textbook example of a badly thought-out promotion which ends up costing the company money. On its own website Red Lobster describes itself as the “world’s largest and most-loved seafood restaurant company.” A Red Lobster restaurant in Yonkers, New York. The chain has been successful and expanded (using the franchise model) to the extent that today it has over 700 locations, mostly in the USA and Canada, but there are also branches in Mexico, Japan and the Middle East. Founded in Florida in 1968, Red Lobster is, as the name suggests, primarily a seafood restaurant, although it also serves other dishes. Red Lobster is an American restaurant chain.
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