Red lobster wild caught snow crab legs

Red Lobster Offers a Pound of Snow Crab Legs for $19.99 and New Crab Imperial

Posted by Q

Labels: Deals , Limited-Time , News , Red Lobster

When Edna Morris was CEO of Red Lobster, the restaurant chain had a $14.99 all-you-can-eat buffet. She thought she could lure in more customers by offering an all-you-can-eat buffet for $22.99 that included snow crab legs. Her ploy to fill seats worked. People mobbed Red Lobsters to fill up on snow crab legs, snubbing their noses at Red Lobster's other buffet offerings such as slimeheads, lumpsuckers, and mudbugs or whatever it is that they bread and and fry. It was a massive miscalculation that ended with Morris losing her job and Red Lobster losing $400 million in stock value in a week.

From Sean Kernan:

Store management realized it was taking customers a strenuously long time to eat the crab legs. People were spending hours at these tables. And consequently, the staff weren't turning over tables fast enough. The process of cracking open crab legs was too tedious.

Because snow crab is an imported item from a natural habitat, the government regulates it so that we don't overharvest.

During the promotion, as crab-leg consumption increased, they lowered quotas (less farming allowed), causing the prices to rise. (High demand + low supply = high price.)

Red Lobster had to keep buying up crab legs at exorbitant prices. Combine this with overeating, and the monthly accounting reports began turning red.

Red Lobster is an American restaurant chain. Founded in Florida in 1968, Red Lobster is, as the name suggests, primarily a seafood restaurant, although it also serves other dishes. 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. 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.

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. 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 the summer of 2003, Red Lobster announced its Endless Crab special offer at the 679 restaurants it had at the time. 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. 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. 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.

Commercial fishing for snow crab is highly regulated and must observe strict quotas.

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. 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. 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.

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. 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. 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. The blame for the failed offer fell on the chain’s president Edna Morris. She had joined Red Lobster from a popular steakhouse chain two years earlier, and many claimed that she failed to understand that the type of all-you-can-eat offers which are successful with large and filling steak and meat dishes would not work with smaller, higher value seafood such as crab. She left the company a short time after the Endless Crab promotion.

A crab meal at a Red Lobster restaurant.

While Endless Crab was a disaster for Red Lobster it underlined how seafood, being wild caught rather than farmed, is much more unpredictable in its availability and also, therefore in its price. Had snow crab quotas been at the same level as they were a few years previously, the wholesale cost of snow crab would have been much lower, and the Endless Crab offer may well have turned out to be a success. However, with low crab quotas, the wholesale price of snow crab was high, and Red Lobster was powerless to do anything about this. There are also issues regarding the responsibility of offering customers a limitless amount of a wild-caught animal which was (as it still is) being fished under strict quotas in order to preserve stocks for future generations. Indeed, other seafood retailers and restaurants in the US and Canada criticised Red Lobster for using so much of the available and limited snow crab quota to supply customers with Endless Crab and pushing the wholesale price higher for the rest of the market.

Today Red Lobster – as the biggest single seafood purchaser in the USA – has improved the sustainability of the seafood it sells. They are committed “to serve only Traceable, Sustainable and Responsibly-sourced seafood” and in 2018 partnered with the Monterey Bay Aquarium Seafood Watch® programme with current Red Lobster CEO Kim Lopdrup stating that they would “drive positive change in the industry and lead the way in sustainable and responsible seafood sourcing.”

The Endless Crab fiasco, however, lives long in the memory. It is often featured in top ten lists of the worst business and marketing decisions ever made and is used as an example of how a poorly planned promotion can backfire on a company. Clearly, the legal issues encountered by the Sea Captain and his Frying Dutchman restaurant in an episode of the Simpsons (which aired more than a decade before the Endless Crab promotion) should have acted as a warning to Red Lobster, who have yet to repeat any special offer involving unlimited crab.

What is the difference between snow crab legs and red crab legs?

The texture of a snow crab is firm and more fibrous than a king crab. Its meat breaks apart effortlessly in long pieces, making it easier to shred into pieces. The shells of snow crab leg shells break apart and crack open with your hands when not overcooked. King crab legs require a bit more work.

Why did Red Lobster stop serving king crab legs?

Store management realized it was taking customers a strenuously long time to eat the crab legs. People were spending hours at these tables. And consequently, the staff weren't turning over tables fast enough. The process of cracking open crab legs was too tedious.

Do you need to thaw frozen snow crab legs before cooking?

Before you reheat or cook crab legs, be sure to thaw them. Thawing crabmeat ensures that it will heat up evenly. You can defrost crab legs in the refrigerator overnight (for about 8 hours) or by running cold water over them.

How many snow crab legs are in 1 pound?

How much is a pound of snow crab legs? 1 lb of snow crab legs is about 3 clusters. This does vary depending on the crab's size. Generally, you're looking at 2 to 3 clusters or 8 to 12 legs.