Turns out, “all you can eat” can eat your profits too.
Timing can make or break your deal in any negotiation or sale. Red Lobster learned this the hard way in 2023 when it offered Endless Shrimp to boost sales. Like many other casual dining chains, it suffered major losses during COVID-19 pandemic.
Their plan wasn’t new, though. Red Lobster offered variations of Endless Shrimp deals through the 2000s. However, this time the timing was off. The company offered Endless Shrimp as a permanent menu item for a flat fee of $20 at all restaurants, with a few restrictions on availability. Patrons could order the deal all day, every day and use take-out containers.
The result? Sales soared. Profits crashed. Resulting in an $11 million quarterly loss, which was just part of their overall $76 million net loss for 2023. In 2024, they removed the deal from the menu and filed for Chapter 11 bankruptcy.
Now the deal is back. Is the timing right?
On April 20, 2026, Red Lobster changed the terms of the deal. They began by offering Endless Shrimp on a limited-time basis at participating locations, priced between $24.99 and $29.99, depending on the location. Other limitations include no availability on holidays, no delivery, and no takeout. The meal is dine-in only.
So, how does this deal compare to their last one? Will it doom the franchise again?
What Red Lobster is doing right with their timing
As a business revenue leader, you sometimes need a loss leader to bring people through the door, hoping to increase sales of other items once they are inside.
Gas stations do this by offering lower fuel prices to get people to buy snack bars in the convenience store. Movie theaters offer matinee prices to sell popcorn at the concession stand. Amazon does it with Prime Day discounts.
1. Create scarcity and more implied demand with limited-time deals.
Red Lobster’s mistake in 2023 was to offer an “unlimited” timing deal. It was a permanent menu item, which created limited negotiation room for the company.
This time, Red Lobster is making the deal a “limited-time” promotion. They don’t define what the limited time is, and, for the consumer, it feels like the promotion could end at any time. This creates a sense of scarcity in a consumer.
Scarcity is a powerful motivator and one of the six ways to influence a customer, according to Dr. Robert Cialdini, bestselling author of Influence.
By increasing the sense of scarcity, more people will likely come in to take advantage. Since the deal could end at any time, it allows Red Lobster to cut its losses if it becomes too costly for its bottom line.
If you want to create scarcity for your business, limited-time promotions, coupons, and sales are your best bet.
2. Set attractive terms for the deal.
While timing is crucial, so are the terms of the deal. When timing a deal, the terms you set are also crucial to your success. You want to make them attractive enough that people will buy and not so generous that you’ll lose your shirt or your business.
The mistake Red Lobster made in 2023 was to offer terms that were too generous and allowed customers to take advantage, which destroyed profitability. The terms of the Endless Shrimp promotion also allowed people to take home their dinner in take-out containers.
Now, Red Lobster has set more reasonable terms. Generous enough to bring people in and reasonable enough to stay in business. They increased the price and added restrictions to dine-in only, plus no holidays.
Moreover, the psychology of the pricing works to Red Lobster’s advantage due to what’s known as the “left-digit effect.” According to Cialdini, people pay more attention to the first digit they see. When a customer sees $24.99, they think $24, not $25. It creates more attractive pricing, increasing the likelihood of a purchase.
Overall, Red Lobster looks like they learned valuable timing lessons from their fiasco in 2023. They have now created a deal that heightens consumers’ sense of scarcity, which is attractive and unlikely to bankrupt them.
This article was originally published by Inc. May 16, 2026.