The stats say I’m sending this out at the worst open rate time, but I cannot help myself. It’s too good to sit on all weekend.
Best brand lesson in business.
Highlights:
– Heavyweights Endless Defense
– Best Brand Lesson In Business
– Wickedly Smart PE/Reverse PR
PE told a Red Lobster whopper, ‘Endless Shrimp promotion’, bankrupted the famed restaurant.
Now, the media is confused, endless shrimp back on the menu after bankruptcy.
Lesson: In advanced PR is reverse PR and customer demographics mistakes are a fast lane to dragging your company in the dirt.
Top PE guys are wickedly smart, so I brought in heavyweights, Emory and the Economist, to assess and measure endless shrimp economics.
Objective: Test pricing outcomes of $20.00 “endless shrimp promotion.”
Here’s the deal. PE bought Red Lobster and immediately cashed in chips – sold off the real estate properties, double-dealed on subsidiary suppliers, 5x’d their investment, and then, through a separate REIT, leased back the properties to the company at sky-high rates.
Making a killing, as deckhands say when the nets come back full.
But then the company sank like a deep-sea sinker.
To shield litigation and shame, they flooded the zones with this whopper story on the devastating effects of endless shrimp economics, and the media swallowed it hook, line, and sinker. Lots of sinkers.
PR lesson: if you hire a PR firm that says “we will pitch you” – cut your losses and run.
The Red Lobster shrimp tale shows the media does not care about facts or your company, sorry.
The media will run with reverse PR – audience affirmation of stereotypes that makes the readers and viewers mad as hell or laugh out loud, and more brilliant PR here – poor us, we rich boys got duped by the good ole boys.
“Jeffro” would come in and stay forever, eating the place down to the tablecloths, creating huge losses on the P&L.
Right and Tilapia is a nutritious fish.
Shrimp economics.
Red Lobster buys their shrimp from foreign farm entities for $3.70 per pound and ships them here via cargo.
$20.00 endless ‘farm’ shrimp promotion originally created to attract overflow crowds to juice cash flow to pay REIT rent.
Set aside with no tides, farm shrimp can’t evacuate waste as wild shrimp do in the tide flows.
But at $3.70 per farm pound, only 2 restaurants in Atlanta serve wild shrimp at $14.00 per pound.
Red Lobster serves 1/4 lb of shrimp per serving—four rounds to make a pound. You would have to eat more than five pounds, or 20 plus rounds, to put them in the hole, dollar for dollar.
The most shrimp I have ever seen a human eat is when Eugene Kicklighter ate 16 rounds of wild shrimp, lightly dusted, at Gateway Restaurant in 1989.
4 pounds of shrimp and comparably Red Lobster’s food costs are still under $16.00.00.
However, endless shrimp is not totally off the hook. It did cause some snags, chasing customers for cash.
Red Lobster was an iconic, aspirational, middle to a smidgeon of upper class destination.
Endless shrimp at $19.99 brings in the dreaded hide cutters, cliff words, meth-driven embarrassments to the holler and hoods.
Half the dining room here looks like a scene from Sling Blade, and the other half looks like a neighborhood visit on Training Day.
A couple on date day could not get out the door fast enough, leaving their flight margarita half-full on the table.
Ray, it’s Shoney’s all-you-can-eat breakfast bar all over again – a new set of customers runs off your classic customers, customer demographics.
Economist tells the story of when rappers started endorsing ritzy, blue-blood Russian tsars Louis Roederer’s Cristal, the brand shooed them away. Big mistake.
So it was a mistake for Red Lobster to attract hide cutters with endless shrimp and a big mistake for Crys to run off the rappers.
Yes, and professor shares the biggest brand lesson in business.
“People use objects and tastes as signals of identity and status, not just as practical things. Because of that, when a lower-status out-group adopts the same marker (whether it’s clothing, a car, a bracelet, or a restaurant), the people who originally used it can start to feel threatened, since the thing no longer clearly separates them from the group beneath them. The closer the two groups are in status, the greater the anxiety around being mistaken for one another. So people disadopt certain tastes or symbols once the “wrong” people start using them.
The endless shrimp for 19.99 deal changed the social meaning of the restaurant because it drew a lower-status out-group (hide cutters) that its core customers felt uncomfortably close to (or that they could be misidentified for). Once the restaurant no longer distinguished them in the way they wanted, the regulars abandoned it. However, if the two groups ar eont he oppiste end of the economic spectrum, it can be considered cool, and exactly why the Ritz had to drop its no flip-flop and cut off shorts policy when rich people started looking poor. Rapper and Russian tsars ‘opposites made in heaven.”
I asked my waitress how she liked the endless promotion.
She said two words, “terrible tippers.”
I looked around the room. My guest left.
I had a deluxe Captain Morgan and Coke by myself.
