The Reason for Endless Shrimp

I have read (but cannot confirm) that in 2011, a Red Lobster employee observed two gentlemen consuming 782 shrimp during 5.5 hours when the chain had its “Endless Shrimp” promotion. According to a Red Lobster store manager, “Endless Shrimp” is offered every September.

Where are we going? To the reason we can have endless shrimp.

Large Shrimp Producers

Our story starts in Japan before World War II because a marine biologist wanted to bring dancing shrimp to the masses. A pricey delicacy, dancing shrimp were dipped in sake and given to diners while wiggling. As one of the first aquaculture developers, Motosagu Fujinaga helped to make affordable shrimp.

Once we had the potential from aquaculture, the supply chain could evolve. It just needed four basics:

1. The shrimp need to be the same. (Aquaculture is the solution.)
2. They require year round storability and availability. (Flash freezing–first created by Clarence Birdseye– retains texture and some taste while aquaculture provides the mass production.)
3. Their pricing should be “efficient and transparent.” (Lower Asian wages were the key.)
4. Demand needs to be predictable so that traders and producers can “forward contract.” (U.S. consumers’ demand for shrimp has become steady.)

The sad result? High quality domestic shrimp production became dwarfed by inferior imports:

From: WSJ

Our Bottom Line: Comparative Advantage

First described by 19th century economist David Ricardo, the world economy becomes more efficient when each country produces whatever requires the least sacrifice. For example, if you have to decide who will do the dinner dishes, just ask the alternative for each person. If someone says he will watch Netflix and someone else has work to complete, then the first person has the comparative advantage for the dishes because he sacrifices less.

Similarly, for shrimp, you can see below which regions have the comparative advantage. Those places are the reason we can order “Endless Shrimp” every September.

From: TriplePundit.com