Where Endless Shrimp Stops

After decades of limited availability, Endless Shrimp became a permanent menu item in 2023. Some say, though, that it caused Red Lobster’s 2024 bankruptcy.

But now, Endless Shrimp is back.

Knowing that customers eagerly awaited its return, Red Lobster will again offer Endless Shrimp for a limited number of days at participating locations. No longer a $20 meal, the new price could be as much as $29.99. In addition, Endless Shrimp won’t be available for delivery, on holidays, or for take-out because diners, after finishing their meal, took piles of shrimp home with them.

Perhaps Red Lobster had Homer Simpson in mind:

Our Bottom Line: Diminishing Marginal Utility

Like the McDonald’s McRib, Red Lobster sees the benefit of limited availability.

McDonald’s removes the McRib from the menu because of how we perceive that extra bite. One McDonald’s franchisee tells us that, when it first returns, he sells close to 200 a day. However, by the end of the promotion, anticipation plummets and his daily McRib sales drop to fewer than 50. If he took Econ 101, McDonald’s CEO knows that McRib eaters are experiencing diminishing marginal utility. With diminishing marginal utility, each new serving gives diners less extra pleasure. Explained by Freakonomics’s Steven Dubner, McDonald’s resuscitates the McRib after waiting long enough for him to forget how bad it is.

Similarly, Endless Shrimp is the perfect example of diminishing marginal utility in two ways:

• First, Red Lobster, like McDonald’s, can elevate Endless Shrimp’s allure by ending the promotion before its marginal utility plunges.
• Also though, unlimited food has a diminishing marginal utility problem. Eating more and more and more shrimp, we get less extra pleasure from each new bite. One article even noted Red Lobster staff complaints about puking customers.

My sources and more: For all you could want to know about Endless Shrimp’s return, these articles, here, here, and here had the facts. And finally, for what they did not say about the shrimp trade and comparative advantage, do take a look at this past econlife.

Our featured image is from Red Lobster via ABC News.

Please note also that several of today’s sentences were in a past econlife post.