The failure of Red Lobster's all-you-can-eat shrimp deal got us thinking about similarly failed marketing efforts. | Photo: Shutterstock.
Marketing is an important element in the restaurant business. The industry is completely too competitive for brands to ignore it as a secondary factor.
A good product and marketing campaign can save a chain from the brink of bankruptcy and open the door to a new group of customers.
However, campaigns can also backfire. If marketing efforts go awry, companies can lose hundreds of millions of dollars, potentially leading to bankruptcy filings and store closures. It's about some of the worst marketing moves in recent industry history, starting with the story that got me thinking about this in the first place.
Red Lobster all-you-can-eat shrimp
Last week, we learned that the venerable casual dining seafood chain has hired a restructuring advisor as its new CEO. Doing so usually means the brand is in some kind of financial trouble, and in that respect we can be thankful for this deal.
Last year, the company offered customers unlimited shrimp for $20 to combat declining traffic. The price was so low that it was so successful that it incurred an operating loss of $11 million, ultimately forcing owner Thai Union to take a huge write-off and put the brand up for sale.
Oh, and the CEO vowed to quit lobster.
Burger King's Ch'King
This is what happens when one brand has an advantage over another. In 2021, Burger King announced its own answer to the chicken sandwich wars: Ch'King. There was nothing wrong with the product at all, except that it was difficult for the franchisees to make. And the name was strange too.
When the product was launched, sales plummeted. It was removed less than a year later. Meanwhile, franchisees filed for bankruptcy, executives were ousted, and parent company Restaurant Brands International poured $400 million into rebuilding the brand. It was almost the opposite of what happened when sister chain Popeyes introduced its landmark chicken sandwich in 2019.
McDonald's Mighty Wings
In 2013, McDonald's was struggling to move beyond the dollar menu era when it launched Mighty Wings. The company's efforts to tap into the growing chicken wing market were so concerning that wing prices hit record highs that year as suppliers stocked up on wings fearing the repercussions.
Well, it didn't work. Customers didn't jump at the chance to get expensive wings at McDonald's when they could go to Buffalo His Wild Wings for about the same price. McDonald's was left with an incredible amount of unsold wings and was forced to reduce prices later on. All of these wing manufacturers let go of supply and prices plummeted. CEO Don Thompson was replaced by Steve Easterbrook just over a year later.
applebee's hand cut steak
In 2016, Applebee's decided to go upscale. The company announced its “biggest marketing effort” in its history, offering hand-cut steaks on wood-fired grills. Franchisees spent millions of dollars on new grills and training employees to cut and grill steaks. They then launched a major campaign to get customers to try the new menu.
It was a huge failure. Same-store sales in the quarter it was launched were down 4.2% (hint: when you spend tens of millions of dollars on a new product, those numbers should be a lot different). Customers seemed confused as to whether the steak was expensive or cheap. A year later, CEO Julia Stewart, the architect of IHOP's revival and subsequent acquisition of Applebee's, was ousted as CEO of the two chains' parent company.
Panera Bread's Pizza Initiative
In 2006, the fast-casual bakery/café chain decided to give pizza a try. The company launched Crispani, a made-to-order pizza loaded with fresh toppings, all designed to bring the company much-needed dinner business.
It was a huge failure. how much? Several years later, the company agreed to pay shareholders $5.75 million for misleading them about the sales situation.
Meanwhile, the chain took on a new challenge in 2020 with flatbread pizza. While we can't say for sure if that caused some of the challenges we've seen recently at Panera, it's worth noting that it's one of the things we know won't be included in the new menu launching next month. Worth it.
Pizza Hut's fast casual overreaction
In 2014, fast-casual pizza was all the rage. Pizza Hut also wanted to get involved. The chain has created a new menu with new types of crusts, “drizzle” sauces, and artisan ingredients such as salami. We also spent countless hours training our staff on a new menu designed to compete with emerging MOD Pizzas from around the world. Several headlines called Pizza Hut “the next Chipotle.”
It wasn't. Sales did nothing and actually declined throughout the first quarter the menu was allowed. After all, fast-casual pizza was never as popular as regular old-fashioned pizza delivery. The chain subsequently lost its position as the largest pizza chain in the country and the world to Domino's Pizza.
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