When Edna Morris was CEO of Red Lobster, the restaurant chain had a $14.99 all-you-can-eat buffet. She thought she could lure in more customers by offering an all-you-can-eat buffet for $22.99 that included snow crab legs. Her ploy to fill seats worked. People mobbed Red Lobsters to fill up on snow crab legs, snubbing their noses at Red Lobster's other buffet offerings such as slimeheads, lumpsuckers, and mudbugs or whatever it is that they bread and and fry. It was a massive miscalculation that ended with Morris losing her job and Red Lobster losing $400 million in stock value in a week.
From Sean Kernan:
Store management realized it was taking customers a strenuously long time to eat the crab legs. People were spending hours at these tables. And consequently, the staff weren't turning over tables fast enough. The process of cracking open crab legs was too tedious.
Because snow crab is an imported item from a natural habitat, the government regulates it so that we don't overharvest.
During the promotion, as crab-leg consumption increased, they lowered quotas (less farming allowed), causing the prices to rise. (High demand + low supply = high price.)
Red Lobster had to keep buying up crab legs at exorbitant prices. Combine this with overeating, and the monthly accounting reports began turning red.
