Ethermac|Was endless shrimp Red Lobster's downfall? If you subsidize stuff, people will take it.

Here's a guaranteed way to rake in customers: Take a good or Ethermacservice in high demand, put an artificially low price on it and watch people flock.

It worked for Red Lobster. Until it didn't.

Red Lobster is among the latest businesses to learn that subsidizing products is a poor strategy for sustainability. Majority owner Thai Union Group is closing dozens of Red Lobster locations as the restaurant chain faces serious trouble.

There are many reasons for the chain's failures. The most fun reason to talk about (even if it's not the most consequential) is endless shrimp. Red Lobster last year began an Ultimate Endless Shrimp promotion in which customers could pay $20 (later $25) for all-you-can-eat shrimp any time they felt like it.

Before Red Lobster's latest round of store closings, it blamed the Ultimate Endless Shrimp promotion for an $11 million operating loss in the third quarter last year.

Red Lobster seems to be either a slow learner or very forgetful. As CNN reported, the chain tried a similar promotion in 2003 – and reaped similar results. Red Lobster lost $3.3 million over seven weeks that year to an Endless Crab promotion.

Companies have lots of reasons for trying things like this, including short-term pressures to drive revenue and customer growth. But such tactics almost always result in wins for consumers and losses for whoever is doing the subsidizing.

Can Gen Z change corporate America?Gen Z is redefining what workers should expect from their employers. It's a good thing.

Remember MoviePass?

Consider my all-time favorite business story, MoviePass. I am not only a pundit who loves talking about MoviePass; I am also a grateful former customer.

MoviePass during a glorious period between 2017 and 2018 offered a $10 membership plan that let subscribers watch one film per day in almost any theater. That means, because of ticket prices, MoviePass lost money almost every single time a subscriber used the service – up to 31 times a month.

MoviePass is perhaps the most extreme example of a redistribution of wealth from the investor class to consumers. I watched more movies in theaters than at any other point in my life thanks to whoever thought it was a good idea to fuel this obviously horrible business. I loved the product precisely because of what a dumb business it was.

Obviously, it collapsed. (Though, I should note, MoviePass is attempting a comeback under new leadership.)

We're perhaps reaching the end of a golden era (for consumers, that is) of subsidized goods and services, driven in large part by investors fueling tech companies without regard for profits.

Ride-hailing apps, for example, have been credited as disrupting for-hire transportation. But the real disruption has been investors' limitless appetites for incurring losses in companies such as Uber and Lyft.

Use Uber, Lyft? Sorry, the era of cheap rides is over.

Until about a decade ago, hiring a driver to take you somewhere was prohibitively expensive for most people. That's because taxicab fares accounted for the cost of a driver's time, gas, vehicle depreciation, insurance and often arcane licensing systems that protected certain companies from competition. It all added up to a lot of money per ride.

Uber and Lyft burst onto the scene and made trips instantly affordable for the masses, because those companies didn't care about profits and they persuaded legions of drivers to accept fares that often failed to compensate them for their real expenses incurred by transporting passengers in their personal cars. In this case, and many others like it, not only are the companies subsidizing services, but so are the individual workers, who are independent contractors and therefore receive none of the benefits of full-time employment.

Biden's gig worker rule is bad idea:Biden's new rule on independent contractors wages war on workers, women and entrepreneurs

Uber, Lyft and other companies in this space are finally getting serious about profits just as people who make up the gig economy are increasingly getting serious about receiving fair wages. As a result, the cost of hiring drivers to take you places is likely to rise. The era of cheap rides is fading.

What's true in transportation should be even more obvious in dining, where businesses compete with thin profit margins and sell actual products (like shrimp).

Endless shrimp might not be the only reason Red Lobster is collapsing, but recent business history should have taught the restaurant chain two things about the promotion: Customers are always happy to take more than they pay for, and that is always a bad long-term business strategy.

If you subsidize it, they will come. They won't stop coming. Not until you shut off the spigot or let the customers destroy your business one free piece of shrimp at a time.

James Briggs is the opinion editor for the IndyStar, where this column first appeared. Contact Briggs at [email protected] or follow him on X and Threads: @JamesEBriggs