At last, for Red Lobster, everyone’s priority at the company is Red Lobster. But will that be enough to make customers love it again?
Red Lobster's new Bairdi crab dish.
Red Lobster
The return of Crabfest at Red Lobster this week arrives nearly one year since America's largest seafood restaurant chain reluctantly became an independent company.
As one negative quarter followed another, its former owner, Darden, didn't see a quick way to reverse the restaurant's disappointing sales. So it sold Red Lobster — just one of its eight brands at the time — to private equity firm Golden Gate Capital. No one knew how things would turn out for the embattled chain.
Twelve months later, in an interview with BuzzFeed News, Red Lobster management wanted to make one thing clear: It's managed to land on its feet.
"We believe we're benefiting greatly from being an independent company," said Red Lobster CEO Kim Lopdrup. "We've had positive comparable restaurant sales growth each quarter since separation."
The company has reduced discounting. Changes in the kitchen to improve food quality and taste have boosted perception. After its prior strategy of offering a greater variety of meat dishes like pork and chicken failed to grow sales, the chain refocused on fresh seafood. The menu is now 85% seafood, up from 75%, said President Salli Setta, and true to its name, it now offers a few more lobster dishes. Cooks are also preparing some items differently: For example, starting this summer it began cooking the shrimp in shrimp cocktail in restaurants — which Setta said results in a plumper, tastier shrimp than the previous frozen and precooked option. Beginning this month, it will test breading fish to order for fish and chips. (Its widely adored cheddar biscuits will remain the same.) To promote innovation, the company tries to think of itself now as a "47-year-old startup." All of these efforts have increased guest satisfaction.
"It has gone better than any of us dared hope," said Lopdrup.
It's still too early to know how strong a recovery Red Lobster can make. Still, "that they're getting traction this soon is pretty amazing," said Malcolm M. Knapp, a foodservice industry adviser and founder of the restaurant industry index Knapp-Track. The company appears to have a coherent, focused strategy, and it's getting support from its new owner, he said, and "all of those are good things."
Being able to say this is no small feat for a 700-restaurant chain that was portrayed as dragging the rest of Darden down with it not too long ago.
"In contrast to the rest of the business, Red Lobster had significant deterioration this quarter," Darden's then-CEO Clarence Otis told investors in December 2013 when announcing plans to separate the seafood chain. Guest traffic had been sliding for some time and comparable sales continued to fall. Facing a number of headwinds, Darden wanted to focus on fixing problems at its other ailing chain: Olive Garden.
"Red Lobster was not the number one priority," said Lopdrup. "We lost focus on differentiating Red Lobster as a seafood specialist and clearly had lost sales momentum."
Voices chimed in from every direction about what had gone wrong with Red Lobster, including bad food and high prices. Rumors spread that it would go out of business.
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