Endless Shrimp Did Not Kill Red Lobster 🦞 (Part 1 of 2)
Over the last week, I keep reading that Endless Shrimp killed Red Lobster. Nothing could be further from the truth. Poor leadership compounded by time led to RL’s downfall. I worked at Red Lobster for 23 years. I began in 1999 as an inexperienced server and left in 2022 as a Senior Director of Operations leading over 50 restaurants. Over that time span, I saw the good times and experienced every poor decision that led to RL’s demise. Here’s my opinion about why RL failed.
1. Sale to Golden Gate Capital (Private Equity): when Darden Restaurants sold RL in 2014, this began the string of poor decisions that were unrecoverable. Prior to the purchase, RL owned most of its real estate, allowing for good profit margins. The same day GGC closed on the sale of RL for $2.1B, they sold the owned real estate to several REITs for $1.5B, with exorbitant long term lease-back agreements adding significant cost. Not only did profits suffer, but underperforming and aging locations could not be relocated due to these 25 year agreements.
2. Restaurants should be led by restaurateurs, not finance & marketing departments: During my tenure, the mid 2000’s were the best for the brand. The brand went upscale with beautiful remodels, an excellent fresh fish program, and wood-fired grills. Significant investments were made in employee training and the brands Core Values of Fun, Integrity, Genuine Caring, Hospitality, Team Work, Excellence, and Respect were alive and well. In short, the focus was on quality, and guests noticed. Guests also noticed when RL started taking shortcuts. Smaller portions, lesser quality premade frozen products, bigger server sections all to save a buck dictated by people who’ve never worked as a line cook on a Mother’s Day. The brand became focused on managing the middle of the P&L, and not boldly innovating ways to drive top line sales and staying relavent. (Continue to next post)
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