Red Lobster, an American Seafood Institution, Files for Bankruptcy
nytimes.com
nytimes.com
Seafood is a harder sell I think and higher prices don’t help.
It's 100% correct that in NE or anywhere near the coast Red Lobster was always considered inferior. The local competition and the ability of non-chain restaurants to "buy off the dock" meant you could always find better options that maybe even cost less.
When I moved to Central TX, I was stunned by how much everyone loved Red Lobster. It was my MIL's favorite celebration restaurant, and my wife loved it as well. To me having lived on fresh seafood for years, it was OK not great, but you could find decent seafood, slightly overpriced. I did see a rapid decline over the next 10-15 years.
But the problem isn't market share since most of the US doesn't have coastal access to fresh seafood. It's the same thing that happens to every chain restaurant after being bought out by a corporation. The restaurant life cycle as I have come to see it.
Start off being run by an owner who cares and is invested in making good food, grow to a local chain, start franchising, grow and get bought by corporate, focus changes from good food to profit and consistency, food quality craters, customers depart.
There's no magic here besides corporate mismanagement from the unlimited shrimp deal that cost them millions a quarter in loss to moving away from scratch cooked food to microwaved prepackaged food.
It's the same with Applebee's, Chili's etc. at one point all these places were decent to good before corporate greed and mismanagement steps in and starts selling over-priced sugar cocktails and appetizer specials. It's no longer about providing good food and atmosphere to families but about extracting maximum value from a customer engagement.
> It's the same with Applebee's, Chili's etc. at one point all these places were decent to good before corporate greed and mismanagement steps in and starts selling over-priced sugar cocktails and appetizer specials. It's no longer about providing good food and atmosphere to families but about extracting maximum value from a customer engagement.
There needs to be a single catch-all phrase for this type of process, which (I think) we've seen more and more regularly in recent years. We see it in physical businesses, and it's also probably behind the huge shift to subscription-based services online. My interpretation is that it's essentially the capitalism that we've had for decades, but taken to ever-greater extremes. It seems to be rooted in America (and indeed, arguably behind a decent proportion of America's increasing woes) but is gradually infecting Europe too.
Whenever I see examples, I think of /r/latestagecapitalism, or "hyper-capitalism" but I'm not sure these terms would be widely-enough understood to be helpful in discussing or explaining the phenomenon.
While the broad strokes about the loss of a restaurant's soul under corporate influence rings true, according to Wikipedia, Red Lobster was purchased by General Mills in 1980 and then went through its massive growth and expansion phase.
That reflects my own memories of the place during that time. They certainly weren't losing customers after their corporate acquisition.
However, food culture and trends change, and the US has undergone a backlash against chain restaurants in general, with the perception that they are synonymous with low quality food.
My theory is that this is even worse for a seafood chain, where perception of freshness is a make or break criterion for diners. Once that perception is out there, it is very hard to recover the brand's image.
> On May 12, 2014, Darden announced that as part of the spinoff of Red Lobster, it was converting the co-located Red Lobster and Olive Garden locations into standalone Olive Garden locations.[31] On May 16, 2014, Darden announced that it would be selling the Red Lobster seafood restaurant chain to Golden Gate Capital for US$2.1 billion.[32] Darden announced the completion of the sale of Red Lobster on July 28, 2014
So, the divesting by the original owners and founders started around 2014. General Mills kept Darden in charge until his death in 1994.
The Union Group effectively burned 2.1 billion in value in 10 years.
It was how they financed the 2014 acquisition by spinning all the real estate assets to a separate entity per Forbes. Straight up corporate cannibalism.
So Golden Gate Capital gutted it, dumped it, and then jacked up the rent... Gordon Gecko would be proud.
How can they decide how much rent to charge if they no longer own the land? Do they just act as a property manager between the new landowner and the the restaurant?
> So Golden Gate Capital gutted it, dumped it, and then jacked up the rent... Gordon Gecko would be proud.
I can totally see that happening, but I'd argue they wouldn't have done it to a strong brand, which has a lot of value. Red Lobster wasn't a strong brand. If the brand were strong it wouldn't have been sold in the first place.
PE and hedge funds look for weak businesses that they can then gut. They have a lot of leverage in those situations. I doubt the hedge funds lost money on the bankruptcy.
Perhaps, but it's also possible that the value was already burning, because the brand itself has lost any caché and the final series of owners accelerated it's demise.
I remember when the brand has a lot of positive recognition 30+ years ago, and then when it became the subject of jokes, and that happened well before those acquisitions.
I came to understand a long time ago that when a business starts franchising, that's a sign that the business is going to be making worse product.
Sadly, you can't tell which is which based on how fancy or expensive the food is (in fact, the very best seafood on the stretch of coastline near me tends to come from small run-down-looking places), except that the places aimed at tourists usually aren't going with the fresh stuff.
Your best bet is to befriend some locals and ask. That's how it's been for my entire life.
Good times.
But, to back up your point, I live in an area (not NE US) where fresh seafood is common and reasonably priced. Why eat at a place like Red Lobster when you have much better options?
But even when I've been in areas where good seafood is harder to get, I was never tempted to give Red Lobster another chance.
There it is.
Reflexive distaste for PE aside, Red Lobster somehow became a prominent part of my childhood's core memories. Must have met the criteria of affordable, family-friendly, and enough menu variety for everyone. I remember seeing strange adult drinks in salt-rimmed glasses called "margaritas" for the first time, how my mom would always point out how cold and dark it was inside, learning words like "booth" and "platter", and of course watching the lobsters awaiting their fate.
I haven't been to a Red Lobster in about 20 years. The one in my hometown is still open. Maybe I can swing by a location before they all close and see if the biscuits bring back memories of good times with family who aren't around anymore.