Posted on 06/26/2024 4:06:39 PM PDT by Jonty30
Red Lobster, known for bringing all-you-can-eat shrimp to the average American and which was at on point the world’s largest seafood chain, filed for bankruptcy last month. Red Lobster now has more than one billion dollars in debt. They closed 50 locations about two months ago and just announced a list of 600 locations it plans to close.
What went wrong?
Same Old, Same Old
Remember going to Red Lobster as a kid? You might have tried your first lobster tail, or surf-n-turf there. That experience you had as a kid, would be hardly different if you went into one of their restaurants now. In the view of industry observers, that might be key to understanding an important part of their demise.
Other full-service chains have revised their menus and refreshed their looks over the last ten years in order to attract more traffic. After the pandemic, consumers started using more disposable income for travel. So fighting to retain customers and appeal to new demographics was essential. Meanwhile inflation from higher labor costs and goods hit restaurant menus.
(Excerpt) Read more at fastcilitycorp.com ...
Although their businesses also may have contributed to that, but apparently the primary cause was that a hedge fund saw enough value in the land to eliminate the restaurants on top.
Assets tend to move to the highest value uses.
Went to one around 2004 and wow.....how the quality had deteriorated.
These restaurants have been sitting on land for 40 years, so it’s not surprising that their value may have risen to the point where it was more productive to eliminate the restaurants on top.
I think it’s a shame that the hedge fund couldn’t move the restaurants to more affordable locations to keep them open.
If Red Lobster were losing money on “all you can eat shrimp” they would have probably stopped doing that pretty quickly.
I’m sure the 400% markup didn’t help.
The assumption that they own the land under the restaurants is just that ... an assumption.
I don’t doubt their business practices were not helping.
Perhaps the hedge fund realized the business was not sustainable, so they decided to accelerate its closure anyway.
I just think it’s unfortunate when businesses close.
Why would Red Lobster’s land be somehow immune from the increased value over forty years that everywhere else in the US it increased?
“RED LOBSTER’S COLLAPSE: WAS IT ALL-YOU-CAN-EAT SHRIMP, OR PRIVATE EQUITY?”
NEITHER - it was the $15+ Minimum Wage in much of the country, plus what has become an EXPECTATION of tipping 20%.
Many here, me included, have had enough and, at a minimum, go to the few restaurants where the police aren’t called if you don’t tip (mainly fast-food).
In this case, what is done cannot be undone.
The loyal customers have been forced to move on and erase
Red-Lobster-ing from their thoughts.
Same thing happened to
Sizzler. Even if they reopen in certain areas, it will require a re introduction, a reinvention of sorts.
Perhaps a new logo and color scheme to really turn heads.
No Robot Only places, please. People need local jobs.
You’re right on that. It cannot be undone.
Never offer all you can eat anything in the USA unless you wanna go broke !
very large pocketbooks
I absolutely agree.
It is not immune, but it is also not necessarily owned by Red Lobster. At least in my neck of the woods, the restaurants are on land owned by some commercial property company and if Red Lobster goes out of business, they will just rent it to the next restaurant. Red Lobster VCs will get nothing out of the deal.
Crappy food, expensive menu, poor service and nobody fixed it is why it failed.......
If Red Lobster were a viable franchise, then the stores would relocate to lower cost land and their clientele would follow them to the new location.
I’ve seen Outback Steakhouse do this in my city. Left high priced land and moved to a cheaper area.
The fact that they’re simply closing the stores tells me that they weren’t making much money at the current location.
SO THAT’S why Red Lobster is closing down.
Now lets talk about Denny’s, Cracker-barrel, Hooters, Outback, Hardee’s, TGI Fridays, Applebee’s...
Hmmmmmmm..... Seems like there might be something going on here!
Last time I ate there the food was below Captain D’s quality.
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