Red Lobster Case Study Essay
Red Lobster Case Study
Red Lobster is a chain of casual dining restaurants, founded and managed by Bill Darden. The headquarters of the company is located Florida, and it has branches in Japan, United Arab Emirates, and Canada. Red Lobster has approximately 698 branches. The company was formed in 1968, with the aim of providing a place where Americans will get some seafood.
The company was successful in introducing fresh and new delicacies to their customers. These fresh dishes became popular, and this accelerated the growth of the company, and in 1980s, the company made its presence in Canada. However, its Canadian experience was not good; this is because the company made lots of losses. Competition was stiff in Canada, and due to poor strategies and lack of sufficient market information, the company was forced to close some of its branches in Quebec, Canada. This happened on September 1997. In 1995, Red Lobster, Olive Garden and Bahama Breeze were integrated, as part of the Darden Restaurants Inc. Joe Lee was then in charge as the Chief Executive Officer, and later on, he handed the company to Clarence Otis.
The company is passionate about seafood, and over the years, the company has initiated the culture of innovation for the purposes of introducing and developing new menus that will satisfy the needs of its customers. Red Lobster has become a household name and over the years was able to gain a good customer base. This has resulted in Red Lobster accounting for 43% of the market share in the casual dining seafood chain division. At the end of 2010, there were 694 Red Lobster locations and total revenue for fiscal 2010 was $7.11 billion. Red Lobster now offers a range of seafood products that include fresh fish, shrimp, lobster and snow crabs. The chain of restaurants grew quickly and was considered part of the “Big 7” of the casual dining chains.
1. Computerized Point of Sale system is top of the line
2. Strong supply chain – Leader in casual dining seafood category for distribution.
3. Certified suppliers direct to restaurants through overnight deliveries.
4. Brand is already known and established, a seasoned player in the chain restaurant industry.
1. They lack highly qualified chefs who have the ability to produce high quality foods. 2. Discrimination in terms of satisfying the customer’s needs. They value rich customers as compared to poor customers. Its competitors treat their customers equally, and they do not enact discriminative measures in serving their customers. 3. The company only concentrates on seafood, and therefore it does not diversify its services. Brinker international and Applebee’s have diversified in their operations. 4. Lack of enough capital to expand its operations outside Canada, Japan and United States of America. This is unlike its competitors who are well funded and capital intensive. 5. The restaurant is getting old fashioned and outdated.
1. Rebranding or repositioning.
2. There is room for creating mergers, and strategic alliance, between the company and other related companies. 3. The company can take advantage of the emerging markets of Brazil, China, Russia, India and South Africa. It should raise capital, and invest in these economies. 4. Growing number of health enthusiasts who might prefer seafood to red meat.
1. Newer restaurants that are trendier.
2. Reduced favorability for the kind of restaurant category that Red Lobster is a part of.
3. Decreasing demand may lead to location closures.
4. Increase in price of raw ingredients such as fresh, quality fish and other seafood.
COURSE OF ACTION
It is highly recommended to continue attracting affluent experiential segment group. In order to continue to attract experiential, a bigger emphasis should be put on the wine selection. This group is kwon for high alcohol consumption (12% of the alcohol consumed at Red Lobster representing the second highest consuming group). Special wine menu with wide variety of wine selection should be introduced. And like the ‘fresh fish’ menu, the special wine menu should be offered to guests to compliment the wine of the day. This also would help Red Lobster to continue expanding without diluting their brand image. Because the original customers would enjoy what they like, and the new customers would have new wine selection to satisfy their needs.
Also Red Lobster will benefit even more if they offer different menus at different locations. For example, in California they could offer slightly more expensive dishes and desserts as appose to the east side in the lower income earning areas where the core consumers will not like the changes at all and they only go there because of the fact that is “cheap seafood.”. They definitely should continue remodeling all their restaurants inside and out to be able to compete and gain market share. Because it will attract new customers and the traditional customers will experience even greater pleasant experience because of the new re-modeled atmosphere. The promotion strategy benefits Red Lobster very much; therefore, they better continue offering promotions and coupons via their website.