A Year Later, Red Lobster Says Its Independence Paying Dividends
Orlando, Fla. — When Red Lobster’s menu team flew to a seafood show in Boston this spring, fishermen were talking about big catches of sockeye salmon and bairdi crab coming from Alaska.
This month, Red Lobster rolled out its Crabfest menu featuring salmon and crab, which company leaders say shows how far the Orlando-based seafood chain has come in the year since it was sold by Darden Restaurants.
“In the past we just weren’t able to make the decisions fast enough to make a deal and then get it on our menus,” said CEO Kim Lopdrup. “But now that we are independent, we are more nimble and can act faster.”
Orlando-based Darden sold Red Lobster a year ago to private-equity firm Golden Gate Capital. The $2.1 billion deal involved Darden’s oldest brand, but one that was suffering from sinking sales.
Red Lobster management took the separation seriously, calling it “Independence Day,” having staff at each restaurant pose for a team photo and asking that managers sign a “Declaration of Independence” to hang in the hallways at corporate headquarters. The past year has been a transformation inside and out for Red Lobster, Lopdrup said. The company revamped menus in November, moved into a new downtown Orlando headquarters in March, hired a new advertising firm and recently changed the management structure inside the restaurants.
At the headquarters, the executive-chef team moved into its new culinary center earlier this month. The chain has 705 restaurants in North America and 58,000 employees, including about 300 at the headquarters.
The goal is to make Red Lobster the nation’s authority on seafood by adding more varieties of fish and shellfish in addition to the crab, shrimp and lobster that made the chain famous.
As one of the country’s largest seafood buyers, Red Lobster should put more emphasis on where its fish comes from, taking advantage of “farm-to-table” trends popular with affluent and younger customers, Lopdrup said.
But as Red Lobster is still the country’s dominant casual-dining seafood chain, it’s hard to change perceptions, said Craig Weichmann, founder of restaurant-investment firm Weichmann and Associates.
“You can’t do something like this quickly because changing the perception of a restaurant is like turning around a ship,” Weichmann said. “And the larger the ship, the longer it takes to turn.”
Weichmann said more seasonal and specialty dishes could help to increase the average check for Red Lobster, something the chain has struggled to do in the past.
“What Red Lobster is trying to do is to take their core customers and convince them to trade up to some of these dishes that are a bit higher-priced,” he said.
Red Lobster president Salli Setta said customers should expect more specialty fish coming to the menu such as tuna and swordfish. Some restaurants could also see more regional specialties such as Dungeness crab in the Pacific Northwest and stone crab in Florida.
Several nonseafood dishes have been dropped from the menu, and the recipes for other popular dishes such as shrimp cocktails and fish and chips are being overhauled.
Drawing attention to specific ingredients and their sources has been a hot topic in the restaurant industry, but one that has often been hard to execute by large chains, said Gregg Rapp, a California-based restaurant and menu consultant.
“Every item comes from somewhere, and restaurants are trying to point that out right down to the city and farm,” Rapp said. “It makes guests feel more connected to the food.”
Inside the restaurants, staffs have been shuffled to spread the workload among managers, Setta said. Eliminating items such as pork chops has lightened the kitchen load to focus on preparing more dishes in house.
Now a privately held company, Red Lobster finances and store sales comparisons aren’t available to public scrutiny in the same way they were under Darden’s leadership.
However, Lopdrup said the restaurant chain has seen improved same-restaurant sales in every quarter since it was purchased by Golden Gate Capital.
He would not provide specific numbers but said that wasn’t the point, anyway.
“We don’t have to manage for quarterly sales anymore,” said Lopdrup, who spent 11 years at Darden in various roles before the sale. “The power of independence has been much greater than we anticipated.”