Red Lobster Considering Bankruptcy Filing

[ClownLoach]

In fairness, Red Lobster was never that big in SoCal. I’m thinking that it could not compete with plethora of fresh seafood as well as Asian restaurants throughout the area. California Fish Grill is a better product IMO, although it’s not sit down.

We sometimes go to the location in Garden Grove. It was the first place we visited when I first went to California as a kid… hasn’t really changed much all these years later. The specials are a great buy but the menu is so so. I really don’t want to pay over $30 (tax and tip) for a plate of fried shrimp and baked potatoe. .

Yes, the one on Harbor and Garden Grove Blvd! It was their predecessor Seafood Broiler. I believe the founders who sold that concept to Red Lobster went on to launch Market Broiler. The thing is those restaurants were always decently busy because of the promotions, constant commercials for new menu items etc. My most recent employer had Red Lobster in the immediate vicinity of several stores and I've been able to watch the rapid decline from decent crowds outside the door waiting for their table (and a clogged parking lot that I'm getting yelled at about by customers as if I could do anything about it, people are amazing sometimes), to dead and even closed like that Oceanside one.

I agree there seem to be better all around choices even though I'm not into seafood but they served a purpose as a reliable chain where you could find consistent food. When that consistency goes away as is widely reported to have happened that is what kills chain restaurants fast. Usually cost cutting by new ownership or management focused on increasing profits over customer satisfaction is the culprit.

Chain restaurants are getting a lot of flack in the news and it is misdirected. Comments like "people don't eat at big chains anymore" or "people don't eat at sit down restaurants anymore" yet you see plenty of growth at newer concepts that deliver consistently good service and quality even if it isn't necessarily of luxurious quality (see Texas Roadhouse growth for example). And of course you seldom see any restaurant site sit empty for long unless there was something wrong with the actual site instead of previous occupant.

The mismanagement of some chains has been incredible. Look at PF Changs under their new private ownership in 2012. They've been passed from firm to firm like a football already and the entire brand has been completely destroyed. This was a brand known for such consistent food and service that even in the Asian community where Americanized chains are questioned, it had an outstanding reputation for quality and surprising authenticity of many dishes. For many years they bragged that they were one of the only restaurant companies to have never had a location go out of business. Of course now they're a shadow of themselves with closures everywhere and neglect at those that remain open after the usual "value extraction" from these moronic firms that have botched every aspect of the operation. Horrible Panda Express quality food in puny portions. In fact on a busy day at lunchtime when the steam table is getting restocked every few minutes I'd argue Panda is now better than PF Changs which should be shocking to anyone who has observed the growth and descent of their business. Waiting for a PF Changs bankruptcy. Maybe these private equity firms are good somewhere, but they are not any good for retail, restaurants, or hospitality. They do not see any value in people, and people are what makes the retail, restaurant, and hospitality businesses run successfully.

BTW I don't eat seafood so if I'm going it's always with friends or family, and that means I don't go to these seafood places that don't offer some beef or chicken dish for those who don't like fish. So something like CA Fish Grill who doesn't offer anything like even a basic chicken dish wouldn't be a place I'd go at all. It's a bad decision on their part because I would not complain about something like so-so quality or overpriced chicken fingers as long as they are edible if it meant I could be included. But all these new fast casual fish places are totally fish only from what I've seen with nothing for non fish eaters, or vegetarians etc. And that will limit their growth substantially as they get ruled out when some groups are picking a restaurant. Even In-N-Out has their "grilled cheese" for vegetarians.

[pseudo3d]

Chain restaurants are getting a lot of flack in the news and it is misdirected. Comments like "people don't eat at big chains anymore" or "people don't eat at sit down restaurants anymore" yet you see plenty of growth at newer concepts that deliver consistently good service and quality even if it isn't necessarily of luxurious quality (see Texas Roadhouse growth for example). And of course you seldom see any restaurant site sit empty for long unless there was something wrong with the actual site instead of previous occupant.

Most "analysts" have awful, misinformed takes. As much as I gripe about some of the takes on this site, it's not necessarily worse than """real""" articles. The issue is that chain restaurants have a lifespan. It goes from good enough to become a chain, to the hot new place that everyone wants, to a stable fixture of suburbia, to its eventual death, where you might have a handful of loosely-affiliated restaurants in Tennessee or "the original" still operating.

It may seem strange now but at one time what was named "T.J. Applebee's" was a trendy "neighborhood bar" chain that exploded in popularity before it reached saturation.

What Red Lobster's owners need to do is follow the consolidation in the chain restaurant industry and add a few chains, while developing some of their own, maybe even with a re-tooled seafood concept.

[veteran+]

Sit down restaurants (the upper scale types) are thriving in my area but NOT the big chain ones.

Fast Food types are slow except the circus of I&O.

Fast casual are just okay.

Also indepenent sit downs are thriving.

[Bagels]

ClownLatch brings up some excellent points. I don’t agree chains have a natural flight — many (Denny’s,, Chili’s, Friday’s, etc.) have a managed to stay revelant even as their peers perished. And Texas Roadhouse continues to grow and thrive while Outback does the opposite… even though Texas Roadhouse basically copied their menu and style.

Many chains have vanished because they never invested in upgrading their locations. Most Red Lobsters have the same interior that they opened with in the 1980s and 1990s.

Red Lobster is the only mainstream seafood restaurant. Many of its menu items, including the biscuits and scampi, are well known and beloved. The problem is that the cost of seafood has swelled beyond the rate of inflation since the 1980s, making an “affordable” seafood establishment a poor business model (notice how the casual chains like Long John Silvet have all but vanished).

Darden knew this. They had been growing their menu with wood fire grilled meals, and had plans to add wood fire pizza ovens in its restaurants. They had started to modernize their restaurant interiors as well. But their investors complained loudly that such moves were taking capital and potential sales away from Olive Garden and Longhorn Steakhouse, and thus the chain was divested. Virtually nothing has been done to it since.

[ClownLoach]

ClownLatch brings up some excellent points. I don’t agree chains have a natural flight — many (Denny’s,, Chili’s, Friday’s, etc.) have a managed to stay revelant even as their peers perished. And Texas Roadhouse continues to grow and thrive while Outback does the opposite… even though Texas Roadhouse basically copied their menu and style.

Many chains have vanished because they never invested in upgrading their locations. Most Red Lobsters have the same interior that they opened with in the 1980s and 1990s.

Red Lobster is the only mainstream seafood restaurant. Many of its menu items, including the biscuits and scampi, are well known and beloved. The problem is that the cost of seafood has swelled beyond the rate of inflation since the 1980s, making an “affordable” seafood establishment a poor business model (notice how the casual chains like Long John Silvet have all but vanished).

Darden knew this. They had been growing their menu with wood fire grilled meals, and had plans to add wood fire pizza ovens in its restaurants. They had started to modernize their restaurant interiors as well. But their investors complained loudly that such moves were taking capital and potential sales away from Olive Garden and Longhorn Steakhouse, and thus the chain was divested. Virtually nothing has been done to it since.

Yep and Darden must have known whatever they were going to do would be controversial to investors. So they cashed out by selling to a incompetent operator, Golden Gate who has a reputation that smells worse than bad fish, and fought off the complaints from the activist investors. Some said it was a giveaway, some said it was a missed opportunity, but now it is pretty clear that they knew the knives were falling and weren't going to try to catch them. Darden is looking pretty great right now when you look at earnings, profits, revenue, basically green across the board. Red Lobster is bankrupt. Obviously they made the right choice (even if they were in effect throwing gasoline on the fire by allowing dumb PE folks to take over knowing their poor track records in the retail, restaurant and hospitality sectors).

[buckguy]

ClownLatch brings up some excellent points. I don’t agree chains have a natural flight — many (Denny’s,, Chili’s, Friday’s, etc.) have a managed to stay revelant even as their peers perished. And Texas Roadhouse continues to grow and thrive while Outback does the opposite… even though Texas Roadhouse basically copied their menu and style.

Many chains have vanished because they never invested in upgrading their locations. Most Red Lobsters have the same interior that they opened with in the 1980s and 1990s.

Red Lobster is the only mainstream seafood restaurant. Many of its menu items, including the biscuits and scampi, are well known and beloved. The problem is that the cost of seafood has swelled beyond the rate of inflation since the 1980s, making an “affordable” seafood establishment a poor business model (notice how the casual chains like Long John Silvet have all but vanished).

Darden knew this. They had been growing their menu with wood fire grilled meals, and had plans to add wood fire pizza ovens in its restaurants. They had started to modernize their restaurant interiors as well. But their investors complained loudly that such moves were taking capital and potential sales away from Olive Garden and Longhorn Steakhouse, and thus the chain was divested. Virtually nothing has been done to it since.

Yep and Darden must have known whatever they were going to do would be controversial to investors. So they cashed out by selling to a incompetent operator, Golden Gate who has a reputation that smells worse than bad fish, and fought off the complaints from the activist investors. Some said it was a giveaway, some said it was a missed opportunity, but now it is pretty clear that they knew the knives were falling and weren't going to try to catch them. Darden is looking pretty great right now when you look at earnings, profits, revenue, basically green across the board. Red Lobster is bankrupt. Obviously they made the right choice (even if they were in effect throwing gasoline on the fire by allowing dumb PE folks to take over knowing their poor track records in the retail, restaurant and hospitality sectors).

Chili's and Fridays have been closing stores for years and just announced a new round of closings. Applebee's continues to close stores and seems destined to become a mostly small market operation, at best. Denny's has had several rounds of closures---I think they benefited, over time, by the decline and, in some cases, ultimate disappearance of regional competition like Shoney's and the Big Boy franchises, as well as the problems IHOP has had. Red Lobster has been hurt by rising seafood prices, but pizza ovens weren't going to save them.

Doing a mass market version of an expensive concept is always going to be tricky---a regional operator is probably more likely to succeed than a national one, but they need enormous volumes to do that and there's probably a lesson in the once popular steakhouse chains (which had real steaks rather than the Applebee's variety)---most of those disappeared or shrank to small bases; the only survivors seem to be regional operations like Girves Brown Derby in Ohio or Hoss' in Pennsylvania and even some of those continue to shrink.

[buckguy]

ClownLatch brings up some excellent points. I don’t agree chains have a natural flight — many (Denny’s,, Chili’s, Friday’s, etc.) have a managed to stay revelant even as their peers perished. And Texas Roadhouse continues to grow and thrive while Outback does the opposite… even though Texas Roadhouse basically copied their menu and style.

Many chains have vanished because they never invested in upgrading their locations. Most Red Lobsters have the same interior that they opened with in the 1980s and 1990s.

Red Lobster is the only mainstream seafood restaurant. Many of its menu items, including the biscuits and scampi, are well known and beloved. The problem is that the cost of seafood has swelled beyond the rate of inflation since the 1980s, making an “affordable” seafood establishment a poor business model (notice how the casual chains like Long John Silvet have all but vanished).

Darden knew this. They had been growing their menu with wood fire grilled meals, and had plans to add wood fire pizza ovens in its restaurants. They had started to modernize their restaurant interiors as well. But their investors complained loudly that such moves were taking capital and potential sales away from Olive Garden and Longhorn Steakhouse, and thus the chain was divested. Virtually nothing has been done to it since.

Yep and Darden must have known whatever they were going to do would be controversial to investors. So they cashed out by selling to a incompetent operator, Golden Gate who has a reputation that smells worse than bad fish, and fought off the complaints from the activist investors. Some said it was a giveaway, some said it was a missed opportunity, but now it is pretty clear that they knew the knives were falling and weren't going to try to catch them. Darden is looking pretty great right now when you look at earnings, profits, revenue, basically green across the board. Red Lobster is bankrupt. Obviously they made the right choice (even if they were in effect throwing gasoline on the fire by allowing dumb PE folks to take over knowing their poor track records in the retail, restaurant and hospitality sectors).

Chili's and Fridays have been closing stores for years and just announced a new round of closings. Applebee's continues to close stores and seems destined to become a mostly small market operation, at best. Denny's has had several rounds of closures---still, I think they benefited, over time, by the decline and, in some cases, ultimate disappearance of regional competition like Shoney's and the Big Boy franchises, as well as the problems IHOP has had.

Red Lobster has been hurt by rising seafood prices, but pizza ovens weren't going to save them. Doing a mass market version of an expensive concept is always going to be tricky---a regional operator is probably more likely to succeed than a national one, but they need enormous volumes to do that and there's probably a lesson in the once popular steakhouse chains (which had real steaks rather than the Applebee's variety)---most of those disappeared or shrank to small bases; the only survivors seem to be regional operations like Girves Brown Derby in Ohio or Hoss' in Pennsylvania and even some of those continue to shrink.

[pseudo3d]

Chili's and Fridays have been closing stores for years and just announced a new round of closings. Applebee's continues to close stores and seems destined to become a mostly small market operation, at best. Denny's has had several rounds of closures---I think they benefited, over time, by the decline and, in some cases, ultimate disappearance of regional competition like Shoney's and the Big Boy franchises, as well as the problems IHOP has had. Red Lobster has been hurt by rising seafood prices, but pizza ovens weren't going to save them.

That's my point--Chili's and TGI Friday's were once trendy, hot chains, but they aren't anymore. You can hand-wring about private equity firms but Darden saw the writing on the wall and made the decision to drop it, even if it was still a controversial decision at the time.

[Bagels]

ClownLatch brings up some excellent points. I don’t agree chains have a natural flight — many (Denny’s,, Chili’s, Friday’s, etc.) have a managed to stay revelant even as their peers perished. And Texas Roadhouse continues to grow and thrive while Outback does the opposite… even though Texas Roadhouse basically copied their menu and style.

Many chains have vanished because they never invested in upgrading their locations. Most Red Lobsters have the same interior that they opened with in the 1980s and 1990s.

Red Lobster is the only mainstream seafood restaurant. Many of its menu items, including the biscuits and scampi, are well known and beloved. The problem is that the cost of seafood has swelled beyond the rate of inflation since the 1980s, making an “affordable” seafood establishment a poor business model (notice how the casual chains like Long John Silvet have all but vanished).

Darden knew this. They had been growing their menu with wood fire grilled meals, and had plans to add wood fire pizza ovens in its restaurants. They had started to modernize their restaurant interiors as well. But their investors complained loudly that such moves were taking capital and potential sales away from Olive Garden and Longhorn Steakhouse, and thus the chain was divested. Virtually nothing has been done to it since.

Yep and Darden must have known whatever they were going to do would be controversial to investors. So they cashed out by selling to a incompetent operator, Golden Gate who has a reputation that smells worse than bad fish, and fought off the complaints from the activist investors. Some said it was a giveaway, some said it was a missed opportunity, but now it is pretty clear that they knew the knives were falling and weren't going to try to catch them. Darden is looking pretty great right now when you look at earnings, profits, revenue, basically green across the board. Red Lobster is bankrupt. Obviously they made the right choice (even if they were in effect throwing gasoline on the fire by allowing dumb PE folks to take over knowing their poor track records in the retail, restaurant and hospitality sectors).

Chili's and Fridays have been closing stores for years and just announced a new round of closings. Applebee's continues to close stores and seems destined to become a mostly small market operation, at best. Denny's has had several rounds of closures---still, I think they benefited, over time, by the decline and, in some cases, ultimate disappearance of regional competition like Shoney's and the Big Boy franchises, as well as the problems IHOP has had.

Red Lobster has been hurt by rising seafood prices, but pizza ovens weren't going to save them. Doing a mass market version of an expensive concept is always going to be tricky---a regional operator is probably more likely to succeed than a national one, but they need enormous volumes to do that and there's probably a lesson in the once popular steakhouse chains (which had real steaks rather than the Applebee's variety)---most of those disappeared or shrank to small bases; the only survivors seem to be regional operations like Girves Brown Derby in Ohio or Hoss' in Pennsylvania and even some of those continue to shrink.

The chains I mentioned have shrunk but have managed to stay relevant. Most modern legacy chains built out their footprint in the 1980z and 1990s. Demographics have dramatically changed since, so it’s no surprise a large number of locations are no longer viable. For example, when I moved to my community two decades ago, the surrounding area was almost entirely white, middle class. Today it’s mostly affluent and largely Asian… and unsurprisingly, almost all the chain restaurants have been replaced with local Asian outlets or high end concepts.

Locations have also gone stale. Many of these chains were built in/nearby the parking lots of now dead malls. Where I grew up, a new retail district was built out beginning in the late 90s through the 00s. Most of the chain restaurants stayed a few miles up the road at the older retail district, which was gradually going out of business. Only in recent years did some move (others shuttered), but if they would’ve done so years ago…

In contrast, consider Outback. Near my brother’s house, they opened a location in 2000 that was super busy for years. By 2017, it closed. The local demographics haven’t changed significantly through the years. A year after it was closed, it reopened… as a Texas Road House. Super busy again. Texas Road House pretty much copied Outback’s menu but at a lower price point with modern interior.

Pizza ovens by themselves wouldn’t have saved Red Lobster, but transitioning to a diversified menu featuring wood grilled meats (autocorrect screwed my OP) may have.

[Bagels]

Chili's and Fridays have been closing stores for years and just announced a new round of closings. Applebee's continues to close stores and seems destined to become a mostly small market operation, at best. Denny's has had several rounds of closures---I think they benefited, over time, by the decline and, in some cases, ultimate disappearance of regional competition like Shoney's and the Big Boy franchises, as well as the problems IHOP has had. Red Lobster has been hurt by rising seafood prices, but pizza ovens weren't going to save them.

That's my point--Chili's and TGI Friday's were once trendy, hot chains, but they aren't anymore. You can hand-wring about private equity firms but Darden saw the writing on the wall and made the decision to drop it, even if it was still a controversial decision at the time.

Casual chains in general have been in decline since the Great Recession. The decline is largely blamed on rising costs and the shrinking middle class. These chains are still very relevant though - Chili’s still has over 1,200 locations - down 400 from its peak.

Darden didn’t want to give up Red Lobster - investors pressured it into doing so. The debt from the transaction had a lot to do with the financial woes.