Red Lobster Case Study

McKensie Vissering

Red Lobster Case Study

FACTS

Timeline

* 1968 – Red Lobster founded by Bill Darden who had 30 years of experience in the restaurant business

* First restaurant was in Lakeland, FL and found success instantly – had to expand in one month and after two years, four more locations were opened

* 1970 – Chain was sold to General Mills but Bill stayed on as President

* 1975 – Joe Lee became President

* Red Lobster’s Firsts:

* First casual dining chain to achieve national scale

* Developed the first national seafood distribution system in the 1970’s and this became an important competitive asset.

* First chain to use a computerized point of sale system

* 1982 – Red Lobster was used as a platform for Olive Garden to be created

* By 1985, RL had grown to 400 locations

* 1995 – General Mills spun off its restaurant unit into Darden Restaurants, Inc.

* 2004 - Kim Lopdrup became president when the chain was struggling

* Bringing affordable seafood to mainstream America, but needed to focus on “freshness”

* 2007 – Darden Restaurants acquired RARE Hospitality which owns Longhorn Steakhouse and Capital Grille

* Recession of 2008 – 2009 hit the casual dining industry hard

* After FY ’10:

* 694 Red Lobsters

* 723 Olive Gardens

* 2 specialty chains: Bahama Breeze and Seasons 52

* Total Revenue of $7.11 B

American Restaurant Industry

* 2009 – Americans spent about 40% of food dollars away from home

* 48% “fast food” (Subway, McDonald’s)

* 31% “casual dining” (Applebee’s, Red Lobster)

* 21% - Family dining, fine dining

* New segments emerging – “fast casual” and “premium casual”

* 2 meals per month at a casual dining (usually a bar & grill) – largest chain was Applebee’s

* “Big 7” – Applebee’s, Chili’s, TGI Friday’s, Ruby Tuesday, Outback Steakhouse, Olive Garden, Red Lobster – made up 33% of the 22,000 chain casual dining restaurants in...