Operations

How Red Lobster plans to get back on its feet

As it heads for bankruptcy and a probable sale, the seafood restaurant chain laid out a turnaround strategy that includes tech upgrades and more “sensible” menu promotions.
Red Lobster restaurant exterior
The chain is also planning physical improvements to it restaurants. | Photo: Shutterstock

It’s safe to say we won’t be seeing another all-you-can-eat shrimp deal at Red Lobster anytime soon.

As the chain readies itself for the Chapter 11 bankruptcy process and a probable sale, management aired a plan to stabilize the troubled brand that includes more “sensible” menu promotions and fewer limited-time offers.

That is presumably a reaction to the $20 Ultimate Endless Shrimp deal that quickened the chain’s descent into bankruptcy.

But that is not the only thing that the  chain wants to change under new CEO Jonathan Tibus, who was hired in February to help navigate Red Lobster's worsening financial situation and prepare it for a restructuring and sale.

In a bankruptcy document filed Sunday, Tibus laid out a three-part strategy intended to improve Red Lobster’s operations. The plan has already been underway for months.

The chain’s top priority, according to the document, is to make its restaurants great places to work. That will include tech upgrades and physical improvements to its stores. Red Lobster will also modernize its hiring process and do more to recognize and reward employees to help with retention.  

The chain will also focus on the customer experience, in part by simplifying its menu to make it easier to execute but still appealing to guests. It’s also planning a “sensible promotional calendar” with fewer limited-time offers, which have become a routine traffic-driving tactic for casual-dining chains.

The third part of Red Lobster’s plan involves closing restaurants. The chain earlier this month closed nearly 100 weak stores that had burdensome leases or poor performance, bringing its U.S. footprint to around 550 locations. And it did not rule out closing more to further reduce its costs. According to the bankruptcy filing, it plans to either reject or renegotiate additional leases.

Orlando-based Red Lobster has struggled for years amid a consumer shift away from older casual-dining brands. It has also been weighed down by expensive leases after former Golden Gate Capital sold much of the chain’s real estate in 2014. Those problems have been exacerbated more recently by leadership turnover and strategic misfires such as Endless Shrimp.

The chain is now hoping for a fresh start via Chapter 11 and a new owner. 

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