Red Lobster Case Study

Introduction

The Uptown Marketing Consulting firm has had the distinct pleasure of evaluating the marketing strategies for the Red Lobster Seafood Restaurants. Red Lobster was founded by Mr. Bill Darden in 1968. Since Red Lobsters’ inception into the market place it has been recognized as the first national casual dining chain, Red Lobster has been a leader in implementation of new technologies to promote and advertise its resources, goods and services, i.e. television advertisements, computerized point of sell (POS) transactions, crossed barriers on types of seafood sold, wines, and desserts. The dilemma Red Lobster is facing is how to compete in today’s market (2010), who is the targeted segment to market to, how to improve the impression of consumers, who is the competition and how to compete effectively with these opponents.

Situational Analysis

Current Competition Situation

The casual dining category has approximately 22,000 chain restaurants competing for business in the United States. Of these 22,000 restaurants, Outback Steakhouse, Olive Garden and Red Lobster are in direct competition. The remaining four casual restaurant chains are Applebee’s, Chili’s, TGI Fridays, and Ruby Tuesday. These four restaurants cater to the bar & grill customer segment.

The PEST analysis, Appendix A, notates that two new categories of casual dining are emerging in the restaurant arena. These new categories are fast casual and premium casual. These restaurants offer made to order meals that are quickly prepared with a slightly higher price point than Red Lobsters $19.00 meal. Even thou Red Lobster’s price point was in direct competition with the premium restaurants like P.F. Changs and the Cheesecake Factory consumer perception is that Red Lobster is just a casual restaurant and not reserved for special occasions like the aforementioned restaurants.

With this in mind it would behoove Darden Restaurants, Inc. to re-evaluate their segmented target group to include the “experientials” segment. This group is indicative of seafood lovers and are in the $100,000 or higher income bracket. Another perception is the quality of the food served at Red Lobster, was perceived to be not as fresh as competitors, the quality of the seafood was poor, and the taste and preparation of the seafood was substandard.

SWOT

Strengths

1. What do you do well?

2. What is unique resources can you draw on?

3. What do others see as your strengths?

Weaknesses

1. What could you improve?

2. Where do you have fewer resources than others?

3. What are others likely to see as weakness?

1. Purchase high quality seafood and ingredients at reasonable prices.

2. Will to integrate new and improved technologies into business

3. Promotions of specialty items i.e. All you can Crab legs, etc.

1. Physical look of the restaurant was outdated.

2. Menu items pictures promoted fried foods over freshly prepared grilled seafood

3. Did not promote freshness of ingredients as well as others

Opportunities

1. What opportunities are open to you?

2. What trends could you take advantage of?

3. How can you turn your strengths into opportunities? Threats

1. What threats could harm you?

2. What is your competition doing?

3. What threats do your weaknesses expose you to?

1. Change consumer perception of freshness of ingredients and seafood.

2. Nutritional meals with breakdown of calorie counts, carbo, protein, and fat grams listed

3. Promote fresh fish, non-fried platers

4. Limit specialty promotions to seasonal with limits to quantity and/or length of promotions.

5. Remodeling of all Red Lobster Restaurants and making needed repairs

6. Hire culinary experts to help design and implement new dishes centered around freshness

7. Change