Hoops, Lindsay, Rosati
Maj. Tyabji, Mgt. 375 Red Lobster Case Study
1 May 2013
Red Lobster was started in 1968 with one location in Orlando, FL. Now it has grown to one of the largest restaurant chains in the nation with 690 locations in all major cities. When Red Lobster was a young chain in the 1980s, it had a reputation for high quality seafood away from the water. In recent years, the company has struggled with its image. In a 2004 survey, participants questioned the “quality of the seafood” and the “taste/preparation of the seafood” (exhibit 6). Red Lobster needed to change how they are perceived by the public. Red Lobster should continue to overhaul their image, by completely remodeling the inside and outside of their
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Red Lobster should definitely raise the price food and wine to accommodate the Experiential crowd. If these customers are paying more they will feel as though they are getting the sophisticated, upscale atmosphere that they desire (Table A). The pricing comes down to who Red Lobster wants to target and with the recent renovations already underway, the company has already blazed a trail towards attracting this new type of customer. Based on the purchase behavior of identified groups the Experientials will have greater $6.10 greater average spending power per meal over the Indulgent crowd ($24.88 compared with $18.78) (Table B). This makes them more profitable as a customer and gives them the greatest experience with regards to enjoying fish and the wide variety of seafood (Table A). Lastly, with the large decline in seafood over time, Red Lobster has the opportunity to make a greater profit because they are paying less for the seafood, while the customer is paying slightly more for the experience that comes along with it (Exhibit 5). Red Lobster’s competition, in the “Big 7” category, has more locations within the United States with the exception of Olive Garden (which has five less). However, per location, Red Lobster brings in $300,000 more volume than its closest competitor (Exhibit 16). That shows that Red Lobster is succeeding over its competition per location.