Rebranding

Red Lobster Wants to Go Upscale


(Corrects description of seafood dish in the third paragraph.)

Promotions such as “30 shrimp for $11.99” just weren’t doing anything to improve Red Lobster’s reputation as a purveyor of low-quality seafood. “You’re not going to see any of these low-priced specials that we’re not proud of,” Kim Lopdrup, Red Lobster’s new chief executive officer, told the Associated Press. The chain has no plans to run the 30-shrimp deal again. But it’s not dropping “Lobsterfest” or “Crabfest.”

“There will still be promotions, but we’ll be promoting food we’re proud of,” Lopdrup told Businessweek.com.

One sign of the coming transformation: the plating. To mimic the way fine dining establishments present their food, Red Lobster’s kitchens are now, for instance, serving fish over rice rather than spreading them across the plate.

The chain, which just completed its spinoff from Darden Restaurants (DRI), has been struggling to hold its own against so-called fast-casual competitors such as Panera Bread (PNRA) and Chipotle Mexican Grill (CMG), which offer high-quality food at a lower cost and faster speed. Just as fast-casual restaurants built their success by positioning themselves as a step up from tired fast-food chains, it seems Red Lobster is now attempting to become a higher-grade alternative to other sit-down establishments that rely on discounts to lure diners.

Tweaking its image won’t be easy. Lopdrup does not expect a change in Red Lobster’s customer base or average check, but if it plans to cut back on promotions, focusing on just a key few, it should be prepared to deliver more in terms of food quality.

As for other changes to the menu, Lopdrup will ditch efforts to expand non-seafood offerings like chicken and beef—bringing their share back down to 10 percent to 15 percent of the menu by late 2014, according to the AP report. He’s also embracing a “barbell strategy,” which is focused on adding lower-priced value items (including $12.99 lobster tacos) on one end and premium items on the other ($30 multi-seafood entree), an approach that fast-food chains like McDonald’s (MCD) also employ.

Venessa-wong-190x190
Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

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Companies Mentioned

  • DRI
    (Darden Restaurants Inc)
    • $49.94 USD
    • 2.36
    • 4.73%
  • PNRA
    (Panera Bread Co)
    • $154.84 USD
    • 0.10
    • 0.06%
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