Red lobster Harvard Case Solution & Analysis

Red lobster Case Solution

1.     Introduction:

The case is about the strategic retail management of Red Lobster, a seafood restaurant located in America. Red Lobster was established in 1968 by an entrepreneur, Bill Darden. He intended to bring affordable and quality seafood to the majority of America.

However, the first Red Lobster was founded in Lakeland Florida. Red Lobster had a significant success and experienced a significant in demand. Darden were forced to expand the restaurant and therefore, opened four other restaurants in Florida. The restaurant chain was then sold to General Mills in1970, and Bill Darden remained president of Red Lobster. Red Lobster restaurant chain had grown rapidly and received recognition on national scale.

Red Lobster had established its first national seafood distribution system in the 1970’s. The national seafood distribution system became the competitive advantage for the Red Lobster. Red Lobster restaurant chain was the first to use a computerized point of sale system. In 1985, Red Lobster had grown its business all over America and became expert in offering variety of seafood such as live Maine Lobster, jumbo shrimp and snow crab. It was also popular for offering non seafood items.

Red Lobster had strong earnings in 1982, which encouraged General Mills Restaurant to use the Red Lobster operations policy to establish an Italian themed casual dining restaurant named Olive Garden. The company also opened Chinese themed restaurant but unfortunately it had failed and the company had to close in down.

However, 31% of the Americans spent on casual dining (full service restaurants) such as Red Lobster which had beer and wine licenses. The other categories comprised of family dining alike to the casual dining but without bear and wine license. Moreover, two other segments of customers emerged recently, fast casual (like quick service, made to other food, higher prices, nicer restaurant environment) and premium casual (like casual dining, culinary forward food, moderately higher prices.

Nonetheless, restaurant chains were differentiated by their size and price point. Red Lobster had higher prices due to higher cost of seafood therefore, it did not fitt in the premium category. However, Red Lobster had a significant market share among the casual dining seafood chains. Due to the recession of 2008-2009, the casual dining industry was affected badly. Moreover, slow growth rate of the casual dining industry had contributed in the low sales. Furthermore, Lopdrup was assigned as the new president for the Red Lobster in 2004 and had made some effective strategies for Red Lobster. However, despite several challenges, he was also presented with the opportunity to expand the business.

1.     Facts:

The competition in the seafood industry had also became exaggerated and the company had experienced slow growth rate in its sales. The increase in the aquaculture had also contributed in the decline of the seafood category. Despite the decrease of the cost, seafood remained expensive thus, Red lobster was more expensive than its competitors.

For this reason, the company considered increasing its menu by adding more non-seafood items. Red Lobster’s new president had established a marketing team to conduct a consumer survey to get the customer’s insight that before initiating any change.  The customers’ insight revealed that the freshness of the sea food is the relatively important when choosing seafood restaurant. However, survey also revealed that the Red Lobster faultily lack freshness attribute its seafood items. In addition, Red Lobster was also lagging in the quality of the seafood and the preparation of the seafood. Another concern rose that, consumers began to see the Lobster as outdated seafood item and want top quality and fresh seafood. Therefore, to improve its quality and sales, Lopdrup made instant improvement by imitating three phase plan..................

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