The demise of Red Lobster is a perfect case study in how to kill a business

[jorcus]

All this reminds me of the movie the Founder in the following exchange.

• Ray Kroc: Is there a problem?
• Harry J. Sonneborn: A big one. You don't seem to realize what business you're in. You're not in the burger business. You're in the real estate business. You don't build an empire off a 1.4 percent cut of a 15-cent hamburger. You build it by owning the land upon which that burger is cooked. What you ought to be doing is buying up plots of land then turning around and leasing said plots to franchisees who as a condition of their deal, should be permitted to lease from you and you alone. This will provide you with two things. One, a steady, up-front revenue stream. Money flows in before the first stake is in the ground. Two, greater capital for expansion. Which in turn fuels further land acquisition, which in turn fuels further expansion and so on and so on. Land. That's where the money is.

 

[ScoopKona]

All this reminds me of the movie the Founder in the following exchange.

• Ray Kroc: Is there a problem?

I read a baseball book (can't remember by whom -- thought it was Jim Hunter but he never played for the Padres). The player mentioned talking to Ray Kroc during salary negotiations for the Padres. Kroc offered to include a few McDonald's franchises as part of the compensation package, "The worst-performing McDonald's made its owner $100,000 last year."

This was during the 1970s.

Later on, I went to work for two brothers, who sold one of their family's McDonald's franchises so they could move close to my school and open a business. And in Las Vegas, I met the owner of a bunch of McDonald's franchises. It was the first time I saw an American Express black card. Pretty much everyone I've met who has any connection with McDonald's did well in life.

I just wish they treated their potatoes with the care they treat their franchisees. I know chefs who consider the Quarter Pounder with Cheese one of the best sandwiches invented. (I disagree because I'm more of a muffaletta and bahn mi guy.)

 

[jp10558]

And my point is that a restaurant can thrive selling frozen seafood. I've listed several examples which are doing GREAT. And since everybody comes to Las Vegas, it's a great barometer of the restaurant industry. Las Vegas has to cater to every single need. Not just the people of Elmira, NY.

What's selling? Sushi, asian noodles and spicy.

I feel like you're missing my point - you can have a business that doesn't cater to everyone or Las Vegas. If you get all the Elmira's out there, you could have a huge footprint in the US - you know, outside the 1st tier cities. You could also be selling to millions of people every day. I know local eateries that are packed every day that have no Las Vegas presence and do not serve spicy crabs. However, these local places either have great service, great food for a reasonable price, or both.

In another local town a chain crab restaurant didn't last a month. So crabs aren't the magic answer.

 

[ScoopKona]

I feel like you're missing my point - you can have a business that doesn't cater to everyone or Las Vegas. If you get all the Elmira's out there, you could have a huge footprint in the US - you know, outside the 1st tier cities. You could also be selling to millions of people every day. I know local eateries that are packed every day that have no Las Vegas presence and do not serve spicy crabs. However, these local places either have great service, great food for a reasonable price, or both.

In another local town a chain crab restaurant didn't last a month. So crabs aren't the magic answer.

I'm not saying crabs are the answer (but they ARE quite yummy). I'm saying that people are flocking to these crab places which sell frozen seafood. They *aren't* flocking to Red Lobster. Obviously, there's a market for frozen seafood at a lower-scale price point. And Red Lobster is no longer part of that market.

That's a problem for Red Lobster. Red Lobster needs to get with the program and give the market what it wants. Otherwise Red Lobster goes bankrupt and goes the way of Howard Johnson's. I'm very glad I don't have any money invested in that business. They're not going to survive because they are incapable of making the change necessary TO survive.

I don't cheer when businesses shutter -- that's jobs lost and more societal misery. Not every business deserves to stay in business, either. There's a whole wave of FAAFO closures on the way.

 

[dioxide45]

We at most would only go to Red Lobster once a year for Endless Shrimp. I must admit that their offering in 2023 was quite tasty and I felt I got value for what it cost. Much better than previous years of Endless Shrimp. I probably ate $40 worth of shrimp for what only cost about $20, perhaps helping to lead to their demise.

 

[1Kflyerguy]

The Red Lobster near us closed up a year or two ago. Nextdoor blew up with people commenting how sad they were about the closure. There was lots of comments people talking about how much they used to love the place, but had not been lately. That is similar to some of the other older chain places that closed. Everyone has fond memories from their past, but often choice newer more exciting places to visit now.

 

[geist1223]

When the Money/Investors Folks take over they tend to destroy a business.

 

[SmithOp]

Boston Market is going the same way around here, two have been shuttered near me.

 

[Talent312]

... Everyone has fond memories from their past, but often choose newer more exciting places to visit now....

I fondly remember Howard Johnsons, Steak and Ale, and Morrison's Cafeteria.
How Bennigan's (a few) managed to remain open is a mystery.
.

 

[rickandcindy23]

For being a restaurant chain, they were around a long time. I would hardly call it a failure, when it served so many communities (like ours) with no oceans anywhere with pretty good seafood.

I suppose Bonefish Grill should be the next to go with the sentiment here.

We will miss Red Lobster here in the Denver area.

 

[Dori]

I really miss Olive Garden here in Ontario. I’m not sure if there are any left in Canada.

Dori

 

[DrQ]

Why Starbucks has lost millions of customers - by the man who turned it into the world's biggest coffee chain​

• Starbucks' sales have fallen this year for the first time since the pandemic
• Former CEO Howard Schultz thinks they need to focus on coffee again

What went wrong at Stabucks - by the man who created it

Starbucks customers have had enough of high prices and painfully slow service - with the coffee chain admitting it has lost tens of millions of visitors this year.

www.dailymail.co.uk

 

[ScoopKona]

I fondly remember Howard Johnsons, Steak and Ale, and Morrison's Cafeteria.
How Bennigan's (a few) managed to remain open is a mystery.
.

If I wasn't busy with my current project, would absolutely open up a Howard Johnson's restaurant.

There are still hundreds of these buildings, with the familiar orange roof. Some of them still even have the weathervane on top. Buy one. Preferably one in a nice part of California (where the money is). Kick the Realtors who use it as an office out. Put kitchen equipment back in. Booths around the perimeter -- just like it was.

The menu is so simple that a chimpanzee could be trained to make it. Put servers in smart, retro uniforms. Spiff the place up. Sell diner food inexpensively. Offer bogo entrees to any couple who shows up in a classic car. (Classic as approved by management. That rusty Toyota Celica is not going to get a free entree. But the Bel-Air absolutely does.) And legally change my name to Horace Johannsen.

"Why no, Wyndham corp! We're not Howard Johnson's. We're Horace Johannsen's! Now come on down and buy some fried clams! And we have 13 flavors of ice cream! Yes, we know it's supposed to be 31 flavors. But we're Horace Johannsen's, and it's 13 flavors."

Wyndham is sitting on an absolute gold mine of diner nostalgia and they're not doing a thing with it.

 

[T_R_Oglodyte]

Wyndham is sitting on an absolute gold mine of diner nostalgia and they're not doing a thing with it.

You're wrong. They are doing something with it. They are trashing the brand.

About six years ago I was on a trip to Boise. I booked into a HoJo property near BOI. My HoJo expectation was for a property at which Motel 6 would be an upgrade; I was jolted to reality. Being somewhat familiar with other brands in the Wyndham portfolio, including some neighboring properties, I realized that as regards lodging, HoJo was now the bottom tier lodging brand in the Wyndham portfolio.

 

[ScoopKona]

You're wrong. They are doing something with it. They are trashing the brand.

About six years ago I was on a trip to Boise. I booked into a HoJo property near BOI. My HoJo expectation was for a property at which Motel 6 would be an upgrade; I was jolted to reality. Being somewhat familiar with other brands in the Wyndham portfolio, including some neighboring properties, I realized that as regards lodging, HoJo was now the bottom tier lodging brand in the Wyndham portfolio.

Wyndham couldn't find their [posterior] with both hands.

I'm not talking about the hotels. Those were never anything special. I wouldn't walk across the street to take the hotel brand for free.

I'm talking about the restaurants. Those were special. Half the people who read this message have some fond memory from a Howard Johnson's restaurant. (And a Woolworth's lunch counter, if they're pushing 80. Or if they've made a trip to Bakersfield just to eat at the last one. We have.)

Unfortunately, the last Hojo's standing was run by people who make the current owners of Red Lobster look like Jack Welch during his glory years. They ran the place into the ground, assuming that "Last Hojo's standing" was enough to keep them in business in perpetuity.

My wife and I were willing to take a trip up to Lake George. But the reviews were unequivocal. "Don't bother. You may as well eat freezer-burnt fish sticks cooked in a malfunctioning microwave oven."

I wasn't happy when I read they had closed. But this was another business which "had it coming."

Wyndham is keeping the shambling zombie of the hotel chain "alive." And they're ignoring the real market demand for Howard Johnson's restaurants.

 

[SmithOp]

I like to watch Jacques Pepin cooking videos, he was with HoJos developing dishes. Bring in his recipes.

After having been the personal chef of French President Charles de Gaulle, he moved to the US in 1959 and after working in New York's top French restaurants, refused the same job with President John F. Kennedy in the White House and instead took a culinary development job with Howard Johnson's.

 

[T_R_Oglodyte]

I'm talking about the restaurants. Those were special. Half the people who read this message have some fond memory from a Howard Johnson's restaurant. (And a Woolworth's lunch counter, if they're pushing 80. Or if they've made a trip to Bakersfield just to eat at the last one. We have.)

HoJo wasn't around MN when I was growing up. I barely remember Woolworth's lunch counter; my memories are more the local Bachmann's brand. (I went to high school with one of the Bachmann grandchildren.)

In somewhat the same vein, I do love Waffle House. I think they are a template for what a branded inexpensive chain operation can be when they focus on what their customer base looks for. I could add some others, such as Chick-Fil-A and Inn-N-Out. I'm not touting the food (though I do love a Waffle House breakfast when I'm in that area). But those chains succeed because of their grasp of their market. And, not coincidentally, I think that in large measure is due to those operations not having been taken over by investment funds with short term goals. I'm actually surprised the Berkshire hasn't moved in on those operations; Berkshire understands long-term value.

 

[ScoopKona]

I like to watch Jacques Pepin cooking videos, he was with HoJos developing dishes. Bring in his recipes.

He didn't devise recipes so much as a way to ensure consistency throughout the HoJo brand. Basically, food was cooked in a handful of central commissaries and brought (frozen) to the individual franchises. (Howard Johnson and Jacques Pepin basically invented franchising and fast food as we know it today.)

The restaurant failed because the market changed -- fast and cheap beat slower but higher quality. (Big Boy, Friendly's, Maid Rite, Sambos* and many others all share the same problem.) There is enough demand to support a small number of Hojo's. But their clock is ticking -- it won't be long until the people who remember eating at a Hojo's aren't on the right side of the ground anymore. And without extant restaurants, no new memories being made means no chance for kick-starting the brand.

* Sambos was also basically "The Washington Redskins, the prequel."

 

[PcflEZFlng]

HoJo wasn't around MN when I was growing up. I barely remember Woolworth's lunch counter; my memories are more the local Bachmann's brand.

I grew up in the Twin Cities in the 60s and early 70s, and I've never heard of Bachmann's. Is it possible you're thinking of Bridgeman's? That's the local chain I remember. They were great.

Back then, it seemed there were a lot of national restaurant brands that didn't have outlets up in MN. HoJo being one of them. And others, like Denny's and Bob Evans and Waffle House.

 

[T_R_Oglodyte]

I grew up in the Twin Cities in the 60s and early 70s, and I've never heard of Bachmann's. Is it possible you're thinking of Bridgeman's? That's the local chain I remember. They were great.

Back then, it seemed there were a lot of national restaurant brands that didn't have outlets up in MN. HoJo being one of them. And others, like Denny's and Bob Evans and Waffle House.

Your right - Bridgemans was the place. You jogged my memory - Bachmann's was a nursery chain.

We mostly did the Bridgeman's on 66th Ave South, a few blocks east of Lyndale Avenue or one on Normandale Blvd just south of I-494.

 

[jp10558]

Why Starbucks has lost millions of customers - by the man who turned it into the world's biggest coffee chain​

• Starbucks' sales have fallen this year for the first time since the pandemic
• Former CEO Howard Schultz thinks they need to focus on coffee again

What went wrong at Stabucks - by the man who created it

Starbucks customers have had enough of high prices and painfully slow service - with the coffee chain admitting it has lost tens of millions of visitors this year.

www.dailymail.co.uk

In my opinion, I never understood why Starbucks was all that popular to begin with. I don't drink coffee, but I know several snobs and they never, I mean never, really liked their coffee. It was always burnt/bitter and strong. And you could always get that from a cooked down gas station pot IMO. And I think the customer service / speed issues / price is the problem. If their coffee was 1/2 the McDonalds price, they could be bad coffee and slow and probably make up for it in price - people will do all sorts of things to save money. If it was higher quality and FAST they can probably make up for a higher price - some large groups will pay for convenience and or quality.

Where so many chains are falling off is they want to be bad quality (skimpflation?), crappy customer service due to unmotivated, unmanaged workers, and high price to get those profit margins. The masses are starting to notice, and the COVID "excuse" (since late 2022 I'd call it an excuse) is wearing thin if not worn out with the masses. It's especially stupid when there are businesses in many places that do show how to do it and that it can still be done. I'm thinking many Asian restaurants, a Brazillian Steakhouse I went to, and several local seafood places down in Surfside Beach.

What I think the comments on that piece are wrong about is the political angle. I really think the vast majority of the mass market doesn't know or care about various chain's politics. When I'm by myself, I'll skip Chick-Fil-A but if I'm with family and they want to eat there, I'm not pitching a fit over politics. And if I'm on a trip and all I see is a Chick-Fil-A for chicken and I want chicken, I'm not starving myself because I dislike the owners.

So the obvious solution for Starbucks is seeing what is making other chains work, and man, 20 minutes to get a coffee and abandoned orders - that right there should be problem one to solve. I'd say 5 minutes is pushing it, especially with mobile ordering. Surely Starbucks can take some exemplar location that is regularly slow and figure out why? It seems like it's either staffing issues( like not enough, or not trained well, or not performing well) or process issues in the workflow. Any of that is solvable. And it should be scalably solvable.

I hate to keep saying it, but if you can't get good staff, you're not paying enough. It's not the job "isn't meant as a career" or is "simple" or whatever. I remember back in the 90s through the teens at least our Wegmans had the best staff, because they paid like $6/hr more than competitors, or more. People *wanted* to work there. It wasn't a high status job, or an easy job, but it paid well, and people were motivated, learned the job and didn't churn every month and so I rarely saw faster checkout people or anyone in the store who could point you to any item, or well oiled cart return people, etc etc etc. They also had "everything" and most quality / price levels. So people went there and maybe paid slightly more but it was a good experience. Lately Wegmans has forgotten much of that, so IDK how well they're doing, but I do know I've stopped shopping there.

Now I get it that all businesses say labor costs too much and they couldn't possibly pay more. I say - if your staff are so useless that they're hindering you, you're going to do poorly no matter how "cheap" they seem to be. The other problem IMO though is the skimpflation - carrying worse and worse quality items. It doesn't matter how cheap your stuff is if it isn't fit for purpose. Slowly more and more people will skip "crap", and eventually someone is going to come along and take that market, or the market will disappear.

 

[rickandcindy23]

You're wrong. They are doing something with it. They are trashing the brand.

About six years ago I was on a trip to Boise. I booked into a HoJo property near BOI. My HoJo expectation was for a property at which Motel 6 would be an upgrade; I was jolted to reality. Being somewhat familiar with other brands in the Wyndham portfolio, including some neighboring properties, I realized that as regards lodging, HoJo was now the bottom tier lodging brand in the Wyndham portfolio.

I have a tough time separating Wyndham resorts with Wyndham hotels. Maybe it's due to the relentless pushing of the Wyndham Rewards credit cards during presentations that has caused my brain to think of them as the same.

So yes, I think Wyndham is trashing the brand with sales and with bad hotels.

Our daughter stayed in a hotel in Oklahoma City that was a Wyndham, and she said it was awful.

When we converted our Bali Hai to Wyndham points 17 years ago, I put the credit card for Wyndham Rewards that came with our ownership into the shredder.

Any Marriott or Hilton is superior to anything Wyndham has for hotels.

 

[ScoopKona]

It doesn't matter how cheap your stuff is if it isn't fit for purpose. Slowly more and more people will skip "crap", and eventually someone is going to come along and take that market, or the market will disappear.

I'd love to be able to agree with this. But I don't see it happening.

The race to the bottom continues. And most people will gleefully buy any damned thing as long as it's cheap.

Meanwhile, the race to the top also continues. The food landscape in this society is the opening sentence of "A Tale of Two Cities." I can head out right now, and purchase Iranian saffron (you'd think that would be embargoed), New Zealand green mussels to go with the saffron. Buy some russets and have a pot of Belgian moules frites in a couple hours.

The average consumer is going to protest, "Who cares? Seriously, who cares where the food comes from? Why do your mussels need to be from New Zealand? Why do you need mussels at all? Furthermore, why would anyone spend $1,000 for a bottle of wine when two-buck Chuck will get you just as drunk?"

As I've mentioned before, I'm glad most people don't care. Because the good stuff costs enough already. Increased demand is only going to lead to higher grocery bills.

 

[jorcus]

My silly Howard Johnson story. When I was very young. 5 or 6 I think. My parents were having relatives in for Thanksgiving dinner but they could not come until Friday. One of the few places open on Thanksgiving was Ho Jo's who would gladly seat parents with a 5 year old an a baby. The special Thanksgiving menu came out. Turkey for sure, other things like ham or fish. The waitress asks what I wanted after my parents explain the menu to me. My response, can I have pancakes? No one objected so that was my Thanksgiving dinner that year.

 

[clifffaith]

We had Thanksgiving once at HoJos. I was most impressed with the table at the entrance that had scoop-your-own-into-tiny-paper-cups pillow mints and nuts. My brother was allergic to nuts so he gave that wide birth. I suspect that was the year we dove to San Francisco for the long weekend (hence no dinner at home that would create leftovers). For some reason my parents brought our Scottie mix with us (not at all a usual thing to do), and she was dead a week later from some sort of disease/infection picked up from the urine of other dogs.