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

[jp10558]

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.

I think you may have missed my subtle point there which isn't that people won't forgive a lot of sins for cheap, but that they forgive less and less sins as the price goes up. And it's perception of being cheap, not whether it's relatively cheap when we're talking about luxuries like going out to eat. For instance, McDonalds kind of barely clears my price vs value bar. Really what gets them currently for me is more in the NE where they almost always have clean bathrooms so we're already stopped to use the restroom and grabbing a snack makes some sense vs going somewhere else for that.

White Castle OTOH is cheaper than McDonalds for the burgers, but they're so bad I recoil at thinking about eating them again. I think each slider there is like $1.50 or something and yet I'd rather grab whatever I can get at a random gas station for more than that than eat White Castle again.

And in the Starbucks thread we see exactly what I'm talking about - Starbucks raised their prices too much and lowered their service (and I don't think ever had an amazing product) too much so people are going elsewhere. On top of that McDonalds decided to eat Starbucks lunches with much improved coffee at 1/2 the price of Starbucks.

I disagree that people will buy any damned thing as long as it's cheap - SPAMs market isn't increasing that I can see. Certainly we constantly lament more people don't buy rice and dried beans that are very cheap. I once had a Finnish "special remembrance cracker" that's mostly sawdust (look up the history). Even if those were the cheapest cracker around I wouldn't buy them.

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?"

I think the issue is when the stuff gets below people's threshold for quality they change their tune. You're lamenting most people just not seeing what has to be diminishing returns in like a $1,000 bottle of wine vs a $100 bottle, vs even a $25 bottle. And quality doesn't always improve as price goes up. Anyway, I see this all the time in all sorts of areas of life - there's "cheap crap", "good value", and "diminishing returns". Some people just want some calories and just because they're not interested in food doesn't mean they're racing to the bottom. I just think the chains need to justify their prices, and for places like Red Lobster that's getting harder and harder to do.

 

[ScoopKona]

White Castle OTOH is cheaper than McDonalds for the burgers, but they're so bad I recoil at thinking about eating them again. I think each slider there is like $1.50 or something and yet I'd rather grab whatever I can get at a random gas station for more than that than eat White Castle again.

And yet there's a line out the door all day long at White Castle in Las Vegas. If there's a bottom, we haven't found it yet.

I'm cynical enough to think that we never will.

I understood your point. I just disagree with it. You seem to be running under the assumption of a slightly-educated, slightly-rational, slightly-thoughtful market. I assume a willfully-illiterate, thinking-gives-me-a-headache, unhinged market. Convenience uber alles. The reason I assume this is because corporations treat their market this way. (Whether by design or by default.) "They don't care. They'll buy anything. Increase the sawdust content of our packaged cookies. Replace a large percentage of cocoa with polymers. They'll never know the difference*."

Starbucks (if these articles are to be believed) treats their customers with active contempt. And still there's a line out the door every time I see one (which is quite often here where I'm packing up the house.)

* People have purchased fake olive oil for decades now. That's never improved, either. It's to the point that if you gave a random person a teaspoon of real olive oil, they wouldn't like it. "This is bitter! I want my olive oil to taste like nothing at all!"

 

[jp10558]

And yet there's a line out the door all day long at White Castle in Las Vegas. If there's a bottom, we haven't found it yet.

I'm cynical enough to think that we never will.

I understood your point. I just disagree with it. You seem to be running under the assumption of a slightly-educated, slightly-rational, slightly-thoughtful market. I assume a willfully-illiterate, thinking-gives-me-a-headache, unhinged market. Convenience uber alles. The reason I assume this is because corporations treat their market this way. (Whether by design or by default.) "They don't care. They'll buy anything. Increase the sawdust content of our packaged cookies. Replace a large percentage of cocoa with polymers. They'll never know the difference*."

You might be right - I keep seeing people bitch about stuff, but being completely unwilling to take any steps to change the situation. However I will say, with the way corporations get to lie or obfuscate what's in their products - it becomes near impossible to know what you're buying in a lot of cases too. I think it's fair to look down on people not reading the info on the box, but it's not really fair to expect people to be private eyes to find out stuff that's well hidden.

Starbucks (if these articles are to be believed) treats their customers with active contempt. And still there's a line out the door every time I see one (which is quite often here where I'm packing up the house.)

I guess I just think that neither Starbucks or Red Lobster is actually convenient anymore, but I don't know why people do what they do. It'd be interesting to see surveys / interviews on some of this as to why people go through all the pain and cost for not great stuff.

 

[ScoopKona]

You might be right - I keep seeing people bitch about stuff, but being completely unwilling to take any steps to change the situation.

Here, we're in total agreement.

Nothing would make me happier than food labeling laws with teeth. Fake olive oil has no business on our supermarket shelves. The problem is so bad, you can take a mostly-full bottle of ANY olive oil back and they'll quietly refund your money to get you out of the store. Everyone in the industry knows that the olive oil is bogus*. Nobody does anything about it.

Same with truffle oil -- no truffles in any of it. Fraud, pure and simple. Nobody seems to care. Plastics in the "mozzarella" cheese? That's how $5 pizzas exist.

People don't know. But more importantly, they don't want to know. Convenience uber alles. Or the 10,000 Maniacs song Candy Everybody Wants. Although Nat was singing about television, it applies just as easily to our food landscape.

* 60% of it, at least. Good luck determining which 40% is real just by looking at the bottle.

 

[easyrider]

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.

That describes our group. We liked Red Lobster but I can't remember the last time we went. It has to be over a decade. Currently our usual spots are a little restaurant in a bowling alley or the golf course.

Bill

 

[HitchHiker71]

That describes our group. We liked Red Lobster but I can't remember the last time we went. It has to be over a decade. Currently our usual spots are a little restaurant in a bowling alley or the golf course.

Bill

The only time we go to Red Lobster is when they run specials we like - like Wednesday nights steak and lobster - same as Outback on Wednesday nights. We kinda cycle back and forth between these two on Wednesday nights when we choose to go out mid-week. We try to take advantage of local restaurant daily specials whenever we can to save a bit of money.

 

[am1]

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

Dori

Yes there are. Where I live, not Canada, we have three in the same city and a few at the airport. Ive been twice this year when it was 2 for 1. I like the soup, salad and breadsticks.

 

[Dori]

am1, I checked and there are a few out west, in Alberta I believe. I also love the soup, salad and breadstick lunch!

Dori

 

[1Kflyerguy]

As for Starbucks, i don't mind their Coffee and various coffee drinks. I don't go to Starbuck as often as I used. So far my orders have been ready in a reasonable amount of time, though there is a location near the hospital and other medical offices that does get backed up.

I think one of the reasons for longer wait times is the added complexity of the menu. When they really just served coffee and some pastries it was fast and easy. Now that so much of the business is fancy cold beverages, those take longer to make, and require more ingredients to stock.

People love all the options, but it makes the whole process slower and more complicated.

 

[1Kflyerguy]

The only time we go to Red Lobster is when they run specials we like - like Wednesday nights steak and lobster - same as Outback on Wednesday nights. We kinda cycle back and forth between these two on Wednesday nights when we choose to go out mid-week. We try to take advantage of local restaurant daily specials whenever we can to save a bit of money.

Almost all of the Outback's near us have closed as well. I just checked online, and we have one 20 miles away.. After that they are several hours away....

 

[joestein]

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.

The last remaining HoJo restaurant is (or was about 7 or 8 years ago) in Lake George in NYS. It is a block or so away from the fort on the Lake. My wife wanted to go there because she had memories of eating there when she was a kid.

It looks liked a poorly run diner on its last legs. We were inside for about 5 mins and left.

 

[joestein]

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.

I have stopped at a waffle house a couple of times when driving down south. I usually leave at 1am and around 6 or 7 am, I need a break to eat and sit down somewhere other than a car.

When I told my in-laws where we stopped, they got excited - it is like some sort of red neck mystery to them. I realize the clientele is not exactly upscale. However, I thought it was pretty good for breakfast and I wouldn't hesitate to go again. Just because some of the people eating or working there are different, it never matters to me. I treat to them nicely and they do the same to me.

 

[HitchHiker71]

Almost all of the Outback's near us have closed as well. I just checked online, and we have one 20 miles away.. After that they are several hours away....

Both Red Lobster and Outback are only 10-15 minutes away from where we live in suburbia, at least for now...

 

[joestein]

And yet there's a line out the door all day long at White Castle in Las Vegas. If there's a bottom, we haven't found it yet.

I'm cynical enough to think that we never will.

I understood your point. I just disagree with it. You seem to be running under the assumption of a slightly-educated, slightly-rational, slightly-thoughtful market. I assume a willfully-illiterate, thinking-gives-me-a-headache, unhinged market. Convenience uber alles. The reason I assume this is because corporations treat their market this way. (Whether by design or by default.) "They don't care. They'll buy anything. Increase the sawdust content of our packaged cookies. Replace a large percentage of cocoa with polymers. They'll never know the difference*."

Starbucks (if these articles are to be believed) treats their customers with active contempt. And still there's a line out the door every time I see one (which is quite often here where I'm packing up the house.)

* People have purchased fake olive oil for decades now. That's never improved, either. It's to the point that if you gave a random person a teaspoon of real olive oil, they wouldn't like it. "This is bitter! I want my olive oil to taste like nothing at all!"

OR maybe people just disagree with you. While I haven't eaten at White Castle in years, I would definitely eat at one if I found myself near one when I needed to grab and run with some food. I generally don't eat at any fast food, but I attach a nostalgia to White Castle. But there are people who love it. There is an urban rumor - which I don't believe - that White Castle has the highest quality of beef of all the fast foods.

As for Starbucks, my wife thinks it is great. So do my kids. I don't drink coffee. Plus paying their ridiculous prices for iced tea or something makes me want to heave - so I never get anything there. But she loves it and loves the K-Cups from Starbucks as well.

FYI.... my wife sees Jane Fraser the CEO of Citibank at Starbucks in the office building they both work in at least once a week in the morning.

 

[T_R_Oglodyte]

I have stopped at a waffle house a couple of times when driving down south. I usually leave at 1am and around 6 or 7 am, I need a break to eat and sit down somewhere other than a car.

When I told my in-laws where we stopped, they got excited - it is like some sort of red neck mystery to them. I realize the clientele is not exactly upscale. However, I thought it was pretty good for breakfast and I wouldn't hesitate to go again. Just because some of the people eating or working there are different, it never matters to me. I treat to them nicely and they do the same to me.

Almost exactly my thoughts. Their target market (clientele) is precisely the type of crowd I grew up in, and going to Waffle House is actually warming for me. Plus they do an outstanding job of delivering a well-prepared basic foods. WH is my main breakfast go to when I'm in their area.

Anthony Bourdain visits the Waffle House.

 

[Greg G]

My wife and I love Waffle House. There are none around where we live, but we always go to them on vacation if they're around or along the way.

 

[ScoopKona]

Almost exactly my thoughts. Their target market (clientele) is precisely the type of crowd I grew up in, and going to Waffle House is actually warming for me. Plus they do an outstanding job of delivering a well-prepared basic foods. WH is my main breakfast go to when I'm in their area.

Waffle House is basically the polar opposite of Red Lobster. That's why they're not in any financial trouble. They're still privately held (by the sons of the founders if I'm not mistaken).

Places like Waffle House used to be the rule, now they're the exception. Half the communities in North America had something akin to a Waffle House. Maybe not as good. But maybe even better. I've eaten at some mom-and-pop diners that are slinging the same basic dishes but doing a much better job.

It really comes down to operational philosophy. There are vendors in night markets in Asia who are serving food which would earn a nod from the Michelin guide (if the reviewers spent time in night markets). Giving a damn about more than the quarterly earnings report is how restaurants stick around. Changing with the times is also how restaurants stick around -- that's why Waffle House is still rolling along and Howard Johnson's (with it's "it comes in the back frozen and we just heat it" menu) is extinct.

 

[joestein]

Waffle House is basically the polar opposite of Red Lobster. That's why they're not in any financial trouble. They're still privately held (by the sons of the founders if I'm not mistaken).

Places like Waffle House used to be the rule, now they're the exception. Half the communities in North America had something akin to a Waffle House. Maybe not as good. But maybe even better. I've eaten at some mom-and-pop diners that are slinging the same basic dishes but doing a much better job.

It really comes down to operational philosophy. There are vendors in night markets in Asia who are serving food which would earn a nod from the Michelin guide (if the reviewers spent time in night markets). Giving a damn about more than the quarterly earnings report is how restaurants stick around. Changing with the times is also how restaurants stick around -- that's why Waffle House is still rolling along and Howard Johnson's (with it's "it comes in the back frozen and we just heat it" menu) is extinct.

I live in NJ, the capital of diners. IMHO most diners suck and are exactly what you complained about HoJos - comes in the back frozen and we just heat it up. Probably majority of chains and many restaurants as well.

 

[Panina]

Must admit I haven't eaten at Red Lobster for years. When I tried it years ago I thought it was just so-so for seafood. It doesn't surprise me it might not survive.

 

[HitchHiker71]

My wife and I love Waffle House. There are none around where we live, but we always go to them on vacation if they're around or along the way.

A WH just opened about five minutes from our home. We haven’t tried it out yet but it’s on the to-do list.


Sent from my iPhone using Tapatalk

 

[Greg G]

A WH just opened about five minutes from our home. We haven’t tried it out yet but it’s on the to-do list.

You lucky dog.

 

[CO skier]

"it comes in the back frozen and we just heat it" menu) is extinct.

Is that not the McDonald's business model? That company seems to be doing OK.

 

[ScoopKona]

Is that not the McDonald's business model? That company seems to be doing OK.

But they make the lion's share of their money in franchise fees and rent. They're a real estate company, basically.

They're another chain I'm glad I don't have any position in. They've got a pretty bleak image problem -- considered the "low-income fast-food choice." Nobody really wants to be that company. (Except payday loan companies, I suppose.)

They beat Howard Johnson's at their own game -- becoming the go-to for travelers because they were fast and inexpensive. They are no longer fast or particularly inexpensive. But if the franchisees start failing, they've got big problems. They get 5% of all sales and monthly rent from every franchisee.

A lot of McDonald’s franchisees left the system last year

A record 1,700 restaurants changed hands last year and more than a quarter of franchisee units have either closed or been sold since 2019.

www.restaurantbusinessonline.com

 

[davidvel]

But they make the lion's share of their money in franchise fees and rent. They're a real estate company, basically.

Oh right, cause the franchisees make nothing off the heating frozen stuff model.

 

[easyrider]

The only time we go to Red Lobster is when they run specials we like - like Wednesday nights steak and lobster - same as Outback on Wednesday nights. We kinda cycle back and forth between these two on Wednesday nights when we choose to go out mid-week. We try to take advantage of local restaurant daily specials whenever we can to save a bit of money.

We usually go out with a group and the large tables at the golf course and bowling alley seem to have enough room for eight to ten people. The golf course is nice in the summer with live music and a view. The bowling alley restaurant has a huge fireplace and is nice in the colder months. Both places have a decent menu and bar.

Bill