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Dec 27, 2013 09:56 AM

Red Lobsters Closing?....

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  1. Oh geez. We'd better get to RL soon to use up the $50 in Olive Garden gift cards my husband received for his birthday. (Seriously?!?!) Ain't no way we are going to eat AT Olive Garden.

    5 Replies
    1. re: Njchicaa

      You could use them at Longhorn Steakhouse.. which isn't too bad.. much better than RL, anyway.

      I never found RL to be a good value for the money.. I always thought the prices were rather inflated for what you actually got.

      1. re: MarlboroMan

        This is true. We've been there a couple of times and had a decent meal. I think the closest one is about 40 minutes away though.

        1. re: Njchicaa

          Isn't the relationship to Olive Garden the telling point. Cost of goods is so much higher at Red Lobster and in the end they are competing for people in the same demographic at what should be the same price points.

        2. re: MarlboroMan

          Not only that, the food you got looked nothing like what they show in their commercials.

        3. re: Njchicaa

          I had a one of those gc too and was not willing to use it at Longhorn. We went to a Longhorn in Boston near Fenway Park last winter and the restaurant was dirty and the food was horrible. Disappointing as it had been quite good when a different manager was there. Anyway we have moved west so drove to Albany recently to Red Lobster and the burger was better than the fish tacos which were okay but not great. Plan to get back there as we still have some cash on the card. This time I'm having the burger!

        4. I'll tell you what, I'm actually surprised it's taken this long for this business model to finally start to implode. Higher prices and lower kwality have been the standard at these mid level chains for too long. Sorry if you were a fan of Red Lobster, but good riddance.

          The article hits the nail on the head, these restaurants were originally suppose to fill a void between fast food and fine dining. Instead they have increased their prices to a point they are no longer truly an "affordable" option as compared to going to some local, better options.

          21 Replies
          1. re: jrvedivici

            I think they're a victim of the economy. Curious how much, if any is backlash from the CEO comments/actions regarding Obamacare and cutting employee hours.

            1. re: Jerseygirl111

              I think they're a victim of crappy food and poor management decisions:

              "The company lowered its profit and revenue projections for the quarter ended Nov. 25, also blaming bad promotions, Hurricane Sandy, purchasing its Yard House USA chain for the bad results, reports Tiffany Hsu at the Los Angeles."

              The CEO blaming the Affordable Care Act is just a case of CYA.

                1. re: carolinadawg

                  So right....Obamacare with it's mandates for firms with over 50 employees would surely have nothing to do with lower profit margins..

                  1. re: cstumiller

                    Umm, the lower profit margins in question are for the quarter that ended November 25, 2013. It's not possible for the Affordable Care Act to have impacted that quarters financial reports, as it hadn't been implemented at that time. So yes, it is completely true that the ACA "surely had nothing to do with the lower profit margins."

                      1. re: carolinadawg

                        Actually, obamacare has already effected businesses that give their employees health insurance by driving premiums up at least 25 percent over the last two years. The additional cost of having to provide the coverage to businesses with 50 employees or more is not going to be that great a problem. Easiest thing to do is higher more people working 29 hours a week. No liability then.

                          1. re: carolinadawg

                            In Economics, I call this "The Gathering Storm Effect", named for Winston Churchill's tome.

                          2. re: cwdonald

                            We've removed some posts about ACA; we're not the right place for that sort of political debate.

                          3. re: carolinadawg

                            Competent Boards analysis their business model well into the future and any pending legislation that has the potential to have a significant negative impact will most certainly be a factor in their decision making process.

                            1. re: Tom34

                              In the post you referenced, I wasn't discussing their future decisions, I was discussing their PAST financial performance.

                              1. re: carolinadawg

                                My point was that for many of the reasons you and others have mentioned their profits have lagged and the ACA and movements to dramatically increase the minimum wage paint an even bleaker future.

                                1. re: Tom34

                                  Sorry, but none of that makes much sense. Servers (who I'm sure are their largest employee group) aren't subject to standard minimum wage laws and would be unaffected by such.

                                  1. re: carolinadawg

                                    When I worked there the servers and all other employees got health insurance if they worked over 20 hours a week. It was a very generous benefit, although that was in the days of General Mills. Hard to remember when health insurance was free AND easy.

                                    1. re: coll

                                      I remember growing up a friend's mom worked for Clover (division of Strawbridges) She got comprehensive family healthcare and a defined pension.

                                      When the new discounters came along and offered their employees neither, Clover couldn't compete and the "public" flocked to the new discounters for the lower prices and Clover closed the doors. We are just as responsible as CEO's.

                                      1. re: coll

                                        I think that's great! Apparently, the situation has changed for the worse.

                                        1. re: carolinadawg

                                          The situation with health insurance has changed for the worst for everyone. Can you imagine a chain restaurant giving it's part time employees full coverage? We had waitresses that had been there 15 or 20 years, just for that reason.

                                      2. re: carolinadawg

                                        Servers are but one group of employees. Low cost kitchen help is a key component of the restaurant industry, especially chains that have broken down kitchen jobs to their lowest common denominator in an effort to keep wages low. Clearly there is a moral argument to be made but in a board room its about the bottom line and return on equity. ACA or significant increases in the minimum wage have a tremendous impact on virtually any low skill / low wage industry. An easy answer there is not.

                                        1. re: Tom34

                                          I worked in a restaurant similar to RL. Servers outnumbered kitchen staff by at least 2:1, maybe 3:1. Most of the kitchen staff made more than minimum wage.

                                          1. re: carolinadawg

                                            Since I used to do payroll at RL, I can say that there were probably 60 servers all told. Of course not at one time! Always at least 10 or 12 on the floor for dinner at any given time (although if it was slow we'd send some home); some only worked Mondays and Tuesdays, some only on weekends etc. Took me half a day to do the schedule, it was very complicated.

                                            Dishwasher, 1, he was a hard worker and worked 7 days (he'd get mad if we told him to take off). Cooks, maybe 6, prep people again maybe 5 or 6. Bussers and bartender, a couple of each. Managers, four; three on duty on any given day. There were also two old timers that alternated at the cash register and then a hostess that just seated people. That's as far as my fading memory can pull up right now.

                                            As far as minimum wage, you didn't start at that in the first place and a manager had to give a review every six months and unless there was an issue, you always got a raise.

                      2. Just an Internet rumor according to this. They are going to try selling it off.


                        1. Many chains seem to fizzle out in time, especially during prolonged weak economies.

                          Centralized purchasing may have some $$ advantages but not allowing a MGR to take advantage of fresh locally harvested products has many quality disadvantages. So does relying on low bid specs.

                          Breaking down what were once skilled kitchen positions to completely unskilled labor with no formal culinary training might be good for the short term bottom line but probably not for long term food prep quality.

                          I think its the same for wait staff. A high volume of lower % tips may pay the bills but its makes for a tiring day. Good place for young folks to learn but I suspect the turnover is significant.

                          1. Could be an issue if all those folks start crowding the good places...