How bad was 2013 for Red Lobster? It had to spend the latter portion of the year assuring potential customers it wasn't dead.
Rumors of its demise weren't all that exaggerated. Parent company Darden Restaurants saw Red Lobster's same-store sales slip 4.5% last quarter and Darden and made noise about spinning off Red Lobster into its own entity. Red Lobster's prestige has faded in recent years, as even in a Darden portfolio that includes the Olive Garden, Longhorn Steakhouse and Yard House chains, Red Lobster falls somewhere beneath the Capital Grille in the pecking order. Darden issued warnings as early as 2012 that its 2-for-$25 meal deals were falling short of the 2-for-$20 deals offered by its competitors. It's been fairly disastrous since.
Even as Darden toyed with the restaurant's logo and uniforms and briefly considered ditching waiters and waitresses altogether, there wasn't much working in Red Lobster's favor. NPD Group noted that the number of restaurant visits driven by deals rose between 3% and 5% at the height of the recession in 2008 and 2009, but slumped 3% last year. What casual-dining establishments are learning quickly is that nobody's going to buy their reheated food or pre-fabricated atmosphere if they don't feel it's a value. The cost of dinners out rose nearly 3% over the [ast year, according to the Consumer Price Index. That's more than the 2.2% overall rate of inflation and isn't helped when a $10 promotional meal jumps to $12 or $14, jacking up the price 20% to 40%.
Meanwhile, as Outback Steakhouse and Carraba's Italian owner Bloomin' Brands added the Bonefish Grill seafood chain to its family more than a decade ago and even lower-tier casual-dining chains such as DineEquity's Applebee's added seafood to their menus at reduced prices, Red Lobster's appeal diminished. On the more casual end, it lost ground to Buffalo Wild Wings. That chain's emphasis on beer, wings, sports and lots of big televisions helped it grow from 340 restaurants in 2008 to more than 500 by 2010 and boosted its revenue by 6.6% that year alone.
The Super Bowl aims ads directly at consumers who were once Red Lobster's core constituents. They were the folks who paid for fancy seafood dinners in landlocked states and saw the chain as destination dining. Now they see it as an overpriced strip mall stop with decent cheddar biscuits. A Super Bowl ad could have helped not only give the company a pep talk as it reinvents itself, but could have helped reintroduce it to U.S. diners who've since sought other options. Now, it's just a fading seafood chain set adrift.