While it is important to mind our business. It is equally important to learn valuable lessons from other businesses. Red Lobster, a popular restaurant chain that begin operations in 1968, has faced serious setbacks. Based in Orlando, Florida, it has closed over 100 restaurants and filed for Chapter 11 Bankruptcy.

In this business blog, we will discuss three lessons restaurant owners and business owners in general can learn from the events leading up to the Bankruptcy filing.

Did Red Lobster Execs Forget to Shift With the Times?

A USA Today article looked into one reason why the popular restaurant chain suffered its demise. It mentioned the restaurant chain failed to appeal to a younger audience. Younger audiences prefer takeout to an eat-in dining experience. Depending on its same customer base from 1968 to now without appealing to the new generation was part of the recipe for disaster.

1. What can restaurant owners learn from this? There must be an appeal to a wider audience. Businesses cannot depend on the same customer base to keep them operating. The director of marketing must be forward thinking and able to keep up with trends. The younger generation and even some older ones are big on trends, and it helps to keep up with what’s hot and what’s not. All you can eat shrimp was not enough to call in the younger people.

Blame Shifting Never Solves the Real Problem

All you can eat shrimp was one of the reasons for the demise according to soon to be former CEO, Jonathan Tibus.  This was back in early 2024 when the bankruptcy was first announced. However, according to a recent article published around the same time by the American Prospect, “Red Lobster’s entire business model was reliant on its own buyer power over seafood suppliers; but once its suppliers merged together, they could wield their own power to add markups.” Red Lobster no longer had buying power.

A storm was brewing in the seafood industry. Government regulations, limits on the abilities of smaller fisheries to provide to customers, the rising cost of seafood, and the lack of foresight contributed to the chain’s fall. All you can eat shrimp was a drop in the bucket compared to the problems the company was already facing. All you can eat shrimp may have added to the bucket overflowing, but it was not the cause of it filling up. This brings us to the second lesson.

2. Paying attention to current events can help a business determine the outcome of an entire industry. When the government passes different laws and implement regulations on an entire industry, it’s time to pay attention. When prices start to rise on supplies for everyone in the industry, it’s time to take heed. Even the people responsible for catching the seafood were paying higher prices for licenses.

All you can eat shrimp would not have been the solution to this problem. One solution could have been to start revamping the menu to include other items that were not as costly. Yes, the restaurant was known for inexpensive seafood for middle class Americans, but in reality, the Middle Class have been teetering and tottering. There was a need for the popular chain to change its mission and garner support from the newer generation, even if that mean changing it’s name in my opinion. Then once you gain support from a new market, offer all you can eat shrimp – maybe.

Red Lobster Knew Bankruptcy is Always an Option

With the company in trouble financially, there was no other option but to restructure the company or liquidate and go out of business for good. The latter option was chosen. Chapter 11 Bankruptcy is when a debtor company proposes a plan of reorganization in order to pay creditors back over time. Under this plan, the judge also approved Damola Adamolekun, as CEO of RL Investor Holdings LLC, a new corporate entity set to acquire Red Lobster following a court approval of the restaurant’s Chapter 11 plan that is set to be approved this month.

3. Business owners should never feel like debt has to swallow them alive. When a business is in debt over its head, it can file for bankruptcy, reorganize under competent leadership, and overcome its challenges. It will take effort on everyone’s part. Determination and a clear plan are necessary.

While Red Lobster’s new CEO has his work cut out for him, his Millennial prospective and outlook, can possibly bring the company back to life. While it may be necessary to do some unconventional business dealings compared to the old way of doing things, a younger CEO is exactly what the company needs. He is able to tackle the issue of gaining that younger customer base.

We shall see if Red Lobster is able to survive the Retail Apocalypse. Moore financial Services seeks to bring awareness to important business matters and present them to micro business owners to learn from and thrive.

Should you need assistance in the preservation and growth of your business, do not hesitate to contact Moore Financial Services today at 888-387-1117.