Comment by OkayPhysicist
2 years ago
Even without private equity's meddling, Red Lobster would have been in a rough spot. Family dining as a segment (lower end restaurants, but with table service) is being squeezed aggressively. Compared to Gen X and before, Millennials on average are valuing food quality over service experience, ballooning the fast casual (order at the counter, but nicer than fast food) segment. This is squeezing family dining from below, meanwhile their branding as ubiquitous and affordable prevents them from raising prices too much without bumping up against the fine dining segment (and who wants to bring a date to Olive Garden?).
And speaking of food quality, restaurants like Olive Garden and Red Lobster are just terrible. I'd rather get a fast-food fish sandwich, or fish and chips at the local brewpub, than eat anything at Red Lobster.
And it's not a secret. Fettucine Alfredo? They open the plastic packet from Sysco, microwave for the appropriate amount of time, same with the sauce, put it on a plate... $18.
You're spot on. I haven't been to any sort of Red Lobster owned property in years. The last time I went to Olive garden it was completely transparent how the microwaved Sysco food is the norm now. I sat there thinking how AI could have just bought the same thing from the frozen aisle at half the price and not had to deal with sitting in a dirty Olive garden.
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So good old business of separating fools from their money.
The one thing Olive Garden has that Red Lobster lacks IMO is great service. Maybe I'm lucky, but I've never once had anything less than awesome service there. I don't go often, and yes it's not fine dining but it's a place to go to enjoy mediocre to good tasting food and be frustration free. I'll take that every single time over a place with better food but unreliable or frustrating service.
Red Lobster well... I've only been twice. Two different locations. The first time service was really, really slow. The second time it was non-existent. After about 15 mins of waiting, we grabbed another waitress who dismissively told us that our waitress just quit and hurried off like it was our problem to figure out. I don't remember the food at all, but even if it was stellar I'd not go back.
There's a local italian restaurant that I frequent which is 30% cheaper than Olive Garden and way, way tastier. There are dozens of other local restaurants that are also cheaper, and tastier, than Olive Garden.
I don't understand why these huge restaurant companies have such a hard time with the "make good food" part of their business model. It clearly can't be that hard if so many small businesses are able to do do it better.
The entire schtick of chain restaurants is consistency. For nationwide chains, that means that the same ingredients end up being used in relatively remote places without cheap access to fresh produce as in, say, California, where fresh produce is far more affordable.
The big chains also tend to aim for excessive variety on their menus, which again leads to food needing to be designed to be less perishable.
And then there's the chunk of profits that are going to run the national presence, ad spend, and line the pockets of shareholders.
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> I don't understand why these huge restaurant companies have such a hard time with the "make good food" part of their business model. It clearly can't be that hard if so many small businesses are able to do do it better.
They would need to have people in the restaurant, tasting the food, observing the business, etc, and empowered to make decisions based upon the evidence. These companies are the opposite of that, and take away that power from the people actually conducting the operation. Even if they could get great cooks, waiters, hosts, managers, etc, to work at these restaurants, the value that they bring would be stifled.
I imagine the logistics of sourcing enough ingredients to supply a nationwide chain are much more complicated than a single local establishment, which pushes the nationwide chains towards more-consistent but lower-quality solutions like just buying from Sysco.
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I don't even really think it's food quality alone that is the issue. It's the total package doesn't match preferences.
I think many millennials would be fine with Red Lobster quality food, if it were quick enough for lunch. But the format is slow, sit-down service. And the atmosphere in these restaurants is not what millennials are looking for to relax or entertain.
That's actually sort of been a sort of a revolution with things like fast casual burgers and a lot of food in airports (at least those that serve upscale cities). A lot of people don't really want at least somewhat extended sitdown. They want fairly decent food that's served quickly.
Individual preferences vary obviously but I'll basically never eat at McDonalds but some of the burger places like Shake Shack and In-and-Out hit the spot now and then.
There's multiple reasons why people visit a restaurant and with different needs.
I think the rise of fast casual is coincident with the rise in people visiting a restaurant when it isn't a treat. When someone is looking to just grab a quick bowl, they don't care as much about atmosphere or service, their priority is something quick, easy, and good value.
But then when these same people go out to dinner when it is a special occasion, they're looking for something measurably better quality and better experience than the fast casual they had three times for lunch that week.
It's the mediocre sit-down places that are caught in the middle. In the 90s these types of places were good enough to be considered a friday night treat. Because people weren't eating out during the middle of the week as much.
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It's not even about quality. Honestly, much of it is just that megachains aren't cool. I'm not above eating at Red Lobster but if I have to pick where I'm going to spend my money it's hardly going to be the first choice.
Millennials don't have families and can barely afford the transportation to get to these places, let alone the cost of a decent meal there. The ones that can aren't satisfied with a cookie-cutter franchise experience.
But, that's assuming that the more well-off generations aren't going. I dunno if that's the case; things other than revenue can be squeezing RL.
Damn near everybody who has a family right now is a Millennial. Millennials are 30-45 years old
Sorry. What I meant to imply was, "Millennials don't have families [at a rate relative to preceding generations.]" Millennial families are less numerous and smaller.
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