Lessons to learn from the Dead Lobster
The news was hard to miss earlier this week. Red Lobster has hit low tide. There’s doubt about whether they can claw their way back to profitability. The newest executive team is now fishing for a way to salvage their future. All puns are intended. Some may even be funny.
Red Lobster filed for bankruptcy protection this week. That announcement came just days after the company announced that it would close 99 restaurants—roughly 14% of its locations worldwide.
The demise of an American business, particularly one that has been part of the common lexicon of American culture, is not really amusing. Thousands of families will be adversely affected if Red Lobster does not emerge from bankruptcy as a profitable company, and hundreds of families will even if it does.
If you heard or read the headlines of Red Lobster’s bankruptcy filing earlier this week, you may remember it for one jaw-dropping reason. The restaurant chain lost $11 million in one quarter last year. That resulted from an offer that was a little too generous. A $20 all-you-can-eat shrimp offer was added to the menu as a regular item. It was intended to generate traffic in a chain that has been stagnant. It worked - a little too well.
I dug into the details beyond those headlines to understand why Red Lobster is in this predicament. I discovered some possible answers and insights that can inform all leaders.
Forsaking the original mission. I've known for years that Red Lobster had once been part of the Darden Restaurants group. This week, I discovered there was a lot more to that name. Bill Darden was the founder of Red Lobster. He started the company with one restaurant in 1968 in Lakeland, Florida. His fellow founder, Charley Woodsby, said their mission was to bring good seafood to landlocked families at affordable prices, according to Nathaniel Meyersohn in a CNN story linked below.
Darden and Woodsby sold their stake in Red Lobster to General Mills just two years after its creation. However, General Mills was wise enough to retain Darden and eventually lean on his passion and expertise to establish what would become Darden Restaurants. Business associates of Darden’s recall him as a man who was personable and caring, even while being tough and demanding.
Subsequent owners of Red Lobster saw the restaurant as merely a source of profits. Joe Guszkowski writes in Restaurant Business, a food service trade publication, that Golden Gate Capital sold the properties that Red Lobster owned to finance 71% of their $2.1 billion purchase from Darden. While that generated revenue, it also created ongoing liabilities, as Red Lobster became a tenant in facilities they once owned. Golden Gate made investments in kitchen upgrades and building their carry-out business. Yet none of that increased sales. Six years later, Golden Gate bailed out. Red Lobster's annual sales had not grown.
Current owner, Thai Union, a seafood supplier, bought Red Lobster, ostensibly to build a seamless business from supply -? farming and catching seafood - to the end consumer of cooked food. Jonathan Maze of Restaurant Business reports that the current CEO of Red Lobster, Jonathan Tibus, claims Thai Union forced previous restaurant leadership to offer the Endless Shrimp promotion and to purchase all shrimp from Thai Union at costs that were not competitive with other suppliers. In short, Red Lobster became a means of boosting Thai Union's core business at the expense of the restaurant’s original mission or profitability.
Ulterior motives are nothing new in leadership. However, they are often damaging to the stated mission of the church, business, or professional practice used to achieve them.
Leaders need the freedom to lead. There has been turmoil at the executive level since Thai Union took control of Red Lobster. Meyersohn reports that the restaurant chain has had five CEOs in three years. He also notes that one new executive team of four left within two years.
It could be that the people Thai Union brought in were incompetent. I don’t know them, so I’d have no idea about that. However, my experience in trucking management, ministry, and other leadership roles has taught me that if turnover is high, it typically reveals a problem at the top. From these news accounts and friends who have educated me on some cultural realities, I’d guess that Thai Union executives never gave the restaurant executives the freedom to lead. The bankruptcy filing seems to confirm that.
In the case of Red Lobster and its owner Thai Union, these two leadership issues are related. Thai Union’s pursuit of supply chain profits hindered Red Lobster leadership’s ability to pursue its stated mission.
What about you? Do the decisions you and your supporting leaders make, whether routine or significant, reflect the pursuit of your stated mission? What unspoken influences shape those decisions? How can you identify them and determine whether those unspoken influences might harm the mission?
领英推荐
Do you give those in supporting roles the freedom to lead? What is the rate of turnover in the staff, volunteer team, or small business you lead? Are there unstated problems you need to understand? Who can help you determine that?
I’ve linked all the referenced articles below. I’ve also linked one Instagram video from Matt Mitchell because it’s too funny not to share.
Enjoy your weekend!
The views and opinions expressed in my Thursday Thoughts on Leadership are my own. They do not necessarily reflect the views, opinions, or policies of the Baptist State Convention of North Carolina or any affiliated churches.
Leadership Coach and Church Consultant
6 个月I think your insights are spot on Dennis. Renewal requires some hard and honest conversations, laser focus on the core mission, delegated responsibility and leadership. The larger the organization, the more difficult these essentials become.