Chain Leader

David Farkas

Mixed Bag
January 19, 2007

Darden Restaurants CEO Clarence Otis announced that he may knock off an Olive Garden competitor by acquiring it. That sounds reasonable to me. Darden is a big company that can afford to pay the multiples now being asked by owners of smaller chains. Otis, who brought up the subject at an analysts meeting in early January, didn’t drop any names.

Otis is interested in buying a rival because he is hoping Olive Garden will provide sales and profit momentum while Red Lobster and Smokey Bones get their acts together. Both chains are in the throes of an identity crisis. Olive Garden meanwhile will open 35 to 40 units in fiscal 2008 and 2009, according to a recent article in the Orlando Sentinel. Red Lobster will open four to 10 in each of those years—Smokey Bones even fewer.

In any case, the article makes only glancing mention that “Darden is repositioning its Red Lobster restaurants, updating interiors and revamping the menu with bolder flavors and a rotating fish offering, for future growth.”

It so happens that Red Lobster’s new prototype, which opened last September, is only 22 miles from my house in Cleveland. I dropped by on Jan. 15 to fill you in on the details.

That day, the fresh fish menu—one of the changes—boasted an impressive list of reasonably priced items: Atlantic salmon ($16.50), tilapia ($15.25), trout ($14.75), cod ($19.25) and grouper ($22.50).

The card also included a section of slightly more expensive dishes called “Chef’s Creations.” When I asked if there were really a chef in the kitchen whipping up these dishes, the bartender admitted there wasn’t but said the chain now calls kitchen managers “culinary professionals.” “There’s one on each shift,” she proudly added.

The regular menu features the usual complement of deep-fried appetizers and shellfish the chain is famous for.

Inside, the restaurant is more formal and upscale-looking than ever. Woods are dark, glass partitions textured and lighting subdued. The sea-faring theme remains noticeable, to be sure, though now it’s limited to framed Coast Guard signal flags and a few nautical maps. The windows feature words like “chowder” and “fish.”

A dozen or so comfortable chairs surround the granite-topped bar. Like other fancy restaurants, spare liquor bottles sit on an enclosed shelf above the bar. But here, surprisingly, the bartenders cannot get at them without first fetching a manager, who must unlock a small sliding door. That makes it tough on a busy night, griped the bartender on duty.

Dining-room seating is limited chiefly to booths. Several have room for eight people; one can hold 12. That’s a booth I don’t want to sit near when full. The restaurant itself holds roughly 238, according to a manager. It’s a big space, but it feels somehow small, though hardly intimate. This isn’t the place where diners linger into the night over espresso or liqueurs.

It is a place, however, where they can grind their own sea salt and peppercorns into their food from self-enclosed dispensers. I’m not sure what such things say about Red Lobster’s “repositioning,” but they sure beat stodgy salt and pepper shakers.

Posted by David Farkas on January 19, 2007 | Comments (0)