Recent Posts
- Fighting Gravity
- Thankful
- Creatures of Habit
- Marked Down
- Questions I Get Asked By Customers
- NA Bev on the Rocks
- Deal, Interrupted
- The Demise of Grady's
- Second Verse, Same as the First
- Cold to Cool
Recent Comments
- leadership not on Fighting Gravity
- William on Fighting Gravity
- Jeffrey Summers on Fighting Gravity
- Lane on Fighting Gravity
- keep fighting for us on Fighting Gravity
Most Commented On
- The Demise of Grady's (18)
- Death in the Family (16)
- Witless Protection Program (13)
- "Is Everything Okay?" (11)
- Second Verse, Same as the First (10)
Archives
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
Blog
Failure to Launch
June 18, 2008
Rockfish Seafood Grill is a terrific concept. I ate in one last night, and the restaurant was crowded with contented customers chowing down on “Great seafood, for not a lot of clams”. The concept was started in 1998 by Randy and Michelle DeWitt. Their original 1,800 square foot location in Plano, TX did extremely well, others followed, and in 2001 Brinker International bought a 40% interest in the eight unit concept. The future looked bright enough to warrant another increase in their ownership to 43% in 2003. By late 2004 Brinker had helped expand Rockfish to 25 units. About the same time period Brinker wrote off its investment in Rockfish. From impressive to impairment in just over three years. What happened?
I was among the first to applaud when Brinker announced their deal with Rockfish. It seemed like a perfect match. Clever Dallas entrepreneurs being funded by a Dallas-based, casual dining portfolio company. A seafood Chili’s partnering with the parent of Chili’s. Even in this tough industry some things look like sure things. Brinker and I weren’t alone. Investment analysts and restaurant publications all sang the praises of the deal, and the Rockfish concept. "Rockfish looks to be one of Brinker’s stronger partner brands for the future," said Bob Derrington, a senior vice president of research for Morgan Keegan. An old quote by Cyril Connolly springs to mind. “Those whom the gods would destroy, they first call promising.”
Before I go any further, and you get the wrong idea, let me tell you that Rockfish is still a very good concept. There are 14 locations, down from 25, but growth still continues. More slowly than before, but growth nonetheless. The lesson to be studied is how a promising concept, paired with a casual dining powerhouse, can fail to grow into a regional, if not national, brand. The lesson to be learned is that there is never a “safe zone” for a concept based on size, or financial backing. Believe it or not, financial backing has probably caused more promising concepts to derail than any other reason. While you and I would need to raise money from outsiders for each opening, reexplaining the concept each step of the way, financial backing without begging can lead to unchallenged growth.
Casual dining seafood is a tough market to compete within. Red Lobster acts as a kind of “death star” for any concept that has visions of growth outside of its core trade area. To be safe you must be positioned either below Red Lobster (the early Rockfish concept), or above Red Lobster (the current Bonefish Grill concept). The Rockfish concept that excited Brinker, as well as others, was a neighborhood seafood place. Usually less than 2500 sq. ft. and in strip center locations. The concept was chef-driven food at prices in the $7-$14 range for entrees, in an old fishing lodge motif. The unique experience, and quality of the food, generated $2 in sales for every $1 of investment in the early locations. The kind of numbers that attract attention and suitors.
This sales-to-investment success appears to have led to the unraveling of the concept. After all, if you can do 2:1 in small locations when money is tight, why not build it in bigger locations if money is no object? This subtle change led to a change in the positioning of the concept from “neighborhood” to “mainstream” casual dining. Suddenly, instead of being the “little gem in the nearby center”, Rockfish became one more casual dining concept on a pad site competing for the same customer dollar. The development strategy became more real estate driven than concept driven, and the concept lost its unique positioning in the market.
The lesson is not a new one, but apparently needs to be retaught to most restaurateurs at some time during their careers: concept positioning is the north star from which all decisions should flow. The success of any concept, especially a growing chain, comes from following three steps in the right order.
- A clear concept positioning based upon an understanding of the customer
- Optimize the unit economics to capitalize on the positioning
- Grow the concept in a manner that does not jeopardize step 1 or 2
The Rockfish story has a happy ending, although not the ending that the DeWitt’s pictured when they partnered with Brinker. They bought the concept back from Brinker after the write-down of the investment. They closed the units that took them away from their original positioning, converted some to a second concept, and began the process of slowly rebuilding Rockfish into their early dream of a place for neighbors to gather and eat. The concept may have failed to launch, but it has not failed to satisfy.
Posted by Lane Cardwell on June 18, 2008 | Comments (9)
In response to: Failure to Launch
Lane commented:
Let me be the first to say that I probably would have made the same decision that Brinker and the DeWitts made in making the restaurants larger. And I would have been wrong, too. Obviously, it is easier to see what went wrong after it is over, than what to do when you are trying to expand a promising concept.
In response to: Failure to Launch
Jeffrey Summers commented:
Great post Lane!
In response to: Failure to Launch
tom koenigsberg commented:
Lane: As usual your insights are enlightenining. I'm sending this to my team -- an education without a pricetag (other than Brinker). Thanks. TK
In response to: Failure to Launch
ALISON GLENN DELANEY FESS Glenn Delaney commented:
Lane: your posts continue to be some of the best stuff being written today in our industry. Always insightful, always relevant, and sometimes even brilliant. You concisely analyze and encapsulate what many of us think about. Keep it up.
In response to: Failure to Launch
RANDY DEWITT commented:
I was surprised to read about myself in your most recent post, especially since we have not talked in a long time. I read them all and agree with Alison, keep it up. I'm posting your three steps to concept success on my bathroom mirror.
In response to: Failure to Launch
Lane commented:
Jeffrey, Tom and Alison: Thank you very much. Randy DeWitt: I thought about calling you before writing, but wasn't sure how to reconcile the facts with my version of the events. I borrowed the three steps to concept success from someone who asked to remain nameless. It would have taken me three paragraphs to have said what they gave me in three sentences.
In response to: Failure to Launch
Carl T. Howard commented:
Lane- I agree with the group that this is another great post. Sometimes we place so much effort in over thinking how to grow a brand that we loose focus and overlook the obvious.
In response to: Failure to Launch
bud the pieman commented:
As in the past your posts are pretty simple and to the point! I was told many years ago that “simplicity is genius” Yes, the price tag for not adhering to the above mentioned steps is most often an expensive one! I made a "growth-misstep" some years ago from which I learned two tough life lessons #1. I realized that I asked the questions to get the answers I wanted to hear. And when I didn't get the answer I wanted, I blew right past the response and ignored it....SUCH ARROGANCE ON MY PART! #2. It is so easy to blame shift and to put the blame of failure on market place factors. BUT I had to finally realize that I MADE THE DECISION to step in the market with my ears & eyes closed. The buck stops with me not the market! It is all about understanding your brand/marketing. We are not in the food business we are in the marketing business, the food & service is our product. PRETTY SIMPLE....
In response to: Failure to Launch
Rosemary commented:
A more appropriate title would have been Size Does Matter.