Web Exclusive: The Long Haul

President Kim Lodrup takes Red Lobster to the next level for long-term growth.

By David Farkas, Senior Editor -- Chain Leader, 3/1/2007

President Kim Lopdrup spoke to Chain Leader for our April Cover Story, “Trading Up,” about how Red Lobster is playing up its seafood expertise by rolling out a fresh fish menu, designing new prototypes and simplifying operations. In this Web exclusive, he expands on several of the changes in store for the 682-unit chain.

On the long-term outlook:

We and Olive garden are the largest brands and both major contributors to Darden’s earnings. The important thing about Darden is that we are managed for the long term. If you go into our board room, you’ll see Joe Lee’s quote about being the best in casual dining. I have never seen short-term earnings considerations cause us to compromise long-term growth. We have a high degree of urgency to do the right thing for the long term. Our vision is to be where America goes for seafood.

On incentives:

Stock is a much bigger deal than actual bonuses in the way Darden incents senior executives. We are evaluated on a number of things, which include sales and profit growth and strategic objectives, like strengthening the guest experience and implementation of the changes in this second phase [of our plan].

On product changes:

We are trying to align consumer touch points with the brand promise. We are making a number of changes in restaurants to deliver that promise to guests. They include improving our menu. At the end of last October, we introduced Today’s Fresh Fish: five to eight varieties printed on a menu that can change daily.

Most of our menu items have a pretty high labor component. Crab legs have to be portioned. There’s cleaning, preparing, weighing, mixing. It’s a lot of work in the kitchen. Fresh fish, on the other hand, has less labor required than lobster and crab. It is simpler to prepare than shellfish. But the food cost is a little above average. So we are changing the food.

Today’s Fresh Fish is one of the first waves of change. We’ve also added new menu items and changed look of the menu. Every menu description has been rewritten to help guests anticipate the flavor they will get.

We have also reduced the number of menu items by over half. So we have new food, and you’ll also see new plateware [in test] and new bread baskets.

We are far more disciplined than in the past. We believe there is one Red Lobster way. That is a bit of a cultural change from the way we used to operate. It’s been embraced as evidenced by our [rising] guest-satisfaction scores.

On prototypes:

We are working to identify the best possible restaurant for the future. We are developing three separate designs, and we intend to choose the best one. The North Olmsted, Ohio, prototype is designed to appeal to current users, but we have found lapsed users like it as well. Sales results have been terrific.

We are already getting family occasions there. What we are now hearing about North Olmsted is that we are getting more adult-planned dinner and business occasions. The restaurant is a little nicer looking than usual, although [the look] is not a deterrent to family visits.

In all, we are doing three approaches. The second is targeted to light and lapsed users. It’s more pushed out from the historic Red Lobster image. What we need to evaluate is what impact that may have on our core users. That is yet to be determined.

And then we have a third design, which looks very nice and would be the lowest cost of the designs. We will evaluate all three before making a decision as to which has the most consumer appeal. We’ll likely know within six months.