Red Lobster, another major restaurant chain, struggles to survive the overwhelming changes in the restaurant industry created by our social changes.
ORLANDO, FL (StLouisRestaurantReview) Rumors of Red Lobster filing bankruptcy surfaced several weeks ago, which is consistent with Applebee’s and other significant brands failing to overcome the high cost of rent, property taxes, staff shortages, and more.
The company is not responding and offering comments to journalists, which is no surprise as they want to minimize the damage that closing dozens of restaurants might create for themselves. That will lead to assumptions being made. They should be talking, but their attorneys likely advise them to say nothing. We all know that attorneys offer the best business advice.
It’s sad as this was once one of the great restaurant chains that brought quality seafood to many areas that did not have it previously. I met my ex-wife for the first time at a Red Lobster. They were deeply rooted in our society.
Rumor has it that multiple locations around Orlando, FL, are closed, including those in Elkhart, IN; Danville, IL; Waterloo, IA; Buffalo, NY; Watertown, NY; Jacksonville, FL; Tamp, FL; Lewiston, ID; Gaithersburg, MD, and Saline, KS.
Several Red Lobster locations have already closed in the St. Louis region, but the trend is spreading across the country. If they do file bankruptcy, they will likely change their business model completely, and they will most likely not survive.
We have been predicting this event since the lockdown. It is not over; it is just beginning. They burned through their cash, PPP loans, and bank loans while raising prices, which hurt their sales, and attempts to cut portions drastically decreased consumer support. Is it poor business, politics, or economics? It is all three! All are responsible!
Three negative factors facing big chain restaurants:
- COVID-19 – consumer buying habits changed. Consumers were forced to order online, and many big chains were slow to respond to such changes
- Inflation – Rent and Triple Net Payments: Most major brands pick premium locations. The triple nets have increased dramatically as poorly managed municipalities raise property taxes, which are then passed on to the tenant. Most of the major brands had lower profit margins to begin with, and as costs increased, those margins disappeared quickly.
- .Lack of Staff – let’s face it. Our country has changed due to the lockdown. People got lazy, made their kids lazy, and now nobody wants to work. This major overexaggerated pandemic changed personalities and attitudes.
Each event triggered another. Inflation was the icing on the cake. The last thing this country needed was inflation that exceeded anybody’s expectations, and it’s not likely over.
