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The Red Lobster: Competitor Analysis

Paper Type: Free Essay Subject: Marketing
Wordcount: 1777 words Published: 17th May 2017

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The company under review is the Red Lobster chain of restaurants. This is a casual dining restaurant found and managed by Bill Darden. The headquarters of the company is in Florida, and it has branches in Japan, United Arab Emirates, and Canada. The company has an approximate number of 698 branches, and they are spread in different countries of the world. The company was formed in 1968, with the aim of providing a place where Americans will get some sea food. Mr. Darden also targeted employers, by creating facilities where they could relax from the vigor’s of the day (Red Lobster Seafood Restaurants, 2012).

This paper highlights the history and development of the company. It also analyzes the market conditions of the company, giving its strategies. This paper briefly analyzes the menu of the company, its human resource strategies and sources of finances. It has a conclusion, which provides a critique of the organizations strategies, and business operations.

History and Development of the Company:

In 1968, Charley Woodsby and Bill Darden came up with an idea of forming the restaurant. By then, the name of the company was Harbor for Sea Food Lovers. It was the first restaurant in Florida, Lakers, and it opened other branches in the State. This happened in the periods of 1970s, and back then, their main competitor was a restaurant by the name of Kitchen Stove. The company was successful in introducing fresh and new delicacies to their customers. These fresh dishes became popular, and this accelerated the growth of the company, and in 1980s, the company made its presence in Canada.

However, its Canadian experience was not good; this is because the company made lots of losses. Competition was stiff in Canada, and due to poor strategies and lack of sufficient market information, the company was forced to close some of its branches in Quebec, Canada. This happened on September 1997.

In 1995, Red Lobster, Olive Garden and Bahama Breeze were integrated as part of the Darden Restaurants Inc. Joe Lee was then in charge as the Chief Executive Officer, and later on, he handed the company to Clarence Otis. The company is passionate about sea food, and over the years, the company has initiated the culture of innovation for the purposes of introducing and developing new menus that will satisfy the needs of its customers.

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The company provides a conducive environment for dining, and celebrations. It is devoted to produce high quality services, and sea food products. The company has an approximate number of 680 units, in different parts of United States of America, Canada, and Japan. The Headquarters of the restaurant is in Orlando, Florida. It is situated along the Darden Center Drive, 1000. It is not the policy of the company to franchise, and therefore all red lobsters restaurants are company owned, and operated.

Market Analysis and Strategy:

Target Market:

The target markets for Red Lobsters are the constant users of casual dining restaurants, and are characterized by high mobility. The Red Lobsters chain of restaurants also targets user of out of home messaging systems. In targeting the users of casual dining, the company has categories, the high end users and the low end users. The high end users are the rich people, and there food is of higher quality, prepared by high class chefs.

In serving the low end users, the company produces frozen sea food, prepared in bulk, and much of it dried. To capture all these customers, the restaurant engages itself in extensive advertisements on television programs, and promotional shows.

The company manages to attract and retain its customers through use of national television advertisements, and it is supplemented by audio programs. The aim of this is to maintain a constant flow of customers, during the period in which the company does not hold promotional shows or programs.


The competitors of the company are Applebee’s, Joe Crabs Shack and Brinker International. In relation to Joe Crabs Shack, the company is the largest and most profitable, operating over 600 branches, as compared to that of Joe Crabs Shack which stands at about 110 restaurants. On other hand, Applebee’s has more than 2000 branches, in over 20 countries of the world.

In regard to this, Applebee’s has a higher market share as compared to Red Lobsters. Brinker International is another competitor of Red Lobsters. The company is a large multinational, serving over a million guests in a day. It operates an approximate number of 1585 restaurants all over the world. In regard to its huge capitalistic base, the business is more profitable than Red Lobsters (Weinstein et al, 2011).

Both these institutions engage in aggressive advertisements of their services. They use television channels and various promotional programs such as loyalty rewards, and social responsibility. Basing on this analysis, Brinker International and Applebee’s have a wider market share as compared to Red Lobsters. However, Joe Crabs Shack is weaker than Red Lobsters in relation to the market it controls and its profitability.

The Swot Analysis of the Red Lobsters in Relation to Its Competitors:


The menu of the company reflects the needs of its customers.

It has a powerful retail brand formed over a time span of 30 years.

The company has an innovative culture that has an effect of increasing its profitability.


Lack of highly qualified chefs who have the ability to produce high quality foods.

Discrimination in terms of satisfying the customer’s needs. They value rich customers as compared to poor customers. Its competitors treat their customers equally, and they do not enact discriminative measures in serving their customers. They not only offer sea foods in their menu, they also have products that their customers may need (Weinstein, et al, 2012).

The company only concentrates on sea food, and therefore it does not diversify its services. Brinker international and Applebee’s have diversified in their operations.

Lack of enough capital to expand its operations outside Canada, Japan and United States of America. This is unlike its competitors who are well funded and capital intensive.


There is room for creating mergers, and strategic alliance, between the company and other related companies.

The company can take advantage of the emerging markets of Brazil, China, Russia, India and South Africa. It should raise capital, and invest in these economies.

Favorable political, economic and legal environment to enable it conduct its businesses.


The European and American economic recession is a threat to its operations.

Existence of huge multi-national corporations such as Brinker International and Applebee’s is a threat to the profitability of the company.

Menu Analysis:

The Menu of the company consists mainly of fresh Sea foods. The menu has a variety of choices, for instance a customer can choose between a fried crab, or a stewed one. The food on offer satisfies all the nutritional standards that a person needs. For instance, fried or stewed crabs will be served with vegetables (Red Lobster, 2012). This ensures that the food taken has vitamins, fats, and proteins. These are essential nutrients a person needs. There prices are also different, depending on the type of food a customer chooses. On this note, the menu satisfies the needs of the market. This is because it has various choices a customer can choose from.

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Human Resource Strategy:

The company has over 1400 employees who work on accounting, sales, management, and supplies. The company hires it employees on a competitive basis, and its offers lucrative salaries, depending on the market conditions and standard of living in the states on which the employee resides. The Company has MBA internship programs, which runs for 12 weeks. The interns are notified of their performance during the final and midterm review.

Employees are given projects to work on. These projects supplement their day to day operations, and they are compensated for them. The restaurant, on most occasions advertises its vacancies at websites, and restaurant support center, located at its headquarters in Orlando, Florida.

Earnings and Revenue of the Company:

In general, the Red Lobsters is a profitable company. For instance, the results of the company’s first quarter ended on August 26th 2012, posted sales revenue of 660 million dollars. Even though this presented a decrease by the margin of 2.1% as compared to the previous year, the company made some profits. The decline in revenue was as a result of an increase in administrative costs, and various depreciation expenses (Darden Restaurant Inc, 2012).

In the third quarter of the company ended in February 2012, the companies sales revenue increased by 6%, as compared to the previous season. This was as a result of aggressive promotions, and brand enhancements. In the second quarter of the year ended November 27th 2011, the company made sales revenue of 602 million. This was higher than the previous year, by a margin of 8%. In the fourth quarter of the year 2011, which ended in August 28th, the company made revenue totaling to 605 million. In analyzing this report, it is therefore prudent to conclude that the company is a profitable venture.


The company has the ability to process fresh and high quality sea food. However, due to stiff completion the company is unable to attract enough customers, to ensure that it catches up with the competition. The company is unable to raise the kind of capital that Applebee’s and Brinker international possess, and therefore it will continue to subordinate itself to the two companies. Its marketing strategy of using the radio to supplement television advertisements is outdated.

This is because the nature of the customers it seeks to attract rarely listens to radio. The financial reports of the company indicate that it is a profitable venture, and with lots of hardwork and innovative tendencies, the company has the ability of attracting more clients. Its human resource strategy is weak. This is because the organization does not have training programs for its managerial team, instead the company focuses on training MBA interns.


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