Connect with us

Business

Red Lobster offered customers all-you-can-eat shrimp. That was a mistake

Published

on

Red Lobster offered customers all-you-can-eat shrimp.  That was a mistake

Red Lobster promised customers an endless supply of shrimp for $20 — a gamble the struggling restaurant chain hoped would help pull it out of its pandemic doldrums.

But Americans, and their appetites, had other plans.

The beloved yet beleaguered pillar of casual dining abruptly shuttered dozens of locations this week, heightening speculation that the chain is careening toward bankruptcy.

Although its dire financial situation isn’t the result of a single misstep, executives at the company that owns a large stake in the chain, as well as industry experts, said that miscalculations over the popularity of the all-you-can-eat shrimp special accelerated the company’s downward spiral.

The closures, including at least five locations in California, were announced in a LinkedIn post Monday by Neal Sherman, the chief executive of a liquidation firm called TAGeX Brands, which is auctioning off surplus restaurant equipment from the shuttered locations.

Advertisement

Representatives for Red Lobster did not respond to a request for comment about the closures, which were listed on its website as temporary, or whether it planned to file for bankruptcy.

But company executives have been vocal about the misguided gamble with shrimp and how they misjudged just how hungry Americans would be for a deal on the crustaceans.

In an effort to boost foot traffic and ease the sales slump that swept through the restaurant industry during the pandemic, Red Lobster executives last year decided to relaunch a popular marketing ploy from years past to lure customers: For $20 they could eat as much shrimp as they wanted.

Eager for a deal during an era of stubbornly high inflation, many consumers eagerly embraced the offer as a challenge. People took to TikTok to brag about how many of the pink morsels they could put down in a single sitting — one woman boasted she’d consumed 108 shrimp over the course of a 4-hour meal.

“In the current environment, consumers are looking to find value and stretch budgets where they can,” said Jim Salera, a research analyst at Stephens, who tracks the restaurant industry. “At $20, it’s very possible for a consumer to eat well past the very thin profit margin.”

Advertisement

During a presentation about sales from the third quarter of last year, Ludovic Garnier, the chief financial officer of Thai Union Group, a seafood conglomerate that has been Red Lobster’s largest shareholder since 2020, cited the endless shrimp deal as a key reason the chain had an operating loss of about $11 million during that time frame.

“The price point was $20,” Garnier said.

He paused.

“Twenty dollars,” he repeated with a tinge of regret in his voice. “And you can eat as much as you want.”

Although the promotion boosted traffic by a few percentage points, Garnier said, the number of people taking advantage of the all-you-can-eat offer far exceeded the company’s projections. In response, they adjusted the price to $22 and then $25.

Advertisement

All-you-can-eat offers can be effective marketing strategies to get people in the door in the competitive world of casual dining — Applebee’s offers $1 margaritas dubbed the Dollarita, buffet chains such as Golden Corral and Sizzler promise abundance at a flat rate, and Olive Garden, one of Red Lobster’s main competitors, has long lured customers with unlimited salad and bread sticks.

But Red Lobster made a few crucial missteps with the shrimp deal, said Eric Chiang, an economics professor at University of Nevada, Las Vegas, and a self-proclaimed buffet aficionado.

The company not only started with a low price point, but offered a prized and pricey menu item that can serve as an entire meal — not many customers at Olive Garden, he noted, are going to stock up on bread sticks and salad alone.

“Most people will also order the Taste of Italy,” he said, “or something that gives you meat and pasta.”

Chiang said the most effective loss leaders, a term for products that aren’t profitable but bring in enough new customers or lead to the sale of enough other items to make the offer worthwhile, use cheap ingredients. A good example is 7-Eleven’s Free Slurpee Day, he said, as the company gives away about 15 cents of ice and syrup to customers who then pay to fill up their gas tanks.

Advertisement

Consumers are especially drawn to all-you-can-eat deals and buffets during tighter economic times, Chiang said.

“This is a story of inflation,” he said. “All you can eat for $15? That gives customers a sense of control. Like we’re not being gouged, not being nickel and dimed for every dessert.”

Red Lobster, it turns out, has been in trouble for a while.

In 2003, the chain, which at the time was owned by Darden Restaurants, the company that owns Olive Garden, offered a similarly disastrous all-you-eat crab special for around $23.

So many people came back for seconds, thirds and even fourths, executives said at the time, that it cut into profit margins. Before long, the company’s then-president stepped down.

Advertisement

In 2014, after a period of disappointing sales and less foot traffic, Darden sold Red Lobster to San Francisco private equity firm Golden Gate Capital for more than $2 billion, a stake that was eventually taken over by Thai Union.

Despite the turmoil, the company, which until this week touted about 700 locations, remained a brand so beloved that it earned a reference in Beyonce’s song “Formation,” in which she describes post-coital trips to Red Lobster.

After the song’s release, the company said it saw a 33% jump in sales, but that glow was short lived and had faded long before the ill-fated shrimp deal was brought back last year.

“You have to be pretty close to the edge for one promotion to tip you over the edge,” said Sara Senatore, a senior analyst at Bank of America, who follows the restaurant industry.

In January, Thai Union Group — citing a combination of financial struggles it pinned to the pandemic, high labor and material costs and the oft-cited buzzword of industry “headwinds” — announced plans to dump its stake in the company, which was founded in 1968 in Lakeland, Fla. The closures this week hit at least five California locations — Redding, Rohnert Park, Sacramento, San Diego and Torrance — according to the website of the liquidation company, which posted images of available items, including a lobster tank, seating booths, refrigerators and a coffee maker.

Advertisement

During a presentation to investors in February, Thiraphong Chansiri, the chief executive of Thai Union, expressed frustration with the situation surrounding Red Lobster, saying it had left a “big scar” on him.

“Other people stop eating beef,” he said. “I’m going to stop eating lobster.”

Advertisement
Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Business

From Heisman Trophy to SUV, O.J. Simpson property auction approved to pay off civil claims

Published

on

From Heisman Trophy to SUV, O.J. Simpson property auction approved to pay off civil claims

O.J. Simpson’s Heisman Trophy, golf clubs, high-end sports utility vehicle and even his driver’s license will soon be sold to pay off a debt the infamous football star carried beyond his own death.

A Nevada probate judge agreed Friday to a proposal by legal representatives of Simpson’s estate to auction “unique and high-profile” personal property, according to attorney’s representing the estate. It is not clear how much money the auction will raise, but it is intended to help pay a portion of a civil claim by the family of murder victim Ron Goldman.

Thomas Grover, who represents Simpson estate attorney Malcolm LaVergne, said the estate was already “beginning the process to auction the items soon.”

The action comes a day after Fred Goldman, father of slain waiter Ron Goldman, filed a creditor claim in Clark County District Court for $117 million against Simpson’s estate.

Michaelle Rafferty, lead attorney for Goldman, said there were no objections from the Goldman family over the auction.

Advertisement

“Our hope is that Mr. LaVergne will use very reputable auction houses and that those funds will come back to the estate,” Rafferty said Friday afternoon.

Both sides are expected back in court next month.

Ron Goldman’s family won a wrongful death civil case against Simpson in 1997, which found him liable for the murders of Goldman and Simpson’s ex-wife Nicole Brown Simpson. The family was initially awarded $8.5 million in compensatory damages.

The jury later awarded $25 million in punitive damages to be split between Nicole Brown Simpson and Goldman family members.

The civil victories came after Simpson’s famous acquittal in the double murder criminal case, known as the “Trial of the Century,” in October 1995.

Advertisement

The 76-year-old Simpson died in April of prostate cancer.

Fred Goldman and daughter Kim lamented that “true accountability has ended” with Simpson’s death. However, Fred Goldman continued pursuing civil collections.

LaVergne was, at first, hostile to the idea of paying off the civil judgment, telling the Las Vegas Review Journal in an interview two days after Simpson’s passing that the Goldman family would “get zero, nothing.” “I will do everything in my capacity as the executor or personal representative to try and ensure that they get nothing,” he said.

LaVergne mellowed, however, and vowed in an interview with The Times to “handle this thing in a calm and dispassionate manner.”

LaVergne’s retraction did not surprise Rafferty.

Advertisement

“The situation changes dramatically with a death,” she said. “Mr. LaVergne was representing his client personally, and now it’s about the estate, proceedings and addressing creditors.”

Court documents from 2015 show the family has received about $132,000 of the total liability.

The $117 million claim includes three renewed judgments against Simpson from 2015, 2016 and 2022 along with interest. Statutory interest alone from June 3, 2022, to July 25, 2024, accounted for an additional $20.7 million. Goldman is also claiming a daily amount of accrued interest of at least $16,638.73.

It’s unknown what type of memorabilia or possessions remain on Simpson’s property.

Rafferty said she had not received an inventory from LaVergne and does not know ultimately how much the Goldman family will collect.

Advertisement

She said LaVergne was obligated to give notice about the intended auction houses, assets and opening bid prices.

“We’ll look it over and we’ll have two weeks to object,” she said.

Continue Reading

Business

After 57 years of open seating, is Southwest changing its brand?

Published

on

After 57 years of open seating, is Southwest changing its brand?

Jim Kingsley of Orange County, who recently flew Southwest on a two-leg journey from Minneapolis to Los Angeles, likened the budget-friendly airline to In-N-Out Burger.

Both brands are affordable, consistent and more simplistic compared with competitors, Kingsley said.

“They’re not trying to offer all the things everybody else offers,” he said, “but they get the quality right and it’s a good value.”

Change, however, is in the air.

Southwest, which since its founding nearly 60 years ago has positioned itself in the cutthroat airline industry as an easygoing, egalitarian option, upended that guiding ethos this week with word that it would get rid of its famous first-come, first-seated policy in favor of traditional assigned seats and a premium class option. They will also offer overnight, red-eye flights in five markets including Los Angeles.

Advertisement

Experts say the changes, especially the switch to assigned seating, are a smart move and will appeal to many as the company tries to stabilize its precarious finances that included a 46% drop in profits in the second quarter from a year earlier to $367 million. But it remains to be seen whether Southwest will pay an intangible cost in making the moves: Will it be able to hold on to its quirky identity or will it put off loyal customers, and in doing so, become just another airline?

“You’re going to hear nostalgia about this, but I think it’s very logical and probably something the company should have done years ago,” said Duane Pfennigwerth, a global airlines analyst at Evercore.

“In many markets away from core Southwest markets, we think open seating is a boarding process that many people avoid,” he said.

That is all well and good, but “I didn’t ask for these changes,” Kingsley said. “Cost and quality is what I care about.”

Open seating has its pros and cons, Kingsley said, though he’s generally a fan. On his trip to Los Angeles, his group wasn’t able to get seats all together. But he likes that preferred seats are available on a first-come, first-served basis, instead of being offered for a high price.

Advertisement

Eighty percent of Southwest customers and 86% of potential customers prefer an assigned seat, the airline said in a statement.

“By moving to an assigned seating model, Southwest expects to broaden its appeal and attract more flying from its current and future customers,” the airline said.

An even bigger draw of Southwest, according to Kingsley, is its policy of including two free checked bags per ticket. This perk often makes Southwest a better bargain, especially for longer trips or bigger groups, he said.

The free bags are a big deal to customers, experts said, and contribute to the airline’s consumer-friendly brand. The airline hasn’t indicated they plan to change their bag policy.

“Southwest has always had a really good, positive vibe,” said Alan Fyall, chair of Tourism Marketing at the University of Central Florida’s College of Hospitality. “It’s free bags, good prices and point-to-point routes. That’s what they stand for and that’s what people love about them.”

Advertisement

Southwest’s change to assigned seating doesn’t mean they’re no longer a budget-friendly airline, Fyall said, but it does differentiate them from the lowest-cost, lowest-amenity options such as Frontier and Spirit.

The move will also require Southwest to update all or a portion of its fleet to include first-class seats. Currently, all seats on a Southwest flight are identical. Fyall said it’s worth the investment.

It’s an appropriate time for Southwest to make adjustments, said Chris Hydock, an assistant professor at Tulane University’s Freeman School of Business.

“They’ve not been profitable the last couple of quarters and they’ve had some activist investor pressure to increase their revenue,” he said.

Costs such as wages and maintenance have risen across the airline industry even as travel increased after the pandemic. Southwest saw a net loss of $231 million in the first quarter of 2024. Wall Street analysts estimate that assigned, premium seating could boost revenue by $2 billion per year.

Advertisement

“This is one of the options where they could potentially increase their revenue and do something that a lot of consumers have a strong preference for anyway,” Hydock said.

For Southwest’s changes to pay off, it has to stick to its roots when it comes to its culture and brand, experts and travelers agreed.

“I love Southwest being different,” Kingsley said. “If they’re trying to be like the other airlines, I think they’re shooting themselves in the foot.”

Advertisement
Continue Reading

Business

Column: 99 years after the Scopes 'monkey trial,' religious fundamentalism still infects our schools

Published

on

Column: 99 years after the Scopes 'monkey trial,' religious fundamentalism still infects our schools

Almost a century has passed since a Tennessee schoolteacher was found guilty of teaching evolution to his students. We’ve come a long way since that happened on July 21, 1925. Haven’t we?

No, not really.

The Christian fundamentalism that begat the state law that John Scopes violated has not gone away. It regularly resurfaces in American politics, including today, when efforts to ban or dilute the teaching of evolution and other scientific concepts are part and parcel of a nationwide book-banning campaign, augmented by an effort to whitewash the teaching of American history.

I knew that education was in danger from the source that has always hampered it—religious fanaticism.

— Clarence Darrow, on why he took on the defense of John Scopes at the ‘monkey trial’

Advertisement

The trial in Dayton, Tenn., that supposedly placed evolution in the dock is seen as a touchstone of the recurrent battle between science and revelation. It is and it isn’t. But the battle is very real.

Let’s take a look.

The Scopes trial was one of the first, if not the very first, to be dubbed “the trial of the century.”

Advertisement

And why not? It pitted the fundamentalist William Jennings Bryan — three-time Democratic presidential candidate, former congressman and secretary of State, once labeled “the great commoner” for his faith in the judgment of ordinary people, but at 65 showing the effects of age — against Clarence Darrow, the most storied defense counsel of his time.

The case has retained its hold on the popular imagination chiefly thanks to “Inherit the Wind,” an inescapably dramatic reconstruction — actually a caricature — of the trial that premiered in 1955, when the play was written as a hooded critique of McCarthyism.

Most people probably know it from the 1960 film version, which starred Frederic March, Spencer Tracy and Gene Kelly as the characters meant to portray Bryan, Darrow and H.L. Mencken, the acerbic Baltimore newspaperman whose coverage of the trial is a genuine landmark of American journalism.

What all this means is that the actual case has become encrusted by myth over the ensuing decades.

One persistent myth is that the anti-evolution law and the trial arose from a focused groundswell of religious fanaticism in Tennessee. In fact, they could be said to have occurred — to repurpose a phrase usually employed to describe how Britain acquired her empire — in “a fit of absence of mind.”

Advertisement

The Legislature passed the measure idly as a meaningless gift to its drafter, John W. Butler, a lay preacher who hadn’t passed any other bill. (The bill “did not amount to a row of pins; let him have it,” a legislator commented, according to Ray Ginger’s definitive 1958 book about the case, “Six Days or Forever?”)

No one bothered to organize an opposition. There was no legislative debate. The lawmakers assumed that Gov. Austin Peay would simply veto the bill. The president of the University of Tennessee disdained it, but kept mum because he didn’t want the issue to complicate a plan for university funding then before the Legislature.

Peay signed the bill, asserting that it was an innocuous law that wouldn’t interfere with anything being taught in the state’s schools. The law “probably … will never be applied,” he said. Bryan, who approved of the law as a symbolic statement of religious principle, had advised legislators to leave out any penalty for violation, lest it be declared unconstitutional.

The lawmakers, however, made it a misdemeanor punishable by a fine for any teacher in the public schools “to teach any theory that denies the story of the Divine Creation of man as taught in the Bible, and to teach instead that man had descended from a lower order of animal.”

Scopes’ arrest and trial proceeded in similarly desultory manner. Scopes, a school football coach and science teacher filling in for an ailing biology teacher, assigned the students to read a textbook that included evolution. He wasn’t a local and didn’t intend to set down roots in Dayton, but his parents were socialists and agnostics, so when a local group sought to bring a test case, he agreed to be the defendant.

Advertisement

The play and movie of “Inherit the Wind” portray the townspeople as religious fanatics, except for a couple of courageous individuals. In fact, they were models of tolerance. Even Mencken, who came to Dayton expecting to find a squalid backwater, instead discovered “a country town full of charm and even beauty.”

Dayton’s civic boosters paid little attention to the profound issues ostensibly at play in the courthouse; they saw the trial as a sort of economic development project, a tool for attracting new residents and businesses to compete with the big city nearby, Chattanooga. They couldn’t have been happier when Bryan signed on as the chief prosecutor and a local group solicited Darrow for the defense.

“I knew that education was in danger from the source that has always hampered it — religious fanaticism,” Darrow wrote in his autobiography. “My only object was to focus the attention of the country on the programme of Mr. Bryan and the other fundamentalists in America.” He wasn’t blind to how the case was being presented in the press: “As a farce instead of a tragedy.” But he judged the press publicity to be priceless.

The press and and the local establishment had diametrically opposed visions of what the trial was about. The former saw it as a fight to protect from rubes the theory of evolution, specifically that humans descended from lower orders of primate, hence the enduring nickname of the “monkey trial.” For the judge and jury, it was about a defendant’s violation of a law written in plain English.

The trial’s elevated position in American culture derives from two sources: Mencken’s coverage for the Baltimore Sun, and “Inherit the Wind.” Notwithstanding his praise for Dayton’s “charm,” Mencken scorned its residents as “yokels,” “morons” and “ignoramuses,” trapped by their “simian imbecility” into swallowing Bryan’s “theologic bilge.”

Advertisement

The play and movie turned a couple of courtroom exchanges into moments of high drama, notably Darrow’s calling Bryan to the witness stand to testify to the truth of the Bible, and Bryan’s humiliation at his hands.

In truth, that exchange was a late-innings sideshow of no significance to the case. Scopes was plainly guilty of violating the law and his conviction preordained. But it was overturned on a technicality (the judge had fined him $100, more than was authorized by state law), leaving nothing for the pro-evolution camp to bring to an appellate court. The whole thing fizzled away.

The idea that despite Scopes’ conviction, the trial was a defeat for fundamentalism, lived on. Scopes was one of its adherents. “I believe that the Dayton trial marked the beginning of the decline of fundamentalism,” he said in a 1965 interview. “I feel that restrictive legislation on academic freedom is forever a thing of the past, … that the Dayton trial had some part in bringing to birth this new era.”

That was untrue then, or now. When the late biologist and science historian Stephen Jay Gould quoted that interview in a 1981 essay, fundamentalist politics were again on the rise. Gould observed that Jerry Falwell had taken up the mountebank’s mission of William Jennings Bryan.

It was harder then to exclude evolution from the class curriculum entirely, Gould wrote, but its enemies had turned to demanding “‘equal time’ for evolution and for old-time religion masquerading under the self-contradictory title of ‘scientific creationism.’”

Advertisement

For the evangelical right, Gould noted, “creationism is a mere stalking horse … in a political program that would ban abortion, erase the political and social gains of women … and reinstitute all the jingoism and distrust of learning that prepares a nation for demagoguery.”

And here we are again. Measures banning the teaching of evolution outright have not lately been passed or introduced at the state level. But those that advocate teaching the “strengths and weaknesses” of scientific hypotheses are common — language that seems innocuous, but that educators know opens the door to undermining pupils’ understanding of science.

In some red states, legislators have tried to bootstrap regulations aimed at narrowing scientific teaching onto laws suppressing discussions of race and gender in the classrooms and stripping books touching those topics from school libraries and public libraries.

The most ringing rejection of creationism as a public school topic was sounded in 2005 by a federal judge in Pennsylvania, who ruled that “intelligent design” — creationism by another name — “cannot uncouple itself from its creationist, and thus religious, antecedents” and therefore is unconstitutional as a topic in public schools. Yet only last year, a bill to allow “intelligent design” to be taught in the state’s public schools was overwhelmingly passed by the state Senate. (It died in a House committee.)

Oklahoma’s reactionary state superintendent of education, Ryan Walters, recently mandated that the Bible should be taught in all K-12 schools, and that a physical copy be present in every classroom, along with the Ten Commandments, the Declaration of Independence and the Constitution. “These documents are mandatory for the holistic education of students in Oklahoma,” he ordered.

Advertisement

It’s clear that these sorts of policies are broadly unpopular across much of the nation: In last year’s state and local elections, ibook-banners and other candidates preaching a distorted vision of “parents’ rights” to undermine educational standards were soundly defeated.

That doesn’t seem to matter to the culture warriors who have expanded their attacks on race and gender teaching to science itself. They’re playing a long game. They conceal their intentions with vague language in laws that force teachers to question whether something they say in class will bring prosecutors to the schoolhouse door.

Gould detected the subtext of these campaigns. So did Mencken, who had Bryan’s number. Crushed by his losses in three presidential campaigns in 1896, 1900 and 1908, Mencken wrote, Bryan had launched a new campaign of cheap religiosity.

“This old buzzard,” Mencken wrote, “having failed to raise the mob against its rulers, now prepares to raise it against its teachers.” Bryan understood instinctively that the way to turn American society from a democracy to a theocracy was to start by destroying its schools. His heirs, right up to the present day, know it too.

Advertisement
Continue Reading
Advertisement

Trending