Dear Red Lobster, It's Time for You to Go

Dear Red Lobster,

It's me, Darden Restaurants (NYSE: DRI  ) . As you may have already heard, it's time for you to move out. I know that I haven't been the best parent that a rudderless casual dining concept could have. I wasn't always around, chum. I wasn't there to tell you that "endless shrimp" would invite the wrong kind of hungry souls into your life. I didn't lend a shoulder to cry on as folks took to cyberspace, suggesting that the quality of your seafood was sinking all the way down to Davy Jones' locker. 

I was too busy thinking about myself, and what you could do for me. I had that 4.2% dividend to look out for since investors weren't looking at me as a growth stock anymore. 

You have to deal with wooing a customer that has a shellfish allergy. I guess you can say that I had a selfish allergy. I simply saw you as a cash cow -- or cash manatee, as they say in the water -- without thinking about what it would take to turn your business around. So I'm cutting you loose. At some point next summer I'll send you off to live on your own. Maybe someone takes pity on you and asks me for your hand in marriage. Either way, you're moving on.

Our relationship just isn't working. I know it's not just the general sluggishness of the casual dining industry. I can't even blame the seafood niche. There are plenty of other chains out there catching lightning on a fishing rod. Ignite Restaurant Group (NASDAQ: IRG  ) is coming off a strong quarter where comps at the 136-unit Joe's Crab Shack rose 3.3%. Bloomin' Brands (NASDAQ: BLMN  ) isn't doing as well with Bonefish Grill's comps sliding 2.7% in its latest quarter, but same-restaurant sales were positive the quarter before that. It's a sharp contrast to the 4.5% and 5.2% declines in comps that you've been going through these past two quarters. Why couldn't you be more like Ignite or Bloomin', huh?

I know you've been trying to make it work. You even added pork chops and Parmesan-crusted chicken pasta to woo landlubbers late last year. We saw how well that worked out. In retrospect, jacking up prices this year was the wrong call. Business became as soft as jellyfish, but with the same kind of sting.

This may sound strange, but you should probably thank me for showing you the door. I'm kicking you out at the right time. I have someone paying attention to me for a change. It's either a baron or a Barington, but either way my future is going to involve cutting costs. If you think you weren't getting enough marketing love, you're not going to like the hand-me-downs that await your siblings that will stick around. Off you go into the big blue ocean.  

So long, and thanks for all the fish.

Darden isn't the only retail disaster
To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2773245, ~/Articles/ArticleHandler.aspx, 9/26/2016 4:54:57 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:02 PM
DRI $62.47 Down -0.58 -0.92%
Darden Restaurants CAPS Rating: ***
BLMN $18.03 Down -0.57 -3.06%
Bloomin Brands CAPS Rating: **
IRG $0.81 Down -0.01 -1.59%
Ignite Restaurant… CAPS Rating: *****