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.
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