Business Strategy
Porter's Five Forces analysis
The Red Lobster Company is certainly profitable if one
considers the following five forces:
Threat of New Entrants (Low):
- High capital requirements to open new full-service seafood restaurants.
- Brand loyalty and a strong reputation make it difficult for new entrants.
- Red Lobster has economies of scale advantages.
Bargaining Power of Suppliers (Moderate):
- Reliant on fresh seafood, which can have volatile prices.
- Many substituted suppliers of seafood and other ingredients.
- Suppliers have moderate negotiating power.
Bargaining Power of Buyers (Moderate):
- Customers have many substitute full-service restaurant options.
- Customers are price-sensitive and desire value.
- Customers have moderate negotiating leverage.
Threat of Substitutes (High):
- Many substitute dining options like casual dining, fast food, etc.
- Consumer taste preferences are shifting.
- Convenience and price of substitutes are a threat.
Competitive Rivalry (High):
- Full-service dining segment is highly competitive.
- Competes directly against national and regional chains.
- Must differentiate on food, service, and ambiance.
- Promotions and discounting erode profits.
Menu Promos
Menu development process - Red Lobster focuses heavily on frequently introducing new menu items and new promos to launch these new ideas
The endless shrimp promotion was added to the menu in June 2023 to get more customers into the store during their dry period ( summer and fall)
Red Lobster experienced a large customer flow which was the goal, but the promotion was only 20$ so it did not turn out to be as profitable as they hoped.
A $11 million loss was accumulated in the 3rd quarter of the year
Since June 2023, the endless Shrimp promotion price has increased since the profit loss in 2023.
-We Found this information through Red Lobster's marketing and customer reviews on Facebook, Instagram, and other social media platforms.
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