Business Strategy

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

--"Ultimate Endless Shrimp"

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.