Richard Allen’s Post

Several news outlets including Global News and Yahoo Finance report that Red Lobster will be filing for bankruptcy. The chain has been struggling with food prices and last years "Endless Shrimp" promotion tanked profits by $11M. #bankruptcy #restaurantbusiness #seafood #menus #retailtrends #retailleasing #retailnews

Red Lobster, the seafood restaurant chain that dates back to the late 1960s, filed for bankruptcy protection earlier as the company struggled to keep its head above water. Many in the media have and will write articles about the failure of the seafood chain and will almost likely (and in an utterly ignorant way) blame the restaurant’s $20, all-you-can-eat shrimp menu item was the subject of the demise of Red Lobster. However, as I pointed out in one of my previous posts, the bankruptcy documents showed that a string of bad financial decisions by Red Lobster’s owner, Golden Gate Investments, had hurt the brand in a multitude of ways. Some in the media and many analysts also blamed the chain's struggle to recover from the pre-pandemic foot traffic levels, and the company’s inability to diversify. Those may be some reasons but the fundamental reason for the demise of this seafood restaurant chain was in the early days decision of the PE's greed and shortsighted actions in selling all the assets (all paid-off buildings owned by the restaurant chain) after taking over Red Lobster. Once the assets were sold off and the PE recouped their investment, the bean counters left the chain struggling to pay their high leases in bad times. So, in reality this great seafood chain did not go bankrupt because of the all you can eat shrimp, the lack of diversification of the decline in foot traffic, the real culprits behind where know-it-all greed financiers, MBAs and PE experts sucking the blood out of a good business. https://lnkd.in/g5vjM8qj #redlobster #pe #seafood #beancounters #mba #experts #privateequity #equity #diversification #restaurant #chain #food #bankruptcy #realculprits #pandemic #investments

Red Lobster, the renowned 🇺🇸 seafood chain, is facing the closure of several restaurants and considering a Chapter 11 bankruptcy filing due to an $11 million loss from their "Ultimate Endless Shrimp" promotion. Originally a limited-time offer turned permanent, the promotion attracted more customers than expected, leading to unsustainable operating costs and a $12.5 million operating loss in Q4 2023. This situation highlights the importance of strategic planning in managing popular promotions. Companies must evaluate the full impact on their brand and financial health, ensuring alignment with overall business goals. The case underscores the necessity to balance the 4Ps of marketing for success and sustainability: 1️⃣ Product: Align with customer needs. Red Lobster's "Ultimate Endless Shrimp" exceeded operational capabilities, causing a mismatch. 2️⃣ Price: Set the right price. Red Lobster's initial pricing failed to cover costs, resulting in significant financial setbacks. 3️⃣ Place: Manage distribution channels. Red Lobster overlooked the operational capacity to handle increased customer volume, leading to higher costs. 4️⃣ Promotion: Attract customers profitably. The "Ultimate Endless Shrimp" promotion, while successful, lacked proper cost control and scalability, causing financial strain. This case serves as a cautionary tale on the importance of strategic planning and balancing marketing elements for sustained success. #RedLobster #MarketingStrategy #BusinessLessons #4Ps Mark Ritson

Red Lobster, on the brink of seeking bankruptcy protection has been recently blaming its downfall on an ill fated “all you can eat shrimp” promotion, but its troubles go deeper than that, maybe even to its real estate. Back in 1995, Red Lobster’s owner, General Mills sold off the chain along with the rest of its restaurant division, which also included Olive Garden, as Darden Restaurants. But in 2014, amid flagging sales and pressure from investors, Darden sold Red Lobster for $2.1 billion to Golden Gate Capital, a San Francisco private-equity firm. That’s when the problems began. You see, to raise enough cash to buy the lucrative seafood chain, Golden Gate sold off Red Lobster's real estate to another entity — American Realty Capital Properties — and then immediately leased the restaurants back. As soon as they sell the real estate, the private-equity company is made whole, but the restaurant chain is now saddled with added rent indefinitely. It gets more complicated but as Red Lobster continued its downward trend over the next decade, few will remember how the economics have changed for Red Lobster from its heyday. Some will say Red Lobster is no longer in vogue, that consumer tastes have changed but we know better.

Contract manufacturer Hearthside Food Solutions is shoring up its finances as parent company H-Food Holdings LLC has filed for Chapter 11 bankruptcy protection.  The company seeks approval of $300 million of debtor-in-possession financing to support operations as it goes through the process. “With a sustainable capital structure and a significant infusion of new capital to fund our long-term plan, we will be well-equipped to enhance our leadership in the food manufacturing industry as we drive continued innovation and growth," Hearthside CEO Darlene Nicosia said. Get the story from Keith Nunes on BakingBusiness. Milling & Baking News Hearthside Food Solutions Keith Nunes

Captain Fresh Expands Global Reach with Acquisition of CenSea. Captain Fresh, a rising star in the online seafood industry, has made waves with its latest acquisition of CenSea Inc., a distinguished frozen fish and seafood importer and distributor headquartered in the United States. Captain Fresh has clinched full ownership of CenSea through a blend of cash and stock transactions, with a significant portion of the deal settled in cash. With a rich heritage spanning forty years, CenSea has carved out a niche as one of the foremost importers of frozen seafood in the US market. The company prides itself on a diverse product portfolio, offering top-notch seafood sourced from nearly 25 countries. CenSea caters to many clients, including restaurant chains, food service distributors, retailers, and wholesalers. This strategic move highlights Captain Fresh's ambitious expansion plans beyond its primary focus on seafood export. Fresh off the acquisition of Senecrus, a leading French shrimp distributor, Captain Fresh now sets its sights on diversifying its operations into distribution channels across the US and Europe. The acquisition of CenSea signifies a pivotal milestone in Captain Fresh's global growth strategy, furnishing the company with a sturdy foothold in the lucrative North Atlantic supply markets. Furthermore, this strategic manoeuvre aligns seamlessly with Captain Fresh's ongoing endeavours to bolster its presence in key regions and augment its product offerings to cater to evolving consumer preferences. This landmark transaction follows closely on the heels of Captain Fresh's triumphant extension of its Series C funding round, securing an impressive $25 million investment. With plans to wrap up the ongoing round at $48 million, Captain Fresh stands poised to capitalize on emerging prospects and cement its status as a major contender in the international seafood domain. As Captain Fresh continues to scout for further acquisition opportunities in the European market, the company's expansion trajectory holds the promise of reshaping the global seafood landscape while unlocking fresh avenues for growth and innovation. https://lnkd.in/gTGhvM7Q

Helping clients achieve their growth potential is rewarding and exciting. What's the next step for you and your business? How can we help, "Power your potential?" #BusinessBanking #KansasCity #SmallBusiness #GrowthMindset

🚨Exciting news!🚨Clairvest has made a minority equity investment in Redstone Food Group. Redstone is a leading commercial bakery of bread and bakery products, focused on the in-store bakery segment. The company was founded in 1972 and is headed by Rob Wheeler who has 35 years of expertise in the food manufacturing industry. Redstone currently operates across numerous facilities in the Greater Toronto Area. Rob will remain the majority owner of Redstone.   This represents Clairvest’s second partnership in the food & beverage co-packing / private label manufacturing domain. Read full press release here: https://lnkd.in/g8KVMxzZ

Unlocking Opportunities: Nash Advisory guided Crackerjack Foods, a leading player in frozen potato snacks, through a transformative journey. Learn how the Nash team, Paul Nemets and Jack Geason’s strategic insights and industry connections paved the way for a successful sale to Lamb Weston. Full article below

For some chains, the Covid lockdown period came with a huge slowdown in business. The recovery, in many cases, was also slow, and recent months have shown some Americans being less willing to dine out. You can blame inflation or just general economic concerns but some chains have not recovered to the level necessary to service the added debt they took on during the shutdown period. Add in that labor prices have pushed higher and some food items cost more and it creates a very difficult operating situation. This seafood chain hurt its financial position by offering its popular all-you-can-eat shrimp meal for $20. That worked to increase traffic, but it was a money loser for the chain. That deal remains on the menu, but it now costs $25. Now, the company is considering its options and is looking for a lifeline.