Can chicken dishes save Red Lobster? Chain to improve non-seafood offering in a bid to boost profits

Can chicken dishes save Red Lobster Chain to improve non-seafood offering in a bid to boost profits

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UPDATED:

14:49 GMT, 2 October 2012

Red Lobster isn't just for the seafood lover in you. It's also for that person in every group who just wants a chicken dish.

The chain that brought seafood to the masses in 1968 is hoping to broaden its appeal by boosting the number of dishes that cater to diners who don't want seafood, including lighter options such as salads.

The idea is intended to eliminate the 'veto vote,' or that one
person in a family or group of friends that rules out Red Lobster
because they don't like seafood.

Red Lobster shows the restaurant's new Chicken with Portobello dish

Avoiding the veto vote: Red Lobster's new menu will include more non-seafood options, such as this chicken with portobello dish

Though the chain has always had a steak dish or two on the menu, if people
want a salad, the current menu only offers a Caesar.

But diners
who aren't in the mood for seafood likely want a little more variety. So
when the chain began the revamp about two years ago, it started by
figuring out how to best fill in the gaps.

'We thought, what are the areas we're missing' says Michael LaDuke, Red Lobster's executive chef.

Last summer, LaDuke and his team
of chefs spent two weeks in Charlotte, N.C. to test about 50 dishes in
three restaurants.

A Red Lobster restaurant is shown in Hialeah, Florida

Budget-friendly: Red Lobster is also increasing the number of dishes that cost less than $15 to attract customers who have cut back on spending

They wanted feedback from diners, but also from the
kitchen staff on any problems they encountered executing the dishes. For
example, they decided that pineapple salsa should be prepared twice a
day, instead of once, to keep it fresher.

Once various
adjustments to sauces and cooking times were made, the test was
broadened to 40 of its more than 700 restaurants in North America.

Diners who ordered the new items were given surveys to fill out whether
they liked the dish, what they would change and whether they'd get it
again.

new Tilapia in a bag dish

Healthy option: The new menu will still feature plenty of fish, of course, such as the new tilapia in a bag dish

One of the dishes that made the cut is a Parmesan-crusted
Chicken Alfredo that's served over corkscrew pasta; it's for diners who
want a chicken dish that's a little more decadent.

DISHES UNDER $15: RED LOBSTER'S NEW PRICES

Red Lobster is increasing the number of dishes that cost less than $15 to attract customers who have cut back on spending.

The chain says the number of lower-cost
entrees will rise to about 60per cent from 40per cent.

'The consumer, it's no secret, is
financially constrained,' says Salli Setta, executive vice president of
marketing at Red Lobster. 'When they do go out to eat, price is much
more of a factor.'

Parent company Darden
Restaurants Inc., based in Orlando, Florida, has been slow
to emphasize affordability at its chains.

At Olive Garden, the 'Taste of Tuscany' promotion this year was a flop
because it didn't underscore value enough. And a $1 price hike for its
'Festival of Shrimp' at Red Lobster didn't go over well either.

The company's results have suffered, too. In its
latest quarter, Darden said profit rose 4per cent, but sales at restaurants open over a year fell 2.6per cent.

Darden
has since vowed that affordable prices will play a bigger role. During its road show of new Red Lobster menu items, they found that $15 was an important
psychological threshold.

'There's a difference between $14.99 and
$15.50 and the difference is more than 51 cents,' says Dave Pickens,
the company president.

Of course, the chain is betting that there
are times when customers are willing to pay a little extra: The NY
Strip Steak & Rock Lobster Tail still costs $32.99.

Pork chops are on the menu for the first
time. Ditto for the Roasted Vegetable Skewers, the first vegetarian
entree that isn't salad or pasta. And there are now three salads,
including the Bar Harbor Salad, which has dried berries, pecans and blue
cheese.

Speaking about the broader casual dining industry,
Raymond James analyst Bryan Elliott says such updating is necessary for
survival.

'Food is a bit of a fashion business, there's change
that evolves steadily over time,' he says. In other words, he says
companies are simply putting on a 'more contemporary set of clothes.'

Cee
Chappell-Bates, a 50-year-old resident of Columbus, Ohio, says she'd be
willing to tag along to Red Lobster with her husband and children more
often if there were a wider variety of dishes.

'As a family,
we've gone probably two or three times in the past year. But they've
been known to go without me too,' she says, noting that she hasn't liked
the texture of most seafood since she was a kid.

Red Lobster also is increasing the number of dishes that cost less than $15 to attract customers who have cut back on spending.

The chain, which is owned by Darden
Restaurants Inc., says the number of lower-cost
entrees will rise to about 60per cent from 40per cent.

A lot hinges on Red Lobster's
makeover. After a long streak of healthy growth that began in the late
1980s, the casual dining segment has struggled to grow in the past few
years because of oversaturation of those restaurants.

People also are eating out less or
opting for places such as Five Guys burgers, Panera Bread Co. and
Chipotle Mexican Grill Inc. that fall somewhere between traditional
sit-down restaurants and fast-food chains.

Red Lobster in particular has struggled, with traffic at restaurants falling in 12 of the past 24 months.