Why Classic American Restaurant Chains Are FAILING

Red Lobsters Across America are shutting down and Thailand might have something to do with it you know as long as I can get them Cheddar Bay Biscuits at home I'm not too pressed but what what's happened in all the images of my childhood we got to talk about it Andrew the headlines are going crazy right now because this is a major American chain right Red Lobster could file for bankruptcy this month following the closure of 50 Plus stores so anyway guys we are getting get into the reasons why break it down make sure you like subscribe turn on your notifications and or you know could go good on some Red Lobster is smalla sauce oh check out smalla sauce atmas sauce.com but David I would say Red Lobster it's a symbol of America man that was like America seafood restaurant that you dined in you got the cheddar bay biscuits and I mean people loved it hold on Andrew when you say this was an image or a stal wart of American retail what era do you mean are you talking about specifically the era that everybody's nostalgic for right now the '90s and 2000s right the ' 80s '90s 2000s um a lot of these things and even all the way back Sears is gone now right right right and I will say this by the way guys not all red lobsters are going away they shut down uh about 93 stores nationwide but they still have like 400 out there so it's just like are they popping though are they a big chunk of Red Lobsters are shutting down and uh they're filing from bankruptcy which means they got to restructure things closed down a bunch of stores auction the stores off right and and it's sort of like it just has to do with the fourth turning of America right now a lot of Brands Andrew from the third turning that were these iconic images from the 90s they are going away right now yeah maybe they can't hang right now we're going to get into the reasons guys there's eight reasons some of these reasons you may have been already thinking about yourself and some of these I guarantee you have not thought about right right right um number one Andrew people just don't think it's cool anymore there's something in the marketing world called brand erosion basically outdated image poor customer service failure to innovate now believe me the failure to innovate it may be driven by something called PE but we're going to get into that later do you think it's just true Andrew that it's just not cool to go to Red Lobster what what instagrammers are going to Red Lobsters when do Foodies talk about Red Lobster what Millennials and gen Z are trying to go to Red Lobster with all the new restaurants out there and I'm going to go deeper into this because you know we think about food a lot so I know what the other competitors to Red Lobster are David plus cheddar biscuits they're just not I mean with all the pastries out there cheddar biscuits where do they rank well you know you can get the home mix now for the cheddar bay biscuits I'll say this um most of the people I would view going to a Red Lobster are boomers or Gen X yeah and also think about it David what Seafood spots blew up in the past 10 years the Asian Cajun ones are you talking about the Via Louisiana sty like The Boiling Crabs the Viet Louisiana style the ones from Texas the ones with butter cjun the whole shebang those got really popular and I feel like a lot of people are eating their Seafood there instead reason number two there are high operational costs whether you're talking about rent utilities labor labor insurance uh the whole this is affecting everybody in retail right now whether you're in FNB or you're in like you know selling goods and you think that a company as big as Red Lobster you think that they're like I don't know in charge or own their own land but for some reason their rent can still go up they don't necessarily own all that right cuz sometimes they're not in a standalone they're connected to some other building well the case of Red Lobster and or their Standalone restaurants they actually sold the land yeah and honestly like dude who who's like if you say you go to Red Lobster that's almost like it's like a joke now uh number three c19 obviously c19 had a big impact on just uh people's consumption habits how much they're going out how much they're cooking at home duh oh oh let me tell you talk about this David people are more choosy on where they spend a bunch of money out when they go out at night so they want like a better experience and Red Lobster is not giving them The Vibes arguably I would say that it's not only not improved since like 1997 maybe the experience has regressed yeah and also who's ordering Red Lobster to go like if you're talking about door Dash Uber Eats who's really ordering your lobster tail to go by the time they get to your door why would you want to eat the lobster tail and the cheddar biscuits they're going to be dry let me defend the double chocolate cake at Red Lobster though the double thick chocolate double you can't defend it enough to bring Red Lobsters back Point number four Andrew they gamble with the all you can e shrimp promotion and they said it led to $ million loss in a year however Andrew there is some more to that because who did they buy the shrimp from possibly also from the company that they were sold to yeah well so the Thai Union group is from Thailand they are the biggest supplier of shrimp to Red Lobster but they also own I believe a majority or a large stake of Red Lobster and they are being partially blamed I'm not saying I know the reasons why but we're going to get into so you saying there's some funny money going on but basically the all you can eat shrimp did not do what the company thought they were going to do because basically locations would run out of shrimp for weeks or even months they would run out of shrimp because of the all you can eat shrimp deal right so they lost $1 million so we thought it's going to be a good deal but then people also thought was too good of a deal yeah Point number five Financial struggles obviously declining profitability declining sales costs that are shooting up that's everybody's going through it right now but when you're like a legacy location and a lot of your costs and all these unions and stuff they're locked in you're not uh you can't really bust an audible you're not very like flexible yeah Point number six competitive pressure one thing that I want to point out David that I think is an overlooked reason is the air fryer at home because the air fryer is meant to fry things and what does Red Lobster have a lot of they kind of have a lot of fried foods yes they have lobster tails and stuff like that but also all the other foods you can buy at home and essentially make them like you know how many recipes there are to make your own Cheddar Bay Biscuits number two you can buy the cheddar bay Red Lobster brand biscuits and make them at home pop them in the air fryer they probably taste the same you can make all the fries at home you can make the fried shrimp you can buy like the battered shrimp and then just air fry it at home and it tastes pretty good I would say it's going to taste nine out of 10 I mean what Red Lobster just deep frying the stuff anyways right um number seven strategic restructuring obviously this is getting into the private Equity aspect Andrew where private Equity firms they come into a company they sell off all the profitable assets already and then they basically like milk it dry right but before you say that all American chains are doing bad David I do want to point out that Olive Garden is killing it Olive Garden just pass the $5 billion Mark for Revenue so what what is your uh you know obviously we're not McKenzie Consultants Andrew why is Olive Garden able to do this like all you can eat stuff and be profitable whereas Red Lobster is just and Olive Well let's be honest if you offer all you can eat bread sticks versus all you can eat shrimp one thing costs a lot less which is the bread sticks so Olive Garden also I think Italian style food uh is just more appealing across the board I think that like like I said there's way more competition in the seafood market between your Raw Bars between all your new uh sushi spots between your Asian fusion cun spots there's like Hood spots that do it I've never seen like a hood pasta spot exactly like Olive Garden man I'm not going to lie I'm not saying that food is amazing but like I would eat there still and it's I think it's relatively cheaper than red well actually if you look at the world rankings globally Italian food is number one I don't know where like raw seafood bar ranks you know what I mean also there just wasn't enough flavor at Red Lobster man I'm telling you the Asian Boiling Crabs they took over the game anytime people go yeah I love going to Red Lobster their chocolate cakes and cheddar bay biscuits are the best but they don't mention anything about the actual core product that's an issue yeah yeah yeah and of course last but not least Andrew people blaming private Equity firms what so basically here's my thing what does this mean David what what is can you basically there was this uh I believe Darden capital is a private Equity Firm that owned Red Lobster all right so they they have the original owners they sell it to a private Equity Firm the private Equity Firm milks it doesn't change anything then they sell it to the thae group the thae group sees a lot of uh taii Union they see a lot of synergies because they own a lot of seafood so they're like yeah we can make this work but then it doesn't work as good as they can so now they just got to close a lot of them down right but I do want to know guys to say all in all like I want to I'm not here to bash Red Lobster I have nothing personally against Red Lobster okay but I do want to say this that I think in general when you expand very quickly it looks like you're super hot but then when you have to close a bunch then it looks worse it's almost like you know like let's say you were in the lead by 30 points right so that's a lot you're in the lead by 30 points you're killing it you're killing your opponent by 30 points and the and then and then by the fourth quarter it cuts down to like 12 points you're still in the lead but you lost a lot so I'm saying that Red Lobster just expanded way too fast and now they have to close a bunch but to be honest they still have like 400 locations nationwide so it's not like they're not all gone right I think ultimately the fact that Red Lobster became not cool or not a good deal or their products became like considered subpar that led them to a point where the private Equity companies could come in and gut them you know what I mean like everybody wants to blame it on either old American Legacy retail companies becoming outdated and just like way too old school internally or they want to blame it on private Equity firms for being incredibly greedy but you need a combination of two things because if a business is booming why would a private Equity come in company come in and gut it and then destroy it do you see what I'm saying where I'm like yeah everything is true the people who hate private equity and think it's like a Scourge on American communities you know because ultimately there is some Downstream impacts on like you know low wage workers and things like that like that's a real aspect but these companies being whack and consumer taste changing and not them not being trendy enough that's a real thing too no I mean true yeah yeah yeah I mean before all the uh the private Equity talk you know a lot like customer bases for Red Lobster was going down so that's a fact you know what I mean like just less people were going it was less trendy it wasn't worth the money you could get your money elsewhere you know I think steakhouses got hit too because of maybe Korean barbecue like type stuff you know and there's just like different steakhous you mean all you can eat stuff yeah like your old school steakhouses just aren't the same anymore so just everything is on its way like if if your company had a 20 25y year run you got to start thinking about how to innovate is what I'm saying right but I think in my opinion these large American FNB brands that used to be in like every you know this is like before like hipster food and eater and all this thrillist stuff got popular and Yelp and stuff I think they're washed like all the Time Square All the Time Square style restaurants red lob so so do you have a comment on this though this is why I think it's going so viral it's because the older generation Gen X and Boomers they're like man all the stuff that I loved and all the stuff I spent my birthdays at or celebratory dinners is going away the America I know from the 80s and 90s is Vanishing well are you surprised that Cracker Barrel is not doing very well either huh is it the PE firms on that one is it the private Equity that's ruining Cracker Barrel too or is it just that Cracker Barrel might just not be that good in today's world yeah guys let us know what you think in the comments section below why is Olive guard SU eding why is Red Lobster going down the drain let us know what you think in the comment section below until next time we the hop hop boys we out peace