RED LOBSTER MOVES to CHINA?
HTM 540, International Tourism Development
May 26, 2013
Review key points from Darden Restaurant’s most recent 10-K. Their stock symbol on the NYSE is DRI
Darden Restaurants based on company sales, market and the amount of company owned and managed restaurants, is the world's largest casual dining restaurant company who has a variety of dining brands to choose from. Their mission is to be “The best, now and for generations... and a place where people can achieve their dreams” (Darden 10K, 2012).
According to their most recent 10-K report (2012), there are many key points for review. “Of the 1,961 restaurants across the United States & Canada ...view middle of the document...
Currently, Red Lobster operates only in the U.S. and Canada.
Darden operates more than 2,000 restaurants in the U.S. and Canada. Red Lobster in particular began its work with six restaurants fiscal year ending 1970 that increased to 704 restaurants in the United States and Canada by ending fiscal year 2012. In 1983, Darden opened its first Red Lobster restaurant in Windsor, Ontario, located in Canada. The first Red Lobster restaurant in the United States opened in 1968 in Lakeland, Florida. There is a plan for Red Lobster to remodel its restaurants across the U.S. and Canada. The new design will mirror the seaside village of Bar Harbor, Maine. “As of June, 2012 they have more than half of the system in the Bar Harbor image. All of Red Lobster’s restaurants are scheduled to be completed by 2014” (“Corporate Fact Sheet,” 2012, para. 6) .
According to the Data monitor report on leading companies (2008), in Canada, the company operates 29 Red Lobster restaurants (para. 4). Although Red Lobster has had success in Canada, there is no other quick service seafood restaurant in the U.S. that has a major -based quick-service seafood restaurant who has established a major existence towards the northern end of the border. Barry Shannon (1996) Vice President of Operations of Red Lobster in Canada explains that “Red Lobster offsets higher food, beverage and labor costs with higher check averages -up to 20 percent higher than at Red Lobster's counterparts in the States” (p. 1).
Compare and contrast two (2) other U.S. restaurant companies who have successfully or unsuccessfully entered the Chinese market.
Two companies that have successfully entered the Chinese market is the Restaurant group, YUM! Brands Inc, specifically KFC, & McDonald’s. The YUM restaurant group owns KFC, Pizza Hut, and Taco Bell. There are approximately 5000 outlets in China. Young stated that “Yum depends heavily on consumer sentiment in the Asian giant; it’s the Louisville, Kentucky based company’s most important market outside of the United States” (International Business Times, 2012, para. 2). Under the YUM brand umbrella, KFC is the more dominant competitor over McDonald’s as well as other local rivals. Most of YUM brands profit is dependent upon China. Mellor explains (2011), that “the secret to the success of KFC’s parent company is its use of the local ingredients” (para. 5). With the collaboration of many other companies in the area, they came together and created a dialogue that enabled them to create some special dishes that appealed domestically.
McDonald’s entered China in 1990 and at that time, there weren’t many competitors to compete against. McDonald’s strategy was to be recognized by its customers as a restaurant more on the high end side, hopeful that this would bring them success. They didn’t want to be viewed as a common fast food restaurant. When entering the Chinese market, they used a different recipe than they did...