The coronavirus has virtually eliminated diners’ ability to stroll into their favorite restaurant, plop themselves down and enjoy a nice meal. It may also eradicate the casual-dining seafood restaurant chain as we know it.
I’ve been reporting this week on the challenges facing Red Lobster, the posterchild of America’s seafood restaurant experience. The chain, with 700 or so units and annual sales in the $2.4 billion (€2.2 billion) range, is going through the worst time in its 52-year existence – in the words of its current CEO Kim Lopdrup.
Pure-play casual-dining seafood restaurants are a valuable slice of the overall $50 billion (€45.9 billion) casual-dining restaurant segment in the United States, but their days may be numbered.
In addition to Red Lobster, several of the country’s notable casual-dining seafood chains are owned by Landry’s, the $4.7 billion (€4.3 billion) restaurant and entertainment company. It, too, is in turbulent financial waters because of the downturn in the foodservice and tourism sectors as a result of coronavirus-related lockdowns.
Total casual-dining restaurant sales represented $302. 2 billion (€277.6 billion) of the total annual US restaurant sales of around $860 billion (€790 billion) in 2019.
Of the 200 chains on the Nation’s Restaurant News 2019 Ranking of the top 200 US restaurant chains, six fall into the casual-dining seafood segment, and the combined sales of those six are just over $4 billion (€3.6 billion), with Red Lobster and Landry’s brands Bubba Gump and Joe’s Crab Shack accounting for $2.8 billion (€2.5 billion), or 70 percent of the sales.
So, it is clear to see that a failure of these three seafood casual-dining chains would be devastating to the casual-dining seafood segment.
More importantly, the optics of losing such iconic and recognized restaurant brands could suggest to many that diners are losing their appetite for seafood – even if that’s not true.
Pain is felt far and wide
Bonefish Grill, one of the larger casual-dining seafood chains, is owned by restaurant firm Bloomin' Brands, which owns Outback Steakhouse, Fleming's Prime Steakhouse and Carrabba's Italian Grill.
For the week ended March 1, comparable sales for Bonefish Grill restaurants opened 18 months or more were up 5 percent. A few weeks later, as lockdowns took affect, same-store sales were down and astounding 83.4 percent.
The news is even more disheartening when you look at Bonefish Grill's average off-premises weekly sales per restaurant, which are largely the only sales happening at most restaurants currently.
Since March 22, Bonefish Grill has had the worst weekly off-premise sales performance of any of Bloomin' Brands' other restaurants -- and it's not even close (see chart above).
Legal Sea Foods announced March 16 that it has "paused" operations company-wide. Roger Berkowitz CEO of the chain, which operates 34 restaurants in the Northeast and Mid-Atlantic regions, said the chain was not planning to offer takeout dining to customers.
Benihana, with 76 outlets, was directing diners to its online app for ordering takeout.
So the question looms large: Will casual-dining seafood restaurant chains still be around when things return to normal? I, for one, sure hope so. But they might look a lot different than they do today.
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