As Red Lobster files for bankruptcy, changing tastes take a toll on its casual-dining competitors

Red Lobster used to advertise that it was “where America goes for seafood.” Now, it has filed for Chapter 11 bankruptcy protection. The casual seafood chain plans to keep most of its locations open, but said its customer count has tanked 30% since 2019. Today, inflation and changing consumer tastes are making things difficult for casual dining restaurants.

Kids these days, said Cornell University’s Alex Susskind, are part of casual dining’s problem.

“I have some Gen Z children, and they would be like, ‘Oh, yeah, that’s where Grandma goes to eat,'” said Susskind, director of the school’s Institute for Food and Beverage Management.

Red Lobster, Chili’s, Outback Steakhouse and other casual sit-down chains have been around for decades. Some diners, young and old, have come to see them as “wallpaper restaurants,” said Stephen Zagor, who teaches about the restaurant and food business at Columbia University.

“You’re not a trend maker. You just sit there, and people recognize you as being a good old friend without an awful lot of excitement,” Zagor said.

Flashy promos can get customers through the door. Like Olive Garden’s Never Ending Pasta Bowl. Or Applebee’s $1 margaritas. But Zagor said they can backfire too, as in the case of Red Lobster’s money-losing all-you-can-eat shrimp deal.

“People are putting, literally, shrimp in their pockets. And I have seen that,” Zagor said.

Speaking of takeout, casual chains had trouble pivoting there when the pandemic shutdowns hit.

“When they lost their dining rooms, they lost their core business model,” said Sam Oches, editor-in-chief of Nation’s Restaurant News. He said even though some diners have returned to restaurants, “more and more consumers would rather Netflix and chill. They would rather press a button on their phone, have it sent to their doorstep.”

And that market is already crowded with cheaper, order-at-the-counter spots like Chipotle and Sweetgreen. Burritos and salads just travel better than shrimp in a pocket.