Red Robin the ‘Poor Man’s Trader Vic’s got Lost in a Sea of Sameness

Clearly it makes sense to sell a mediocre brand that has become lost in a sea of sameness, driven by investor groups looking for a return rather than a customer according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

The question is Why? The fact is Gerry Kingen did a great job creating a brand with a clear point of differentiation, it was to be “the poor man’s Trader Vic’s. So, what happened?

Kingen sold the company he founded and slowly the investors ideas on what Red Robin should be, from ‘like a TGI Friday’s, eventually a’ fast casual’ burger chain.  Clearly that journey has not worked out well and investors.  Now some investors want Red Robin to become something else? Obviously, they do not want Red Robin to be mediocre any longer.   

Last week Private equity firm Vintage Capital Management LLC offered to buy Red Robin Gourmet Burgers Inc. for $40 per share, according to regulatory filings. Vintage, stated they were the third largest shareholder in Red Robbin. They want a ‘transparent review of strategic alternatives.

Restaurant brands the ilk of Red Robin, that at one time not only had ‘cachet’ and customer relevance, they had the pulse of the consumer an understanding of how to drive brand value, top-line sales and bottom-line profits.   When brans stall or start running flat, investment groups rush in to ‘save investors. What they don’t do is focus on the consumer, they talk return on investment, profits, growth, not about the consumer or customer relevance?

Why? Well, our Grocerant Guru® believes because they don’t understand the basics of the foodservice business.  Red Robin did not have mediocre leadership.  Red Robin had good leadership doing what the investors wanted, the way they wanted them to do it.  How did that work out for investors?  

Battle for Share of Stomach

Regular readers of this blog know it is not just Red Robin they know that Sun Capital closed more Boston Markets than they opened, and have reduced Friendly’s from 500 units to 174. How can that be? We ask Why buy a chain restaurant that has lost its ‘mojo’ without a clear path drive top line sales and bottom-line profits?  How many mediocre restaurant brands have been stifled by investor groups looking at spread sheets while not being focused on the customer?

When MTY Group said it has agreed to buy the struggling take-and-bake pizza chain Papa Murphy’s for $6.45 per share, giving the deal a valuation of $190 million Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® wondered out loud how many franchisee’s, store managers and employees will lose their jobs in the next four years? We ask what is the value of a mediocre portfolio of brands that continue to decline? Leadership needs to step-up to stand-out.

The value of a product or brand at times diminishes in consumer relevance as consumer evolve. The team at Foodservice Solutions® understands that the consumer is dynamic not static. If you are spending more time looking at spread sheets than customer’s path to purchase, you might be seeing more red than bread. 

Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit Facebook.com/Steven Johnson, www.Linkedin.com/in/grocerant/ or www.twitter.com/grocerant/