In business, much like in sports, success is far from guaranteed. Even when a company is thriving, healthy paranoia is a necessity, as external factors such as geopolitical shifts, inflation, and evolving customer preferences, amongst others, can derail progress. Nowhere is this more evident than in U.S. restaurant chains like Hooters, TGI Fridays, and Red Lobster, all of which have struggled in recent years.
Red Lobster, an iconic brand that originated in 1968, has faced a steep decline—so much so that it filed for Chapter 11 bankruptcy protection a few months ago. Restaurants remain open, with 93 of them closing. The company has reportedly accrued estimated liabilities of $1 billion to $10 billion, with $24.4 million owed to distributor Performance Food Group, according to CNBC. Key performance metrics, including guest visits, have declined by approximately 30% since 2019.
Several factors contributed to this downturn: inflationary pressures, rising minimum wages in half the U.S., high lease costs, increasing competition, and executive missteps and initiatives—like turning the popular “Endless Shrimp” promotion into a permanent daily menu item, resulting in even more losses. As noted by CNN, this isn’t the first time a miscalculated promotion has hurt the chain—an “Endless Crab” deal in 2003 led to a $3.3 million loss in just seven weeks. With such mounting pressures and needing to reinvent themselves, Red Lobster is turning to a new CEO.
Enter Damola Adamolekun
New CEO Damola Adamolekun, appointed by the private equity firm Fortress Investment Group, has been tasked with leading the turnaround. Adamolekun, a 35-year-old who previously led P.F. Chang’s to a successful resurgence before leaving the position in 2023, has taken an unconventional approach to his new role at Red Lobster. Before formally stepping in as CEO, he visited various Red Lobster locations across the U.S. under the radar. As the Wall Street Journal reported, this undercover work gave him a firsthand look at operations, employee challenges, and customer experiences—without the usual CEO filter that is nearly impossible to scrub. This type of undercover work, which can also be described as on-the-ground leadership, is an approach that offers a critical reminder for CEOs and leaders who are dealing with a crisis or attempting to revitalize their company, culture, and brand.
Perspective And True Understanding
During his visits, Adamolekun discovered that customers “just want quality food in a comfortable setting and to connect with the history of the brand,” as he shared in the previously referenced Wall Street Journal article. While this might seem obvious, it is a necessary reminder for CEOs. In the complexity of daily business, it’s easy to stray from the fundamentals that made a brand successful and accumulate unnecessary complexity that leads to poor decision-making and slow reaction to changing circumstances.
As businesses increasingly rely on technology, data, and artificial intelligence to steer their decision-making, there is still incomparable value to operating with boots-on-the-ground leadership. The numbers can tell one story, but firsthand experiences offer a deeper, unfiltered view of what’s genuinely happening within an organization and, thus, what’s being reflected on the balance sheet. JPMorgan Chase CEO Jamie Dimon has long advocated for this approach, frequently visiting and interacting with various partners and aspects of the business to stay on top and ahead of everything.
When leaders operate with this kind of direct engagement, they build stronger connections from the top down and, ultimately, better synergy between leadership and frontline workers. By stepping into Red Lobster locations incognito, Adamolekun gathered valuable insights and demonstrated to his current (and future) team members that leadership isn’t removed from the day-to-day. This approach improves trust, aligns teams with leadership, and improves the customer experience, positively impacting the bottom line.
Like Starbucks, which has seen its new CEO refocus the company on its core identity and rebuild from the inside out, Red Lobster’s new leadership team aims to rebuild from the inside out. Reviving an iconic American brand isn’t going to happen overnight. Still, there’s hope for a turnaround as Adamolekun and the rest of the team seem to be honing in on the basics:
- Understanding your customers.
- Identifying where things went wrong.
- Reminding people of your brand’s story.
It’s not everything that’s needed for a company’s comeback, but often, keeping things simple is precisely what’s required to steer momentum in the right direction.