Red Lobster’s new CEO, Damola Adamolekun, came with a plan to turn the company around. First, however, he’d have to lift spirits.
By May 2024, the lobster chain had gone bad. Its private equity owners had saddled the company with expensive leases, labor costs were rising, and promotions like “Endless Shrimp” were bleeding money. The company shuttered dozens of locations and filed for Chapter 11 bankruptcy.
Then came the acquisition by a buyer group led by Fortress Investment Group, followed by the installation of Adamolekun as CEO. On Fortune’s “Next to Lead” podcast, the new leader said his first days were tough.
“It’s a company that’s been through a lot,” he said. “Morale is very low. People are beat down.”
Adamolekun said that it was important to come in with a “message of hope” and “possibility.” In his first town hall, he said that Red Lobster would execute the greatest comeback in the history of the restaurant industry.
His goal was “galvanizing the team around a vision,” he said.
Adamolekun had done it before. Prior to his Red Lobster role, Adamolekun led Paulson and Associates’ investment in P.F. Chang’s. He became the chief strategy officer and took over as CEO in 2020.
Under his leadership, P.F. Chang’s launched its to-go business, a boon during the COVID-19 pandemic. Under his leadership, the company reached revenues of about $1 billion.
Red Lobster has a long way to go to see that kind of turnaround. By the end of 2023, the company had incurred operating losses exceeding $10 million per quarter. The pandemic didn’t help, and America’s movement away from seafood and toward steakhouses meant a dwindling customer base.
Adamolekun told Fortune that he was organizing his effort around three principles: food, hospitality, and ambience.
He listed new products like seafood boils, a new program called Red Carpet Hospitality about making people feel “like family,” and efforts to remodel the restaurants.
Some of those were quick, he said, like changing menus and instituting bonus plans. Redesigning the restaurants takes more time, he said.
“That’s been the bulk of our attention,” he said. “It’s just improving the actual experience for our guests.”
Now a year into Adamolekun’s tenure, the question remains: Will his efforts work?
There have been some mixed signals. Bloomberg reported that the company cut some executives as it attempts to renegotiate those leases that remain a drag.
But customers seem excited. The seafood boil was a certified hit.
