Darden Restaurant Inc, the operator of Red Lobster and Olive Garden, has opened three Red Lobster - Olive Garden combined store locations in smaller cities that they believe cannot economically support standalone locations.
As the picture below shows, the locations have two separate entrances entrances and dinning rooms, but reportedly share a bar area, kitchen, and bathrooms. Customers in one dinning room cannot order from the menu of the adjoining restaurant.
On the surface the strategy appears to make strategic sense, reach new customers by creating economies of scale to control costs and deliver incremental revenue. Nevertheless, I question the overall strategy. I would argue both restaurant chains have lost they way from their historic brand compasses and now currently suffer from a lack of authenticity. For example I would venture to guess that many middle class Americans question how fresh the seafood at Red Lobster really is, while Olive Garden is hardly seen as real italian. The fact that consumer sentiment has drifted from these initial positions is due to business decisions putting profit in front of brand equity. The two in one concept further plays up the chain aspects of both brands and helps continue diluting their authenticity. Then there is the old marketing rule that if do two things well enough it means you don't do anything great.
While Yum brands has executed this strategy on many of their fast food and QSR brands (KFC, Taco Bell, Long John Silvers, and Pizza Hut) with a major difference versus Darden's full-service restaurants being that they usually have joint dinning rooms, which enable families to all order different foods and then sit together delivering a benefit for the customer.
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