It’s time for Red Lobster to be a little less shellfish
Red Lobster needs to start pressuring its suppliers to engage in sustainable fishing practices, before it’s too late.
Red Lobster is already feeling the heat (literally). Oceans are one of the most vulnerable ecosystems to climate change . As the Earth’s atmosphere becomes more polluted with carbon dioxide, they also absorb more of this gas, making the water more acidic. This decrease in pH makes it more difficult for crustaceans, such as lobsters and crabs, to build exoskeletons to protect themselves .
But it’s not just the lobsters that are suffering. Some fish species are also less resilient to climate change . Changes in sea temperature impact the metabolism, reproduction, predator/prey balances and susceptibility to toxins of many aquatic species . These changes have tangible impacts on the filet that reaches your plate, as fish size may decrease by up to 30 percent . Exhibit 1 shows how increasing acidity interacts with higher temperatures and changing currents to change the distribution, number, quality and size of fish species.
Exhibit 1: Wind, currents, and acidity caused by climate change cause shifts in the geographic distribution of fish populations (University of New Hampshire, Source 6)
Red Lobster cannot put off addressing this problem. As early as 2008 the fishing industry began to feel the impact of global warming . Many of the most vulnerable species are the most popular for consumption such as pink salmon, Pacific bonito and spotted grouper . Decreasing populations of these fish and crustaceans, combined with a reduction in their size, makes them more expensive for organizations such as Red Lobster to source. This puts Red Lobster in a particularly difficult position because an integral part of its customer promise is maintaining low, consistent prices.
The company has already been taking some measures to ensure that their business remains scale-able.
- Transition to farmed fish. Darden, Red Lobster’s parent company until 2014, developed a lobster aquafarm to decrease the restaurant’s dependence on wild lobsters . The aquafarm reduced Red Lobster’s exposure to risk inherent in the changing physical size, population size, and migratory patterns in crustaceans caused by climate change.
- Seafood with Standards. Red Lobster launched this program to ensure that they are not sourcing endangered or overfished seafood . Sustainable sourcing helps maintain a critical mass in the population size of these species to ensure that they do not go extinct. Not only does this help vulnerable aquatic populations, but it also is an investment in the long-term sustainability of the fishing industry and in popularly consumed species.
Exhibit 2: From Red Lobster’s Website
But they can be doing more to ensure that they don’t flounder.
Because of its scale, Red Lobster is uniquely positioned to ensure that their fish suppliers are doing all that they can to make the fishing industry sustainable in spite of increasing pressure from climate change. There are a number of initiatives that Red Lobster can pursue.
- Put pressure on suppliers. While Red Lobster itself may only source ‘seafood with standards’, this doesn’t mean that their suppliers are. Because of Red Lobster’s scale, they have significant negotiating power to demand that their suppliers are not fishing endangered populations and are adhering to quotas. Studies show this is this most effective way to manage inevitably decreasing populations . Preventing overfishing in the industry as a whole benefits Red Lobster by preserving the populations of fish that they may one day want to source .
- Sharing information about species locations (don’t be shellfish!). Fish are changing their migratory patterns . Red Lobster should encourage its wild-caught fish suppliers to share information about species locations with national organizations such as the National Oceanic and Atmospheric Administration (NOAA). This enables species preservation organizations (like the NOAA) to create a consolidated database of where fish are moving. This is both beneficial to the fisheries and the marine biologists who are studying the species.
- Change consumer behavior. Because of its size and established reputation, Red Lobster is uniquely positioned to introduce consumers to new fish species. As such, they should more heavily emphasize species that are climate-resistant .
Just Keep Swimming
Moving forward, it seems like Red Lobster will likely grow their reliance on farmed fish. But if the restaurant industry as a whole makes this shift, will this reduce the attention paid to the wild-caught industry, resulting in less investment into sustaining these fledgling species? As fish and crustacean populations begin to dwindle, how feasible is a business model that relies on delivering seafood at a low cost?
 Mendelsohn, Robert O., and James E. Neumann. The Impact of Climate Change on the United States Economy. Cambridge University Press, 2004.
 Loki, Reynard. “Now You Seafood, Now You Don’t: 10 Foods Climate Change Could Soon Eradicate.” Salon, Alternet, 31 Dec. 2015, www.salon.com/2015/12/31/now_you_seafood_now _you_dont_10_foods_climate_change_could_soon_eradicate_partner/.
 University of British Columbia. “Some marine species more vulnerable to climate change than others.” ScienceDaily. ScienceDaily, 26 September 2017. <www.sciencedaily.com/releases/ 2017/09/170926125137.htm>.
 Garisto Pfaff, Leslie. “Warming Waters, Looming Crisis.” New Jersey Monthly, 10 Aug. 2017.
 Cimons, Marlene. “Fish Might Be Shrinking.” Popular Science, 28 Aug. 2017, www.popsci.com/fish-shrinking-climate-change.
 Chapman, Erik. “Climate Change and Fish Populations.” N.H. Sea Grant/ UNH Cooperative Extension, University of New Hampshire, 9 Dec. 2010, http://nsgl.gso.uri.edu/nhu/nhug10001 .pdf
 “Climate Change Will Have Major Impact on Fishing Industry, Says UN Agency.” UN News
Centre, United Nations, 10 July 2008, www.un.org/apps/news/story.asp?NewsID =27330#.Wgj1q7D82u4.
 Miranda C. Jones, William W. L. Cheung. Using fuzzy logic to determine the vulnerability of marine species to climate change. Global Change Biology, 2017; DOI: 10.1111/gcb.13869
 “Darden Aquafarm, World’s First Commercial Lobster Farm, To Grow Billions Worth Of Shellfish.” The Huffington Post, 9 Apr. 2012, www.huffingtonpost.com/2012/04/09/darden-aquafarm_n_1412352.html.
 “Seafood with Standards.” Red Lobster, www.redlobster.com/our-story/seafood-with-standards.
 “A Rising Tide.” The Economist, 18 Sept. 2008, www.economist.com/node/ 12253181?source=hptextfeature&story_id=12253181.
 Brander, K. M. “Global Fish Production and Climate Change.” Proceedings of the National Academy of Sciences, vol. 104, no. 50, June 2007, pp. 19709–19714., doi:10.1073/pnas.0702059104.
 United States, Congress, Graziano da Silva, Jose. “FAO Strategy on Climate Change.” FAO Strategy on Climate Change, Rome, 2017.
Student comments on It’s time for Red Lobster to be a little less shellfish
It’s clear from the information shared in your post that sustainable fishing should be at the forefront of Red Lobster’s business strategy. But as it grows its activities in farming fish and crustaceans as a sustainable practice, I wonder, how will consumers respond? It seems that as the social push towards organic, natural and whole foods gains momentum, the idea of farmed fish becomes less desired and even shunned by customers. Who wants farmed salmon when you can buy Alaskan wild, fresh-caught salmon? And farmed tilapia is rapidly becoming synonymous with a product many consumers eschew. As consumers become more conscious of the sources of their foods, can Red Lobster’s sustainable fish farms be sustained?
I also wonder how long Red Lobster can maintain its low-cost seafood business model, as it experiences other impacts of climate change. Not only will the availability of fish decrease, but the rest of its supply chain will also likely experience related effects – costs of transportation will increase as the cost of fuel rises, wheat and other agricultural products may become scarce and expensive as temperatures rise and water disappears, and regulations on importing goods may become more stringent. Unless Red Lobster can institute significant improvements to its supply chain and operations to offset these rising costs, it will eventually have to pass along price increases to customers. If Red Lobster can no longer be the low-cost seafood restaurant that consumers expect, what’s its position in the market? How does Red Lobster, the ethical, environmentally conscious and fair-priced seafood restaurant sound? ¯\_(ツ)_/¯
Should companies engage in sustainable practices when their customers don’t care about sustainability? Implicit in the IKEA case was the notion that its consumers responded at least somewhat positively to the company’s eco-friendly policies. I’m not sure that is the same for Red Lobster.
One of the clients I worked for in consulting was Red Lobster. In 2014, they were acquired by Golden Gate Capital and brought in a team of Bain consultants to overhaul the business (I left before we saw the results of this heroism). My recollection is that Red Lobster’s core customers would not be impacted by messages of sustainability. They would, however, respond negatively to higher prices or changes in certain offerings.
Shalei’s suggestions of sharing information is particularly compelling. It seems low risk and relatively easy for the company. But I think her better question is whether this business can survive in its current form. If activists start to push the company to source their fish differently, it may raise prices and their customers may not care that they’re helping the environment.
Great post! While I do agree that Red Lobster may decide to pass on the increased cost of seafood as a result of global warming to the end consumer, I think there are other ways that Red Lobster is exploring mitigating cost before making drastic price changes that would be very noticeable to the consumer. In addition to lowering cost through vertical integration of the supply chain (farming lobsters in Malaysia via aquafarm), Red Lobster is also subtly changing their menu product offerings by substituting the species of lobsters available to diners. This substitution allows Red Lobster to avoid higher procurement cost while still delivering on the customer promise of taste. Furthermore, few consumers can tell the difference. For example, the restaurant increased its offering of Rock Lobsters – these are the types of lobsters it is farming in Malaysia, a species that is cheaper to produce. Only this species does not have claw meat, only marketable tail meat. Thus, Red Lobster added the “lobster tail” offering, which uses a different species completely but the difference is barely noticeable.
Additionally, another way that I see the restaurant being sustainable in the long run is to increase not only the different types of seafood offered, but also to increase the total number of non-seafood offerings – a quick peruse of their menu shows that Chicken Wings and Mozzarella Sticks are just as much as the menu as other seafood-related items. Thus, perhaps the restaurant is pulling levers through food substitutions to deliver on the whole experience of “food away from home” or dining out, rather than simply passing the cost of seafood to the end consumer.
Very interesting article! It is hard to accept that with all the technological developments of mankind we have still not been able to find a better food solution than the subjugation of other species and all the environmental – if not moral – problems that this entails  (just to highlight, I am a meat lover and include myself in the group to blame). A few interesting developments are happening on the field  but the jury is still out if bioengineering will be able, in the future, to replicate the taste of lobster and fish at an accessible cost: that is the one trillion dollars question.
 Harari, Yuval N., et al. Sapiens: a Brief History of Mankind. Vintage Books, 2015.
 Strom, S. (2017), “Impossible Burger’s ‘Secret Sauce’ Highlights Challenges of Food Tech”. The New York Times. Available at https://www.nytimes.com/2017/08/08/business/impossible-burger-food-meat.html (Accessed: 29 November 2017).
First off, I simply LOVE the number of fishy puns used in this blog – thanks Shalei! I agree with the push towards more farmed fish – to Jeff’s point, Red Lobster’s consumer base cares mostly about cost and by extension, will likely have less of a reaction to eating farm fish versus wild fish. I also really liked the idea of making this a more widespread trend throughout the restaurant industry, and to that effect, perhaps Red Lobster could also consider partnering with other restaurants to share the capital costs of creating more aquafarms and reducing costs through economies of scale.
Red Lobster’s business model is certainly at risk with the effects that climate change are having on its supply of fresh seafood. I’d argue that the proposed initiatives to combat this issue don’t go far enough, however.
Putting pressure on suppliers, ‘changing’ consumer behaviour and increasing information about these issues might alter these trends to a small extent, but if Red Lobster is serious about its mission to combat climate change and protect its business, it can ultimately be taking these issues into its own hands.
Red Lobster could flat out refuse to accept seafood from suppliers who do not meet their environmental standards, rather than putting pressure on them. And rather than changing consumer behaviour, it can easily dictate what it puts on its menu.
So pull your finger out, Red Lobster, and practise what you preach!