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Red Lobster Bets Big on Maine-Inspired, Upscale Revamp

Red Lobster, the flagship chain of restaurant giant Darden Restaurants (DRI), is swimming upstream against prevailing industry trends with its plan to roll out an upscale new look and menu to all its 700 restaurants by 2014.

It's a ballsy move, both in the scope of the makeover and the change it brings to Red Lobster's position in the market. The big question is whether Red Lobster's move to a tonier look will be a hit with today's penny-pinching customers.

The new Red Lobster look was created in response to customer research the company did several years back. When asked where they thought the chain was based, customers said, "Maine." In particular, Bar Harbor. So Red Lobster has recreated its entire look based on a sleek, lighthouse/nautical theme. Adirondack chairs sit outside for diners who await tables.

Gone are the cheesy old fishing nets and other corny nautical bric-a-brac of old. In its place are lighthouse-inspired lanterns that light a cosy interior of natural stone and wood -- think more like The Charthouse. Along with the luxe new interior comes a new, more streamlined lobster icon as well, compared with the classic, more realistic, 3-D lobster logo seen above.

In other words, it's good by sea-shanty town, hello Kennebunkport. You can see the differences in this company video:

A new menu completes the picture, with dishes such as maple-glazed salmon and shrimp, New England lobster rolls, and pecan-crusted jumbo shrimp. Entree prices on many new items are in the $18 range for dinner.

Red Lobster plans to spend a hefty $350 million on the makeovers. The chain is slated to remodel nearly 200 stores a year. And the push comes at a time when many upscale chains are still suffering. While updating Red Lobster's look is a great idea that's long overdue, the move upscale seems counter-trend. Red Lobster thrived in the downturn at a midrange price, so it's a little odd that Red Lobster wants to mess with that success at such a tenuous time in the restaurant industry.

The company seems aware of customers' price sensitivity -- at the same time as the resort-style makeovers, it's introducing another set of menu items with lower prices, from $13-$17. The question is whether customers will understand what's happening, as the decor broadcasts "fine dining" and some menu items reflect that, while others say "bargain."

It can be a good thing to roll out a new look aggressively, to keep momentum going and achieve chain uniformity as fast as possible. But given the direction of this change, there's also some serious risk here. The combination of lower prices and pricier-looking surroundings may confuse diners.

Diners may just stay away because they think it'll be expensive. Some marketing magic will definitely be required to tie all these new initiatives up in a bow and help customers understand them.

Photo via Flickr user Ollie Crafoord

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