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RED LOBSTER MARKETING CHIEF DETAILS AD PLANS

Three Finalists Chase Seafood Chain's $80 Million Account

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CHICAGO (AdAge.com) -- On the heels of Red Lobster's first quarterly same-store sales decline and a shakeup of its leadership, the chain's marketing chief discussed the search for an agency to handle an $80 million advertising account and an aggressive plan to shore up sales.

"We have been assessing ad agencies, and

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after visiting 12 agencies, we now are focusing on three finalists," Kim Lopdrup, chief marketing officer of the Darden Restaurants seafood restaurant, told Adage.com. "We expect to make a decision in no more than 60 to 90 days."

The finalists
Havas' Euro RSCG Tatham Partners, Chicago, the incumbent agency of six years, is defending the account against Grey Global Group's Grey Worldwide, New York, and independent Richards Group, Dallas. Grey also handles advertising for Darden chain Olive Garden and has produced a pair of TV spots for a Red Lobster promotion that breaks Feb. 9. Richards Group is also no stranger to restaurant marketing, handling ad accounts for buffet chain Golden Corral; Metromedia Restaurant Group's Bennigan's; and Fired Up's Johnny Carino's Country Italian restaurant.

The finalists will produce sample creative based on a brief and be judged on their strategic thinking and creative talent. Mr. Lopdrup said the winning agency will have an opportunity to shape the chain's new strategy, but in the short-term he is putting more emphasis on the food.

The chain's current campaign theme, "Share the Love," from Tatham, "focused too much on people at seaside not enough on our great food and service," he said.

Tatham layoffs
Several creative executives from Tatham sibling Euro RSCG MVBMS Partners, New York, are being tapped to help with the pitch after Tatham last week laid off nearly 15 people, including top creative staff on the account. To make matters worse, Jim Schmidt, Tatham's chief creative officer and another top creative, resigned from the agency. A Red Lobster spokeswoman had not been aware of the agency's departures.

Mr. Lodrup said that with Tatham the chain experienced six years of same-store sales growth but that corporate brand "strategy" was part of the issue in poor customer traffic counts despite aggressive discounting.

"We haven't done enough to drive sales and part of that is that recent advertising is not up to historic standards," he said. "We do have a good promotional calendar and we're working hard to improve the advertising. We simply have to do a better job of getting the word out about how good our food and service really are."

"Darden and Red Lobster have been an outstanding partnership for six years and we've helped Red Lobster achieve record results and guest counts today are higher than when we took over the business and we look forward to helping them continue to build their brand in the future," said Gary Epstein, Tatham's CEO.

Two months on duty
Mr. Lodrup has been in his post since December. Last month Dick Rivera, Darden Restaurants' president and chief operating officer and interim president of Red Lobster, stepped down to pursue "entrepreneurial opportunities." Mr. Lodrup wouldn't comment on when he began reviewing agencies review. He also wouldn't say whether he was a candidate to replace Mr. Rivera, but said the company is looking at candidates inside and out of the Darden units.

Red Lobster's same-period sales in December 2003 were down 12.5%, while January sales improved slightly, although same-store sales were still down 2% to 3%, with traffic down 4% to 5%, far below the 3.5% same-store sales gain a year ago.

Traffic
"Traffic continues to remain an issue for the brand and we believe problems continue to be promotion, marketing and value related," Andrew Barish, restaurant analyst with Banc of America Securities, said in a note to investors today. "While the brand is addressing all of these areas, it will likely take some time before results can be seen."

Mr. Lopdrup also wouldn't comment on agencies being approached to handle advertising for Darden chains Smokey Bones and Bahama Breeze, referring calls to Darden. Darden declined to comment.

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