Long John Silver's turnaround plan comes with corporate layoffs

Dive Brief:

Quick-service seafood chain Long John Silver’s cut about 20 positions last week at its Louisville, Kentucky-based headquarters, according to the Courier Journal. These positions make up less than 1% of its total workforce of 2,700 employees.
The changes at its headquarters are meant to help fuel growth and reflect changes in the organization, the company said. Departments impacted include human resources, accounting, marketing, customer service, training and culinary.
The chain has about 1,000 locations, but has had ongoing troubles even after hiring new leaders and redesigning stores and uniforms.

Dive Insight:

Although the timing of these layoffs might pose a challenge (seafood sales jump as high as 25% during Lent), minor cuts at the Long John Silver's headquarters should come as no surprise considering the company's dismal performance throughout the past few years. Privately-owned Long John Silver’s was once a part of Yum Brands, but was sold in 2011 when Yum decided to focus on its stronger brands Pizza Hut, Taco Bell and KFC. Since then, Long John Silver's has struggled to grow sales.

In 2015, for example, Long John Silver's finished the year with about $560 million in sales — down 5.3% from the year prior — and 1,060 units, which was down nearly 7% from the year prior. In 2016, despite adding a $5 value meal and starting a campaign focused on sustainability, Long John Silver's finished the year with $475 million in sales — down 7.7% — and with 950 units, down nearly 8%. The slide continued in 2017, with sales dropping 5.6% to $455 million and the U.S. footprint down 4.9% to 940 units.

The company kick-started some aggressive initiatives in 2018 to change this trajectory. It redesigned its drive-thrus to include animated video screens aimed at improving order accuracy and efficiency. Drive-thrus generate about 50% of Long John Silver's sales, so these changes could quickly drive some type of return.

The chain also began focusing on its mobile website, new menu items — including customizable rice bowls — and a new interior design. At the time these changes were announced, the company said remodeled restaurants were yielding double-digit sales growth, according to Restaurant Business.

In March, Long John Silver's unveiled its changes at a new flagship restaurant in its hometown of Louisville. CEO James O'Reilly said the grand opening marked a new era for the brand. Since then, the company acquired 76 restaurants, primarily in Indiana, to focus on its revitalization efforts. While growing its company-owned footprint, Long John Silver's is simultaneously promoting a franchise growth incentive program to drive development after the past few years of retraction. To support that growth, the company put a new chief operating officer in place in January. Blain Shortreed is tasked with leading franchise operations and restaurant development.

That is a lot of changes in a short amount of time. But Long John Silver's is well positioned to undergo a turnaround. For starters, other than Captain D's, there isn't a lot of competition in the limited-service seafood space. Further, demand for seafood continues to rise. U.S. per capita seafood consumption increased by 1.1 pounds to 16 pounds in 2017, according to a report from the National Marine Fisheries Service. This growth is driven by a number of factors — a healthy halo, versatility and oversaturation of pizza/burgers/chicken among them.