Friday, October 31st7.9°C
21625
23129

Darden announces sale of Red Lobster for $2.1 billion; holds onto Olive Garden

NEW YORK, N.Y. - Darden Restaurants says it will sell its Red Lobster chain to investment firm Golden Gate Capital in a $2.1 billion cash deal.

The company, which also owns Olive Garden, had announced late last year that it planned to either spin off or sell Red Lobster to improve its financial performance.

Both Olive Garden and Red Lobster have been losing customers in recent years. The company has tried various menu changes and marketing campaigns in hopes of winning back business.

Part of the problem is the growing popularity of chains like Chipotle, where customers feel they can get the same quality of food without having to pay as much or wait for table service.

Red Lobster, which opened in 1968, helped popularize seafood among Americans. The first location in Lakeland, Florida, boasted platters that included frog legs and hush puppies for $2.50.

As the chain suffered sales declines more recently, Darden expanded its menu to include more non-seafood dishes in a bid to attract a wider array of customers. The efforts didn't take hold.

Darden CEO Clarence Otis has noted that Red Lobster has been unable to capture higher-income customers.

But the company sees more potential in fixing Olive Garden, which it says fits with its other, smaller restaurant chains that cater to diners willing to spend more.

The company reworked the logo for the Italian food chain and has been adding lighter menu items, as well as smaller dishes that it says better fit with eating trends.

Investors have challenged Darden's plans to sell only Red Lobster, saying that the company should separate Olive Garden and Red Lobster as a pair from its other, more successful chains, which include Longhorn Steakhouse and Capital Grille.

There are about 700 Red Lobster locations and 830 Olive Gardens in North America.

After the transaction costs, Darden said it expects proceeds of $1.6 billion, of which $1 billion will be used to retire outstanding debt. The company said it expects the deal to close in its first fiscal quarter.

Shares of Darden, based in Orlando, Florida, slipped 1 per cent to $50.10 in premarket trading.

___

Follow Candice Choi at www.twitter.com/candicechoi

The Canadian Press


Read more Business News




Recent Trending




Today's Market
S&P TSX14458.69-68.88
S&P CDNX771.65-9.42
DJIA17195.42221.11
Nasdaq4566.138+16.912
S&P 5001994.65+12.35
CDN Dollar0.8927-0.0007
Gold1172.90-25.70
Oil80.33-0.57
Lumber322.40-1.20
Natural Gas3.715+0.066

 
Okanagan Companies
Pacific Safety0.11+0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.150.00
Cantex0.045-0.015
Anavex Life Sciences0.1711-0.0089
Metalex Ventures0.0350.00
Russel Metals32.22-0.35
Copper Mountain Mining1.97-0.05
Colorado Resources0.14+0.005
ReliaBrand Inc0.012-0.004
Sunrise Resources Ltd0.05+0.025
Mission Ready Services0.375+0.005

 



23015

FEATURED Property
195161523 1925 Baron Road
3 bedrooms 1 baths
$57,300
more details
image2image2image2
Click here to feature your property
Please wait... loading


Empty nesting: financial issues

Now that the children have ‘left the nest’, it is a good time to step back and take stock of your financial situation. Being on your own will probably cut household costs to some extent, b...


Keep your haunted home safe

Eerie sounds, spooky lights and Jack-o’-lanterns aglow—extra efforts at Halloween will keep visitors coming back for both tricks and treats. However, to keep the fun going, it’s imp...


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...

_








Member of BC Press Council


22786