Darden, Inc. has finally decided between their two floundering brands, opting to sell Red Lobster and launch a continued effort to revamp Olive Garden. According to a report on the Washington Post.com on Friday, Darden announced a deal to sell Red Lobster and its real estate to Golden State Capital for $2.1 billion cash. Darden hopes to end up with proceeds of $1.6 billion from the sale after expenses. Both restaurants have been attracting less and less customers, but Darden executives think that Olive Garden stands a better chance of recovering and drawing a higher-income clientele.
Golden Gate Capital owns California Pizza Kitchen, Payless Shoes and Eddie Bauer. The company has already negotiated a deal to sell the Red Lobster real estate for $1.5 billion to American Realty Capital Properties who will then rent it back to Golden Gate. Darden shareholders are not happy with this recent move to unload Red Lobster, but shareholder approval was not required. Darden stock was down by 4% Friday.
Red Lobster’s official top fan, the newly-crowned “Lobstar," Ashley Berne, doesn’t expect much to change, however. She likes things just the way they are. ABC News quotes the Laotto, Ind., resident as giving the chain some advice.
“Keep your claws off the cheesy biscuits and the Ultimate Feast.
Darden also owns Longhorn Steakhouse, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s, and Yard House. Among the Darden holdings, Red Lobster has the most name recognition of them all, especially in the South. It remains to be seen whether the new company will continue with the menu changes that were put in place in the recent past. There was an effort to diversify the menu, offering customers more non-seafood options. Again, common sense might dictate that people who come to Red Lobster usually want a seafood experience that rises above the average. Perhaps, restaurants should stick with what they do best.