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Red Lobster closing? Darden CEO denies rumors on restaurant closures

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Is Red Lobster closing its doors? Although rumors about the struggling restaurant chain are in full swing, the CEO of Darden Restaurants, which includes Olive Garden, Bahama Breeze, LongHorn Steakhouse, The Capital Grille, Eddie V's, Yard House, and Seasons 52 denied buzz of shuttering the popular seafood eatery, citing a Dec. 27 Orlando Sentinel news report.

Rumors about Red Lobster restaurants closing have been swirling around for months, but according to the CEO via, a statement from a company spokesperson, Red Lobster is not shuttering its stores at this point.

Rich Jeffers blames the buzz on a story that surfaced recently from LA Weekly, which he says "was clearly being facetious. Moreover, he blames several media outlets from running with the story without exercising responsible journalism by confirming rumors directly with the corporation.

The push to close the chain began when activist investor firm, Barington Capital was left with a bad taste in its mouth over the company's strategic moves. Barington believes Darden should split off or sell the fledgling Red Lobster, which is losing share to Chipotle, Joe's Crab Shack, and other casual brands.

"You had a couple outlets where clearly folks weren't practicing good journalism, and no one called to verify if what they read in LA Weekly was accurate," Jeffers said.

Stephen Anderson, a senior analyst at Miller Tabak, said Red Lobster closures will "sharpen management's focus on restoring Olive Garden, which post-Red Lobster will comprise more than half of Darden's sales to more consistent sales growth."

Darden's second quarter earnings were lower than expected, causing shareholders to sell off the equity. Moreover, the stock's (ticker symbol: DRI) price has under-performed peer competitors like the Cheesecake Factory and Cracker Barrel Old Country Stores over the last five years.

Any news of Red Lobster closing its restaurant locations is sobering, especially for those who have been loyal to the brand over the decades. However, should the rumors eventually pan out, it underscores the reality that brands that usually existed on name brand alone or under new threats from innovative and invasive competitors.

In the end, it's all about the cheddar...not biscuits.


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