Darden Restaurants, which also owns Olive Garden, was flirting with the idea of selling Red Lobster for some time. The seafood chain wasn’t contributing enough to Darden’s bottom line and efforts to improve Red Lobster’s sales weren’t working as hoped.
Red Lobster’s dismal performance is easily recognized in official financial data. In the three months ending in February, 2014, Red Lobster sales declined 8.7 percent from the previous year, dropping to $611 million. Darden made several attempts to reverse the negative trends, including an expanded menu with non- seafood items to attract more customers, but efforts failed.
Olive Garden and Longhorn Steakhouse, also owned by Darden Restaurants, have each witnessed sales declines of their own. But the declines at these two chains are smaller and upper management believes Olive Garden and Longhorn Steakhouse can more easily turn the corner and improve.
Red Lobster first opened in 1968 in Lakeland, Florida and was the first seafood restaurant to gain nationwide prominence. The chain presently has 700 locations. The $2.1 billion cash offer works out to about $3 million per restaurant.
Shares of Darden Restaurants, ticker DRI, are down approximately 4 percent following the news, in midday trading.