Darden Unloads Red Lobster For $2.1 BillionMay 16, 2014
Darden Restaurants has sold its 705-unit Red Lobster brand to investment firm Golden Gate Capital for $2.1 billion in cash. Expected to close by the first fiscal quarter of 2015, the deal includes both Red Lobster and related real estate assets. According to Darden, roughly $1 billion of the sale’s proceeds will go toward reducing debt, with the remainder dedicated to a share buyback program.
Darden first began exploring a potential spinoff or sale of its Red Lobster concept last year, following heavy pressure from activist investors to separate the struggling chain from its more profitable brands. In its third quarter ended February 23, Darden’s total sales were down 1.1% to $2.23 billion, due primarily to a same-restaurant sales loss of 5.6% across its core Red Lobster, Olive Garden and LongHorn Steakhouse brands. The company, which also owns the The Capital Grille, Bahama Breeze, Yard House, Eddie V’s and Seasons 52 concepts, operates more than 2,100 restaurants and generates more than $8.5 billion in annual sales.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.