So long crab linguini soaking in alfredo sauce and lobster tails glistening in butter. Darden announced Thursday that it will either sell or spin off Red Lobster, in hopes of bolstering its stock value.
The company, which also runs Olive Garden and other restaurants, stated that it will also suspend the opening of new Olive Garden locations and slow down new locations for LongHorn Steakhouses. “The reduced unit growth will lower capital spending by at least $100 million annually,” Darden released in a statement.
So what led to the Red Lobster's unfortunate demise? Since the economic downturn, restaurants similar to Red Lobster have suffered as consumers have become more careful about how they spend their money. People are opting to pick chains like Chipotle over Red Lobster or Olive Garden, as the former tends to take less time than a sit-down restaurant and cost less.
Darden Chairman and CEO Clarence Otis explained that the restaurant sector has undergone significant change, " with relatively low levels of consumer demand in each of the past several years for restaurants generally, and for casual dining in particular."
Although the planned Red Lobster spin off still awaits final approval from the company's board, Darden predicts any impending separation to occur in early fiscal 2015. Until then, we can only imagine what a possible Red Lobster spin off would involve. We're just hoping it involves some form of melty, cheesy lobster and steak burrito. Here's to the future.
H/T New York Times + Picthx Red Lobster