Darden Restaurants Inc. is setting Red Lobster adrift but betting that it can still turn around Olive Garden’s fortunes.
The company, based in Orlando, Fla., said Friday that it would sell its seafood chain, which has a restaurant in Waikiki, to investment firm Golden Gate Capital in a $2.1 billion cash deal. The announcement came despite objections from some shareholders to the plan to separate Red Lobster, which was announced late last year.
Both Olive Garden and Red Lobster have been losing customers in recent years, even as they changed their menus and marketing campaigns to win back business. Part of the problem is the growing popularity of places like Chipotle and Panera, where customers feel they can get the same quality of food without paying as much or waiting for table service.
But Darden CEO Clarence Otis has drawn a distinction between Red Lobster and Olive Garden. He says Red Lobster in particular is increasingly unable to attract the higher-income customers Darden caters to with its more successful chains.
Red Lobster, which opened in 1968, helped popularize seafood among Americans and today has about 700 locations in the U.S. and Canada.
Darden sees more potential in fixing Olive Garden, which has about 830 locations.