Fans of popular seafood chain Red Lobster have been buzzing this morning, with news that the now-struggling brand has been sold, and speculating over the fate of the seafood purveyor.
Red Lobster was offloaded by Darden Restaurants, parent company of fellow mid-range chain Olive Garden. The sale totaled $2.1 billion, and investment firm Golden Gate Capital walked away from the deal with the restaurant brand.
Up until the Red Lobster sale, the chain’s immediate future was questioned as Darden revealed fiscal concerns about the brand. There was some talk of a “spin off,” altering the brand to appeal to fast-casual diners — many of whom have allocating dining out dollars to innovative and inexpensive walk-in, sit-down joints like Panera.
The older Red Lobster, which was founded in Florida in 1968 before expanding nationally, has fought to retain relevance in a rapidly changing restaurant culture.
Newsday reports that the pair of chains owned by Darden have faced similar challenges as lower-cost, lower-effort brands come up in malls and shopping centers across America:
“Both Olive Garden and Red Lobster have been losing customers in recent years. The company has tried various menu changes and marketing campaigns in hopes of winning back business… part of the problem is the growing popularity of chains like Chipotle, where customers feel they can get the same quality of food without having to pay as much or wait for table service.”
KULR says that Darden currently operates slightly fewer Red Lobster locations than they do Red Lobster, and the sale’s proceeds will be pushed back into the business to resolve debt:
“There are about 700 Red Lobster locations and 830 Olive Gardens in North America… After the transaction costs, Darden said it expects proceeds of $1.6 billion, of which $1 billion will be used to retire outstanding debt. The company said it expects the deal to close in its first fiscal quarter.”
Facebook users launched the brand to the top of the site’s trends — all of whom seemed to be concerned that Cheddar Bay biscuits might not make the sale:
Twitter also had lots to say about the matter of Red Lobster’s biscuits:
Red Lobster biscuits are top 3 most overrated thing on Twitter
— Aaron (@abake6) May 16, 2014
Why Red Lobster is worth $2.1 billion pic.twitter.com/bGSDLlUMfk
— Ashley Lutz (@AshleyLutz) May 16, 2014
No, really, basically all anyone talked about were the biscuits:
— Jim Cramer (@jimcramer) May 16, 2014
Okay… some people discussed the fiscals:
Golden Gate Capital, which is buying Red Lobster for a chunky $2.1bn, also has California Pizza Kitchen, Eddie Bauer in portfolio…
— Megan Murphy (@meganmurp) May 16, 2014
As of now, plans for Red Lobster’s future aren’t known — but the capital firm could probably make back their money just licensing the biscuits.