Darden Restaurants, which began in Lakeland, Florida, with the opening of the first Red Lobster restaurant, plans to “separate” its Red Lobster subsidiary through a tax-free spin-off or sale.
The two closest Red Lobster locations are at 4333 Candlewood St. in Lakewood and 12892 Harbor Blvd. in Garden Grove.
Red Lobster had annual sales of approximately $2.6 billion in fiscal year 2013. Kim Lopdrup, currently Darden’s President, Specialty Restaurant Group and New Business, has been selected to serve as Chief Executive Officer of Red Lobster following the separation. Brad Richmond, who has been Senior Vice President and Chief Financial Officer of Darden since 2006, is expected to become Chief Financial and Administrative Officer.
“This is a thrilling opportunity to build on the very strong market position Red Lobster has established over the past 46 years,” said Lopdrup. “As a stand-alone company, we will be free to focus in a more single-minded manner on the many current and prospective guests who find what Red Lobster brings to the marketplace highly relevant. A priority will be highlighting and evolving signature attributes of the Red Lobster dining experience. A spin-off will also allow us to target our efforts and investments on value-creation opportunities that may be material to a stand-alone Red Lobster but not to Darden overall.”
Lopdrup served as President of Red Lobster from 2004 to 2011. In that capacity, he led a comprehensive revitalization of the brand that resulted in significant improvements in guest satisfaction and profitability.
Richmond served as Red Lobster’s Senior Vice President, Controller and Strategic Planning from 2003 to 2005, helping to strengthen operating discipline and achieve restaurant efficiencies that enabled growth of the brand.
Darden’s other properties include Olive Garden, Longhorn Steakhouse, Capital Grille, Bahama Breeze, and Seasons 52.
The announcement may have been in response to an effort by dissident shareholder Barrington Capital Group LP to force the parent company to split in two, with one piece containing Red Lobster and Olive Garden and the other for the rest of Darden’s properties.
The separation is expected (but not guaranteed) to complete by the middle of 2014.
Other changes at parent company
Darden will also cut back on the growth of its remaining properties, suspending the opening of new Olive Garden restaurants entirely. Growth in new locations of Longhorn Steakhouse will be limited.
A new Olive Garden was opened at Buena Park Downtown mall earlier this year. Another restaurant at Knott Ave. and Katella Ave. has been opened for many years.
Changes in management will emphasize growth in same-store sales rather than through expansion to new locations.
“Darden is the market leader in full-service dining because of the passionate commitment, collective capabilities and hard work of generations of employees. We are also the leader because we regularly and rigorously review our business and strategic direction, and take decisive action when market conditions change,” said Clarence Otis, Darden’s Chairman and CEO. “Our industry is in a period of 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, as well as additional unexpected softness since June. Even with challenging industry conditions, however, companies that have outstanding assets and excellent teams can continue to create compelling value provided they are strongly aligned behind the right priorities.”
An exterior shot of the Olive Garden at Buena Park Downtown mall. The location opened in July 2013.
File photo by C.E.H. Wiedel.