Red Lobster Closing?

Darden Restaurants has been trying to quash false reports since Christmas that Red Lobster is shuttering its restaurants across the country. Still, on Friday afternoon "Red Lobster closing" was the No. 1 item trending on Yahoo, and the rumor was the subject of multiple Tweets and Facebook posts.

"To clarify, reports that @RedLobster is closing are false," the company tweeted out Friday. "We're looking forward to your next visit!"  Darden said last week it plans to sell or spin off the Red Lobster chain into a separate company. But "we never said we were closing any restaurants," spokesman Rich Jeffers said Friday.

Yeah it looks like Darden has some activist investors pushing the company to do some things to get the stock price up. Red Lobster's growth has been pretty weak so Darden may sell them or spin them off to focus on growing brands. The whole casual dining scene Applebee's, Logan's etc seems to be pretty weak.

Darden is indeed looking for a buyer to sell off their stake in Red Lobster to but that doesn't mean, for Red Lobster employees, that they have anything to worry about, at least not as far as future employment is concerned.  IF someone new buys them you can rest assured they aren't going to invest that much (amount it would take to purchase them) in order to shut down the franchise.  

What most likely will happen though is the same thing that happened to the local Taco Bell restaurants which all the local restaurants were sold, by their owner, to a much larger company as of the first of the year.  The new owners first moves was to remove, change, or alter the Health Insurance that the managerial employees had under the old owner.  Also the old owner (of Taco Bell) sold out to the larger company in great part account of the new (Democratic) Health Care law and his unwillingness to deal with the new government regulations and requirements.  That makes now three owners I personally know that made decisions to close stores, retire, or get out of business due to the Democrats passing that health care bill.  

Red Lobster's new owners very likely will make similar moves and other moves to try and recuperate their investment faster, whoever buys it.  It is Darden that is in trouble, not just or only Red Lobster that is causing this.    As for what it means locally we have a new Olive Garden and a new Longhorn so since they are here they will most likely stay and not be cut.  Darden also just made a large investment in remodeling the local Red Lobster so as for Florence we are in pretty good shape.  

A spin-off is not a shutdown.  In most cases it just means business as usual to consumers.

Great example.  News Corp  and 20th Century Fox split from each other last year.   What changed?  the logos, and it's 21st Century Fox now.  That's about it as far as it is to consumers.

It just tells me that profits are flat at Red Lobster. 

Each restaurant's just a big enough operation that the expense ratios at their restaurants are very high.  And with fish and their food supplies being relatively expensive, it's a tough nut to crack into great profits.

Darden's wanting to put their resources into restaurants where they can easier control the wholesale cost of food--other than Red Lobster.