Darden Restaurants will be selling Red Lobster to a private-equity firm for $2.1 billion, according to an announcement the company made on Friday.
As parent company to the Red Lobster restaurant chain, it was after years of sagging sales that led them to this decision. It may seem strange that a business with poor sales can have a high price tag this high, but much of that $2.1 billion only covers Red Lobster’s real estate. What’s left of the brand’s value is “fairly minimal,” Sterne Agee analyst Lynne Collier wrote in a note.
The cheddar-biscuit purveyor’s demise is being hastened by a growing American preference for micro-managing meals that can be scarfed down quickly. So the era of families sitting down to a meal conceived by food scientists and prepared in a kitchen they can’t see is fading fast.
This is scary news for a host of other chains, including Olive Garden, which Darden still owns.
Even as consumer spending has improved, many consumers have still been less willing to spend on sit-down meals,” noted a recent report from market research firm IBISWorld. “Instead, consumers have shown a preference for cheaper fast-casual concepts.”
Catering to mostly an elderly audience who no longer goes out socially, was one of the major reasons stated by analysts to limit Red Lobster’s growth.
On the other hand, Chipotle doesn’t seem to be having much of a problem. The burrito-makers have done such good business over the last quarter, they were confident enough to raise prices, apparently without fear of losing customers.
Meanwhile, with regard to the future of sit-down family restaurants like the previously mentioned Olive Garden, things are not quite as bad…yet. In a last ditch attempt to stay relevant, they’ve spiffed up their logo, made it easier to customize their popular soup, salad and bread sticks lunch menu, and found ways to get the lunch crowd in and out in a hurry.
The suggestion to consider expanding abroad has been raised to these dying chains. Or perhaps they might consider starting a business baking and selling those delicious cheddar biscuits.
We’d hate to have to let THEM go…Hello?
We’ll miss you.
Thanks to Huffington Post for information used in this article.