Darden Restaurants announced Friday it will sell its struggling Red Lobster chain for $2.1 billion — a move making some of its investors crabby.
CNN reports the restaurant will be sold to San Francisco-based private equity firm Golden Gate Capital after Darden originally planned to spin off the restaurant due to lagging sales.
Since the economic decline, U.S. diners have turned to more affordable casual restaurants such as Panera Bread, leaving upper-tier restaurants such as Red Lobster in a downturn.
Investors have criticized the way Darden is handling the seafood chain's fate. The Wall Street Journal reports two investment groups supported a split from the parent company rather than a complete sale of Red Lobster.
But according to The New York Times, Darden says the all-cash sale will help pay its outstanding debt and finance a stock buyback program.
Red Lobster is Darden's oldest restaurant. The Orlando-based company also operates brands such as LongHorn Steakhouse and Olive Garden.
In a statement, Darden's CEO says the move will allow the company to focus its efforts on what it calls the "Olive Garden renaissance program."
Although the Italian-food chain is Darden's largest revenue generator, it has also seen decreased sales. In an effort to attract a younger crowd, it began experimenting with more complex ingredients. (Via Olive Garden)
As for Red Lobster, Forbes reports Golden Gate Capital believes it can reverse its salty future by working with its "unparalleled market position in seafood casual dining." (Via Forbes)
The deal will close in early 2015. Golden Gate Capital has not commented on whether it would close any of the existing Red Lobster locations.
