Daily news
May 28, 2024

It wasn’t the endless shrimp that pinched Red Lobster. How private equity rolled the seafood chain.

Red Lobster, the ubiquitous American seafood chain, began to struggle in the late 2000s and early 2010s. The poor economic climate coupled with changing dining habits had an impact on the company, leading to falling sales and overall performance. In an attempt to revitalize its business, Red Lobster's then-parent company, Darden Restaurants Inc., decided to sell the struggling chain to Golden Gate Capital, a private equity firm, for $2.1 billion in 2014. Golden Gate claimed it saw potential for a turnaround, noting that Red Lobster had a loyal customer base and strong brand recognition. Once the deal was closed, Golden Gate began its work to revamp the restaurant chain. First and foremost, the firm worked to improve the quality and appeal of Red Lobster’s menu by adding high-end items like Alaska sockeye salmon and Prime rib. At the same time, they tried to maintain the affordability factor that had always been core to Red Lobster's brand. Golden Gate placed a substantial focus on enhancing the dining experience and customer service at Red Lobster, too. They aimed at creating inviting and relaxing atmospheres in the restaurants and trained staff on providing top-notch service. Further, the firm also found ways to trim costs. One of the main cost-cutting strategies was to restructure Red Lobster's real estate holdings. Golden Gate created a separate entity, Seafood Realty LLC, to which the restaurant's properties were sold and then leased back to the