Claim: The Red Lobster chain is about to close its doors and go out of business for good.
Example: [Collected via Facebook, December 2013]
Origins: Red Lobster is the ubiquitous casual dining restaurant chain operated by Darden Restaurants of Orlando, Florida, which boasts over seven hundred outlets worldwide, including (in addition to the United States) operations in Canada, the United Arab Emirates, Qatar and Japan.
In September 2013, the
These results prompted Darden, under pressure from investors, to announce in
The company plans to shed Red Lobster through a tax-free spinoff to shareholders, but would be interested in a sale if it could raise more money.
Darden's plan follows months of questions and pressure from investors and analysts over how it planned to bring back consumers after the recession. Darden is one of the biggest companies in the casual dining industry, with a market value of
Though Red Lobster served as the basis for the Darden empire, it has become less important to the company over time. Members of the management team said that they expected same-restaurant sales for the chain to fall
Separating the low-growth brand would let its new management team focus on running the company for its significant cash flows, while letting the rest of the company focus on its other brands' needs, including different marketing and pricing strategies.
Rich Jeffers, a spokesman for Darden Restaurants Inc., which owns the chain, said the rumor may have started after the website LA Weekly published a story that the company faced an "uncertain future." A torrent of tweets and other online media followed with reports that the chain was closing.
"We are not closing any restaurants," Jeffers [said].
The confusion may also be linked to Darden's announcement that it plans to sell or spin off the Red Lobster chain into a separate company.
In December  the restaurant group revealed plans to release its oldest but worst performing segment into the wild. The initial plan was to create two independent companies, but after considering a number of structures — ranging from selling to a strategic partner to giving up the real estate assets while holding onto the brand — Darden concluded the Golden Gate deal would create the most value, the company said in a statement.
It's clear Red Lobster can't compete on its own yet, and until it can find a way to bring diners back to the restaurant, it would be foolhardy to cast it off.
Last updated: 16 May 2014
de la Merced, Michael J. "Red Lobster to Be Split from Darden's Empire." The New York Times. 19 December 2013. Kim, Susanna. "Red Lobster Says It's Not Closing Its 705 Restaurants." ABC News. 27 December 2013. McGrath, Maggie. "Red Lobster and Olive Garden Drag Darden Lower." Forbes. 20 September 2013. Sharf, Samantha. "Red Lobster Caught by Golden Gate Capital for $2.1 Billion." Forbes. 16 May 2014.