A Red Lobster seafood casual dining chain restaurant.
Alamy
By Olivia Oran

Activist investor Barington Capital Group said Monday it was disappointed with a recent plan by Darden Restaurants (DRI) to spin off its Red Lobster chain to enhance shareholder value.

Barington, which leads a shareholders' group that owns a stake of more than 2 percent in the chain, said in a statement it views Darden's plan "as incomplete and inadequate."

"Darden's board of directors and management team are focused on creating value for all Darden shareholders," a spokesman said in a statement. "We are confident that our plan, together with actions we are taking to enhance guest experiences and reinvigorate demand, will lead to improved performance in our restaurants and substantially increase value for all Darden shareholders."

New York-based Barington, which has previously urged Darden management to break up the company and explore spinning off its real estate properties,
said it was particularly disappointed that Darden's plan failed to unlock value from the company's real estate holdings.

Barington estimates that Darden's real estate could be worth $4 billion.

Barington has recommended Darden explore creating a publicly traded real estate investment trust to get full value for the real estate assets.

Barington also said it believes that just separating Red Lobster from the rest of Darden will still leave the company with too many brands.

"Unfortunately, Darden's proposed plan appears to us to be more of an attempt to do the minimum necessary to maintain the status quo than an effort to formulate a truly comprehensive strategy to improve long-term shareholder value," the fund said its statement.

Barington recommends that Darden split into two companies: one for Olive Garden and Red Lobster, and the other for its higher growth brands, including LongHorn Steakhouse, The Capital Grille, Yard House and Bahama Breeze.

Darden, which manages eight restaurant brands, has become too large and complex to compete with its rivals, Barington has said.

Activist investor Starboard Value has also come out publicly in favor of pushing for change at Darden.

Darden shares fell 0.4 percent to $51.92.



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24 Comments

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SHEILA

from what i'm reading. the real estate and the earnings from the sale will yield "fast money" for barrington. what's wrong with steady income? oh, that's not the way the game is played any more. buy low sell high and quickly is the norm now. pity--that's one more shot to the middle class.
I truly don't understand why "the powers that be" say there are too many restaurants to handle, that's absurd.
why separate RL from the others anyway? why not create two or three different entities? oh, that's right, read my first paragraph.

January 14 2014 at 6:07 AM Report abuse rate up rate down Reply
Joy

20 years ago, I would take my small granddaughters to (Wed Wobster) as they procounced it.

Not being a great seafood fan, I would order a large bowl of clam chowder, It was delicious with large chunks of clam and potatos .

Today that clam chowder is a mere shadow of its' former self. Watery with few clams.

We don't go there any more.

January 14 2014 at 3:56 AM Report abuse rate up rate down Reply
maeder

I used to love Olive Garden and Red Lobster, no more, everything comes with an alfredo sauce, the food itself is cheap, low quality. I love Dardem's Capital Grille, love Bahama Breeze and Yard House.

January 13 2014 at 10:04 PM Report abuse rate up rate down Reply
albinfla

bring back crabbie mondays

January 13 2014 at 9:05 PM Report abuse rate up rate down Reply
albinfla

bring back crabbie mondays

January 13 2014 at 9:05 PM Report abuse rate up rate down Reply
Wayne Carter

Long John Silvers Is BETTER ! and that is real Sad !

January 13 2014 at 7:36 PM Report abuse rate up rate down Reply
1 reply to Wayne Carter's comment
debij

It is only if you like fried to death seafood. If you want a seafood chain that is really good, find a Legal Seafoods. You will never eat another fast food fish again. Better yet, go to non-chain restaurants. They will appreciate your patronage much more, and the money will stay in your area instead of profits being siphoned off into a corporate vacuum. I guarantee if you visit even a bad New England restaurant (non-chain) it will beat a Red Lobster. Summer before last, lobsters were running $25+ at Red Lobster for a 1.25 pound lobster when in southern New Hampshire, Maine, and Eastern Mass they were averaging less than $3 each off the boat. Who was making the $22 profit because if they were selling them to the public at $3 each, you know Red Lobster was paying even less?

January 13 2014 at 9:08 PM Report abuse rate up rate down Reply
frddrvr99

I worked for Red Lobster for almost 20 years. In those years I have seen a lot of changes. Some were good and some not so good. Red Lobster had lot it's sense of core values. They do need to break away from the rest of the company so they can focus on the things that make a restaurant successful. By breaking away they can focus on employees who without you cannot run a restaurant. Make them feel important and you will get a better quality employee who will take pride in their work and also how they treat the guests. When the guests feel important show them that they really mean something by offering them top notch service, quality food and value for the money. Can it be done? Yes but it will not be easy. A plan needs to be forged and then follow it through. Some tough decisions will have to be made but in the long run it will strengthen the brand.

January 13 2014 at 6:56 PM Report abuse +1 rate up rate down Reply
1 reply to frddrvr99's comment
bzzzbayte

THATS HORSERADISH

January 13 2014 at 10:16 PM Report abuse rate up rate down Reply
mmlauw

We used to go to Red lobsters & love the cheese bread but we stop going there a while ago. Price and quality don't match. The shrimp tastes like a defrost frozen shrimp. If the focus mainly is to put profit on top of service & quality, it'll fail at the end.

January 13 2014 at 5:58 PM Report abuse +2 rate up rate down Reply
1 reply to mmlauw's comment
debij

I agree. I really don't like going to Red Lobster. We have other seafood restaurants in the area that are always full, and Red Lobster seems to get the people who want seafood but can't get seats in any of those. They need to revamp their menus to reflect what a REAL seafood restaurant is. Some things they could add that would be excellent items are a real New England Lobster pie (lobster in cream sauce with buttered ritz cracker crumb topping - some places add chopped sea scallops), fresh lobster rolls (lobster salad on a new england doggie roll), milk poached fish (whatever kind of fish you want to order - usually flounder and cod are poached in milk), and new england style fried clams (freshly shucked small clams in milk and cornmeal and fried whole - bellies included - not clam strips). Fresh made chowder would go well too.

January 13 2014 at 8:47 PM Report abuse +1 rate up rate down Reply
Tom

This is a riot. Asking a question like that to HP/AOL users. 90% far left uneducated "progressives" with no experience with money other than a government debit card

January 13 2014 at 5:57 PM Report abuse -3 rate up rate down Reply
1 reply to Tom's comment
debij

You're speaking only of yourself there, Tom. I know many HP/AOL users with higher education and who have much more money than you'll ever see with your high school (maybe) education. I personally hold 3 different post secondary degrees, and work in a University setting. Please remember that "progressives" tend to be educated, while "conservatives" want to keep people dumb and under their control (except for the #1 who just want to keep as much of their money as they can at the expense of everyone else).

January 13 2014 at 8:51 PM Report abuse rate up rate down Reply
1 reply to debij's comment
rickahight

Spoken like a true liberal. Arrogant ranting. Three post secondary degrees? Likely paid for at least in part by the very taxpayers liberals abhor.

Working in a university setting? Figures.

Red Lobster's service has declined for years. TGI for example, is investing in significant rebranding. Not sure if Red Lobster can rebound. Good seafood just costs more. Red Lobster has to focus on the customer palate and completely turnaround service.

January 13 2014 at 10:40 PM Report abuse rate up rate down
alloftis

Dave has it right. Gone are the days of investing in employees, the business for the long term, and the return to the investors will come as a result. All the corporations that have gone public are just interested in ROI and nothing else. It is a crying shame. It happened to Sears, Allstate, and so many others I cannot count them all. Just like GM, too many brands and not enough emphasis on the core business and it employees and customers, who make great companies what they are.

January 13 2014 at 5:50 PM Report abuse +1 rate up rate down Reply
1 reply to alloftis's comment
debij

Which is why I tend to patronize local restaurants rather than chains when I can. At least they still have pride in what they do, and people are often more important than the money coming in. I would much rather go to a place that the chef can pop out and see the joy in people's faces eating what he created. Those people cooking in places like Red Lobster aren't chefs - they are cooks.

January 13 2014 at 8:54 PM Report abuse +1 rate up rate down Reply