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In a $2.1 billion cash deal, Darden Restaurants says that it will sell its Red Lobster chain to Golden Gate Capital.
Customer buying patterns played a large role in the decision to sell the popular restaurant franchise. Since 1968, people have loved Red Lobster, a restaurant that included menu items like seafood, frogs legs, and hush puppies. Like many restaurants, they chose new advertising campaigns and changes in their menus to boost sales.
Executives for the restaurant looked at how the product was selling, and found that both Red Lobster and Italian food chain, Olive Garden, have been losing customers, according to the Associated Press. Red Lobster is a large franchise, with 700 Red Lobster locations in North America. Investors have challenged Darden's plans to sell only Red Lobster.
Darden CEO Clarence Otis noted that Red Lobster failed to find higher-income customers. According to Reuters, Darden is anticipating that proceeds from selling Red Lobster will reach $1.6 billion. The company believes that $1 billion from the sale will be used to retire debt.