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New owner, new quality focus for Red Lobster

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Red Lobster began a new era Monday, as Orlando, Fla.,-based Darden Restaurants completed its $2.1-billion sale to private equity firm Golden Gate Capital.

The chain is going "back to the basics of being not just the biggest, but the best seafood restaurant," said Kim Lopdrup, Red Lobster's new chief executive officer.

"We're going to have some really spectacular food suitable for a special occasion," Lopdrup said, and "we're going to have more everyday food at the lower end" as well.

Red Lobster will cut back on dishes without seafood and end much of the deep discounting that took place recently under Darden. Deals such as 30 shrimp for $11.99 will go away, though longtime specials such as Endless Shrimp will remain.

For now, the new Red Lobster is keeping some of its Darden ties. Customers can still use Red Lobster gift cards used at other Darden restaurants and vice versa.

Corporate employees are working in a separate wing of Darden's headquarters until Red Lobster chooses a new corporate address somewhere in the Orlando area.

As Red Lobster moved toward new ownership, Lopdrup said last month it began introducing dishes including fresh swordfish and tuna -- "foods people really expect at a good, authentic seafood restaurant."

Still, Lopdrup said he doesn't expect Red Lobster's average cheque to rise from its current level of around $21. The menu will offer dishes at a number of price levels, he said.

Elevating quality is a strategy Lopdrup pursued during his seven years as the chain's president until 2011. He oversaw Red Lobster as it gave restaurants the feel of a Maine seaside village and introduced wood-fire grilling to move away from its fried-food image.

Still, Red Lobster has had uneven performance for years, and its decline has been particularly steep lately. Sales dropped 5.6 per cent to $664 million in the last quarter. The chain's challenges include its age of 46, practically elderly in restaurant years.

At the same time, casual dining in general is facing competition from faster, cheaper and trendier competitors.

As sales continued declining and Darden faced pressure from a hedge fund to break up the company, it announced plans in December to sell or spin off Red Lobster. Now another hedge fund has invested in Darden as well. Both funds have protested the sale and said the price was too low.

Boston University hospitality professor Chris Muller said he thinks Red Lobster can thrive under San Francisco-based Golden Gate. For one thing, it can take more risks. Darden's board of directors, he said, "was probably not as willing to be as experimental as they can be now."

Red Lobster was the chain that started it all for Darden, which owns seven other brands including Olive Garden. The company's namesake, Bill Darden, opened the first Red Lobster in Lakeland, Fla., in 1968.


-- Orlando Sentinel

Republished from the Winnipeg Free Press print edition July 29, 2014 B5

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