top of page

The Lobster Tale

Red Lobster operates 551 restaurants across Canada and the U.S. The new owner, Golden Gate Capital, is closing 99 underperforming locations.

The media is very misleading, it sounded like the entire chain of restaurants was closing, but creating a smaller footprint and reworking their concept is a good start. The news does not say how many of those leases have expired, how many of those locations are corporate or franchised.

Closing locations is nothing new, the onslaught of negative coverage is not great for the Red Lobsters that are thriving. Hopefully, Golden Gate Capital will be able to weather the storm and recreate the iconic brand into a smaller, faster concept.

Looking at Golden Gate's pixelated website, they seem to own a lot of different industries, moving companies, Payless shoes and restaurants? It seems that Golden Gate made out like a bandit by paying 2.1 billion for Red Lobster because Red Lobster owns their land. The latest news from Red Lobster CEO is that they are optimistic at returning from bankruptcy.

Darden looks like a reputable investment firm, based on their website, and brands they represent. Darden owns Olive Garden, YardHouse, LongHorn Steakhouse and Ruth's Chris. When looking at investment management, it's sometimes a better bet to go with an investment group that is very experienced in only one industry.

As a franchisee, you are always taking the risk that your brand could be bought out by a fishy investment group. There's always a stock spike when a buy out starts hitting the PR wires, if you aren't certain about the changes, read through your franchise agreement to see how to go about selling, you could be getting out at the peak of your investment. Red Lobster might be going belly up, depending if the investment firm can pull it out of its tailspin. It might be smart for franchisees to sell their existing locations.

Red Lobster - a tale of franchising by AwAKE Franchise


bottom of page