They're in worse shapethan I thought.
In a move sure to set the culinary world and classy guys everywhere reeling, Darden has announced that it will either sell or spin off its Red Lobster restaurants.
Adding to the devastation, the company, which also runs Olive Garden and other fine-dining establishments, said it will suspend the opening of new Olive Garden locations and slow down new locations for LongHorn Steakhouses.
Why, you ask? Dear God, why??
Because Darden isn't doing so good. It seems that consumers are turning their noses up at hoity-toity sit-down places like Red Lobster and Olive Garden these days in favor of cheaper chains like Chipotle.
Darden to Sell or Spin Off Red Lobster
Looking to boost shareholder value, Darden Restaurants, Inc. is looking to sell or spin off Red Lobster, suspend new Olive Garden openings, and implement more limited growth of new LongHorn Steakhouses.
Sandell Asset Management Corp. (“Sandell”), the beneficial owner of approximately 1.7 million shares, or 6.5%, of Bob Evans Farms, Inc. (BOBE) (“Bob Evans” or the “Company”), released an open letter to the shareholders of the Company indicating that it intends to commence a consent solicitation at Bob Evans. Sandell is being advised by the proxy solicitation firm MacKenzie Partners, Inc. (“MacKenzie”).
The results will really let the Davis team know if they are in trouble or not. I remember Kroger being in a very similar situation in the mid 80's. Kroger handled it well and the shareholders all made more than 10% annualized return for a number of years from the special one time hefty dividend Kroger issued to shareholders in order to fight off KKR, and their bonds have proven to be a great investment over the years. Will BOBE be able to pull off a KR??? We shall see shortly!