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Why Red Lobster is aggressively expanding into China despite the trade war

Brian Sozzi
Editor-at-Large

Red Lobster will continue to claw its way into China’s casual dining space, despite escalating trade tensions between the U.S. and China.

The U.S.-based seafood chain with more than 700 locations globally opened its first location in Shanghai in December. A Beijing location swung open its doors last month. The menus at both stores largely feature seafood favorites from the U.S. but also several items tailored to Chinese eating tastes.

More stores in China are planned, Red Lobster CEO Kim Lopdrup told Yahoo Finance. Red Lobster’s push in China comes amid a broader interest in premium seafood experiences by the Chinese, explained Lopdrup.

“The Chinese love seafood, they are very finicky about quality, they actually trust American brands,” Lopdrup said on Yahoo Finance’s The First Trade, adding that both locations are doing “well” despite trade war fears weighing on the country’s once red-hot economic growth rates.

“[We are] not worried about the trade tensions, we are being embraced thus far,” he said. “Clearly, it’s something we are going to keep an eye on — but right now we are not seeing any reason or concern.”

Darden Restaurants (DRI) sold Red Lobster to private equity firm Golden Capital in 2014 amid pressure from activist investor Jeff Smith of Starboard Value. Led by Lopdrup since then, Red Lobster has worked to improve the quality of its ingredients and digital ordering capabilities. Besides China, Red Lobster has also opened up locations in Malaysia and Guama.

Lopdrup said there are no plans right now for an initial public offering.

Brian Sozzi is an editor-at-large and co-host of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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