The owner of Red Lobster is still looking for a buyer for the struggling seafood chain, and it’s keeping its expectations low.
“We're not expecting to get anything much from the sale,” Thai Union Group CEO Thiraphong Chansiri told investors during an earnings call Monday, according to a transcript from AlphaSense. “So you don't need to expect any one-time gain from Red Lobster.”
He added that the company is preparing for a bidding process and expects that to take three or four months.
Thai, a Thailand-based seafood conglomerate, said last month that it planned to divest from the 660-unit Red Lobster after a long streak of poor performance by the chain. Its problems came to a head in the third quarter of last year, when a $20 all-you-can-eat shrimp promotion led to an $11 million operating loss.
Those losses continued in the fourth quarter, when Red Lobster posted an operating loss of $12.5 million, its largest of the year. Thai Union cited “industry headwinds,” including higher materials costs and interest rates, for the loss.
All told, Red Lobster generated a loss of more than $22 million for Thai Union last year, exceeding the company’s already-dour forecast for the brand.
The casual-dining chain is “doing okay” on the top line, said Thai Union CFO Ludovic Garnier, but profits remain elusive.
“We are not happy with this decision [to divest], but I think it shows that we took the right decisions to move away and to exit from the business,” he said.
Red Lobster was founded by Bill Darden in 1968 and was part of Darden Restaurants until 2014, when it was acquired by Golden Gate Capital for $2.1 billion. Thai Union’s involvement began two years later, when it paid $575 million for a 25% stake in the brand. In 2020, it led an investment group that bought majority control of the chain. The terms of that deal were not disclosed.
After closing a handful of Red Lobster locations in 2022, Thai Union said early last year it intended to turn around the ailing brand, taking a more hands-on approach and making changes to the menu and operations. In September, it promoted longtime General Counsel Horace Dawson to CEO.
But after another difficult year, the company decided it wanted out. It will now turn its focus back to its core business of canned tuna, sardines and other seafood products.
Chansiri admitted that the situation has left a “big scar” on both him and Thai Union.
“Other people stop eating beef,” he said.“I'm going to stop eating lobster.”
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