Red Lobster Says it Won’t Go Out of Business…Yet

red lobster

Red Lobster, the Darden Restaurants Inc. seafood restaurant chain found in strip malls across the country, dismissed rumors that it would be closing its more than 700 U.S. locations.

According to a post on LAWeekly, Darden has plans to either “sell or spin off” the Red Lobster chain into another business; “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.”

Hoity-toity or not, the competition is on the rise, with healthier and faster places popping up all across the country. But a Darden representative says the rumors are just that, started by the LAWeekly post. According to ABCNews, Rich Jeffers, a spokesman for Darden Restaurants Inc., said the company “is not going out of business.”

Darden’s market value is a whopping $8.5 billion, and Red Lobster’s revenues make up a huge chunk of that—about $2.6 billion in 2013, but the chain’s growth isn’t impressive notes LAWeekly, “Last quarter the company experienced a 31 percent drop in net earnings,” and in a statement, the company said “The reduced unit growth will lower capital spending by at least $100 million annually.”

In addition to 705 Red Lobster locations, Darden Restaurants owns a total of 2,100 restaurants including the Olive Garden chain, LongHorn Steakhouse, The Capital Grille and other smaller restaurants including Bahama Breeze, Seasons 52, the Yard House and Eddie V’s.

Keep in touch with Jill on Twitter @jillettinger

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Image: istargazer