Red Lobster heads in right direction, key shareholder says
The tide at Red Lobster is rising, with key shareholder Thai Union saying its losses at the Orlando-based company have fallen significantly.
The Thailand-based seafood supplier reported that its share of loss from operations in Red Lobster decreased by 66% in the second quarter compared with the same time last year.
Converted from Thai currency, the loss in the quarter this year was about $2.7 million, improved from a loss of about $8 million last year.
“This is a massive improvement,” said Thai Union Group CFO Ludovic Garnier. “This is going in the right direction.”
In an Aug. 8 presentation, Thai Union attributed the smaller loss to price increases and lower food and labor costs.
The improvement follows Thai Union reporting a “share of profit from operations” for Red Lobster in the first quarter of this year.
“It’s continued evidence of stabilization at Red Lobster,” said San Diego-based restaurant analyst John Gordon.
Thai Union, whose brands include Chicken of the Sea tuna, became a Red Lobster stakeholder in 2016 before teaming up with a group of investors in 2020 to acquire the rest of the company from San Francisco’s Golden Gate Capital.
The chain has not yet revealed a new CEO. Kelli Valade resigned in April 2022 after just eight months on the job.
Garnier said this week Thai Union is working closely with Red Lobster on its strategy for the next year. He added the guest count has to improve.
Thai Union’s presentation included ways to bring in more customer traffic by making Red Lobster visits an “everyday occasion” and growing its rewards member program. It also called for lowering costs and meeting labor and efficiency requirements.
At the end of June, Red Lobster revealed its “Ultimate Endless Shrimp” promotion would be “available all day, every day.” For $20, customers start with two shrimp dishes and then can order more.
“We do remain cautious about Red Lobster,” Garnier said. “You know, the situation is always volatile. … We see some improvement, but we want to make sure this is sustainable.”