The restaurant business has always been known to be a tough industry with slim margins making profits hard to come by. Just ask Darden Restaurants Inc., which announced Tuesday a fourth-quarter loss of $55.1 million compared to a $92.3 million profit in the year-ago period. The disappointing news follows last month's announcement that it would sell 73 Smokey Bones restaurants while closing 56 Smokey Bones and two Rocky River Grillhouse locations.
Darden joins peer Applebee's International Inc. among other publicly traded restaurant chains with slumping stock that have resorted to selling part of their businesses to turn things around. Casual dining chain Applebee's has been shopping itself around since December, and it recently may have attracted the interest of IHop Corp. Meanwhile, fast-casual chain Friendly Ice Cream Corp. was sold June 17 to private equity firm Sun Capital Partners Inc., which swallowed it up for $559.4 million in cash and debt.
Despite putting a majority of its Darden restaurants up for sale, CEO Clarence Otis says the Orlando, Fla.-based company, which also owns Olive Garden and Red Lobster, would consider a "major acquisition," according to Theflyonthewall blog. With its stock slumping and shareholders hungry for profits, a major deal adding to its menu might be the right recipe. —Gerald Magpily
See story from Dow Jones via CNNMoney
See story from the Orlando Business Journal
See post from Theflyonthewall blog
See June 13 post from Dealscape
See related April 26 post from Dealscape
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