The investor lost $19 million related to the seafood chain's poor financial performance.

Thai Union, regarded as one of the world’s leading seafood producers, announced Tuesday that it will exit its minority investment in Red Lobster.

The company has been an investor since 2016 when it poured in $575 million. However, a recent evaluation of the restaurant’s operational and financial potential has soured its belief in the chain. Thai Union lost $19 million in the first nine months of 2023 from Red Lobster.

“The combination of COVID-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders,” Thai Union CEO Thiraphong Chansiri said in a statement. “After detailed analysis, we have determined that Red Lobster’s ongoing financial requirements no longer align with our capital allocation priorities and therefore are pursuing an exit of our minority investment.”

As the company explores available options for its exit, it will record a $530 million non-cash impairment charge in connection to the investment. Going forward, Thai Union’s corporate strategy will focus on its core business—ambient seafood, frozen products, and pet food.

In 2014, Golden Gate Capital purchased Red Lobster for $2.1 billion from Darden Restaurants and took the company private. In August 2020, the private equity firm agreed to sell its remaining equity stake to a consortium of Thai Union, global restaurateurs, and Red Lobster management, called Seafood Alliance. Around the same time, Debtwire reported that Red Lobster was exploring strategic options after facing “unprecedented challenges resulting from the COVID-19 pandemic.” The publication said the chain was dealing with earnings pressure and near-term maturities. In January 2021, Red Lobster completed debt refinancing

In addition to less-than-ideal financial performances, Red Lobster’s leadership has been shaky during the pandemic. Former CEO Kim Lopdrup—who had been at the helm for 14 years across two stints—retired in 2021. He was replaced by Kelli Valade, who held the position for only eight months before resigning around April 2022. She moved on to become CEO of Denny’s and Keke’s Breakfast Cafe. At the time, Red Lobster didn’t provide a reason for Valade’s short stint. She called it “an incredibly difficult, but necessary decision.” 

After a year and a half went by, the seafood chain announced Horace Dawson as its new CEO. Previously, he worked as Red Lobster’s executive vice president and general counsel since 2014. Additionally, CMO Patty Trevino came on board in February 2022 but left by August 2023. David Schmidt served as Red Lobster’s CFO for seven months before joining Valade’s team as president of Keke’s Breakfast Cafe.

Chain Restaurants, Feature, Finance