Orlando Sentinel – Red Lobster is Making Money Again, Key Investor Says

Red Lobster in Leesburg is pictured on Monday, May 15, 2023. (Stephen M. Dowell/Orlando Sentinel)
Red Lobster in Leesburg is pictured on Monday, May 15, 2023. (Stephen M. Dowell/Orlando Sentinel)


Red Lobster shareholder Thai Union says the Orlando-based seafood chain turned a profit again in the first quarter of this year, and the company doesn’t plan to sell the brand even as challenges remain.

The Thailand-based seafood supplier reported it had a “share of profit from operations” for Red Lobster in the first quarter of this year, improved from a loss in the same period last year.

“I want to manage your expectation,” said Thai Union group CFO Ludovic Garnier on a May 3 earnings call. “We still have a lot of work to be done.”

Thai Union is still projecting a loss for the full year from its share in Red Lobster, Garnier said. The chain is also still without a CEO after Kelli Valade resigned more than a year ago after just eight months on the job.

But the company said in its earnings presentation it has no plans to sell Red Lobster in the short term. Thai Union, whose brands include Chicken of the Sea, 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.

San Diego-based restaurant analyst John Gordon said it was notable that Thai Union doesn’t have plans to sell the seafood chain.

“It’s important to the brand and the employees of the brand,” Gordon said. “With the fact that they don’t have a CEO right now, some need of safety and continuity is vitally important to the people.”

Thai Union also said last year it was providing “financial assistance” by guaranteeing part of Red Lobster’s credit, no more than $65 million, or about 25% of the outstanding balance.

Red Lobster in Leesburg is pictured on Monday, May 15, 2023. (Stephen M. Dowell/Orlando Sentinel)User Upload Caption:
Red Lobster shareholder Thai Union says the Orlando-based seafood chain is turning a profit again but challenges remain. Red Lobster in Leesburg is pictured on Monday, May 15, 2023. (Stephen M. Dowell/Orlando Sentinel)

Thai Union’s share of profit in the first quarter of this year from Red Lobster converts from Thai currency to about $3.5 million. Their loss in the first quarter of 2022 converts to about $7.2 million today.

“There’s no question that this is a pretty dramatic turnaround in quarter one,” Gordon said. “Tactical marketing promotions and store-level operational excellence will be highly important for Red Lobster’s stability going forward.”

Garnier attributed the first quarter profitability to Valentine’s Day as well as the “Lobsterfest” limited-time event that started in January with menu items such as lobster and shrimp tacos and lobster and shrimp topped sirloin. Prices at the restaurant chain have also gone up, Garnier said.

He said Red Lobster needs to make sure it has good value between big promotions like its Lobsterfest and Ultimate Endless Shrimp as consumers in the United States are sensitive to price.

“We need to reinvent. We need to be a bit more creative,” Garnier said. “… The team right now is working on how to propose [a] new menu, new meal, very attractive from a value proposition.”

Eating out cost 8.6% more in April than it did a year earlier, with full-service meals up 7.2%, according to the federal Consumer Price Index.

Red Lobster spokeswoman Lori Cherry did not immediately answer questions from the Orlando Sentinel about profitability or any turnaround plan, but she said there are no updates on the search for a new CEO.

With Valade’s departure last April, Red Lobster revealed that Paul Kenny, former CEO of Asia’s Minor Food, would be a “liaison” between Red Lobster’s leadership and the board. Kenny is a key shareholder in the investor group called Seafood Alliance, which acquired the chain with Thai Union.

A vacancy in this kind of position for more than a year is rare, said Kevin Stockslager, executive vice president and partner at St. Petersburg-based Wray Executive Search. His firm specializes in restaurant leadership searches but is not involved in Red Lobster’s hunt.

“It certainly could be an indication that they did not find the right candidate for the CEO position, but I also think it could be an indication that they’re happy with some of the other current C-level leaders on their team and the leadership they’ve been provided by their board,” Stockslager said.

Gordon stressed the importance of finding a new leader.

“For Red Lobster to execute a true revolutionary plan, they need a world-class CEO,” he said.