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Red Lobster chain sold for $2.1 billion

– Darden is setting Red Lobster adrift but betting that it can still turn around Olive Garden’s fortunes.

The company, based in Orlando, Florida, said Friday it would sell its seafood chain and the accompanying real estate to investment firm Golden Gate Capital for $2.1 billion cash. The announcement came despite objections from some shareholders to the plan to separate Red Lobster, announced late last year.

Olive Garden and Red Lobster, both of which have Fort Wayne operations, have been losing customers in recent years, even as they changed their menus and marketing campaigns to win back business. Part of the problem is the growing popularity of places like Chipotle and Panera, where customers feel they can get the same quality of food without paying as much or waiting for table service.

But Darden CEO Clarence Otis has drawn a distinction between Red Lobster and Olive Garden.

Otis says Red Lobster in particular is increasingly unable to attract the higher-income customers Darden caters to with its more successful chains, which include Longhorn Steakhouse, The Capital Grille and Seasons 52.

Red Lobster, which opened in 1968, helped popularize seafood among Americans and today has about 700 locations in the U.S. and Canada. The first restaurant in Lakeland, Florida, boasted a menu including a half-dozen oysters for 65 cents and platters with frog legs and hush puppies for $2.50.

As it suffered sales declines more recently, executives blamed a variety of factors, including a refusal among customers to swallow price increases. In 2012, for instance, executives cited a $1 price hike for its “Festival of Shrimp” special in explaining a quarterly decline in sales.

More recently, the company tried to attract a wider array of customers by adding more non-seafood dishes to Red Lobster’s menu. The efforts didn’t take hold.

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