Seafood giant Thai Union Group maintains its investment in US foodservice operator Red Lobster.
The Thailand-based group issued a statement insisting it is “committed” to “change” in the Florida-based business.
Thai Union first invested in the restaurant chain in 2016, paying $575 million for a minority stake.
Its current shareholding in Red Lobster amounts to 25% of the group’s ordinary units and 24% of its preferred units.
Last week, bangkok post reported that Thai Union was considering the future of its investment, quoting CEO Thiraphong Chansiri as saying that the company has “never prolonged any bad business.”
In Thai Union’s 2022 annual accounts, canned seafood brand owner John West booked a “share of losses” from Red Lobster “equivalent to THB 1.63 billion (US$47.1 million)”. Thai Union said the loss was the result of the chain’s “loss of operating performance” of THB 1.21 billion and a “lease adjustment for differences in accounting standards” of THB 421.9 million.
A Thai Union statement provided to just food read: “Thai Union would like to reconfirm that Red Lobster is still seen as a valuable opportunity for Thai Union.”
Thai Union’s annual report said the casual dining chain suffered the impact of the Omicron variant of Covid-19, along with “high inflation, slowing consumer spending and threatened supply chains.”
Red Lobster operates more than 700 restaurants in the US, Canada, and many other markets. It opened its first store in Thailand last year.
Its higher losses were a factor in the nearly 11% drop in Thai Union’s group net profit in 2022.
In a presentation detailing Thai Union’s financial results for 2022, the company stated that Red Lobster’s “financial compact is under pressure due to ongoing operational challenges. Thai Union demonstrated continued support for Red Lobster by providing a $65 million guarantee of a portion of Red Lobster’s credit facility in August 2022 to strengthen Red Lobster’s financial position and ability to recover business.”
In its statement today, Thai Union added: “In recent months, Red Lobster’s business performance has been improving and in line with expectations in terms of sales growth, cost of goods sold and labor costs. This is the result of his continued focus on business change with initiatives including new menu offerings, ensuring value is delivered to customers, cost controls and targeted marketing campaigns.
“Therefore, Thai Union is fully committed to and supports Red Lobster in its business recovery plan. The company looks forward to seeing the positive outcome of Red Lobster’s focus on marketing strategies, human resource development, product and service enhancement.”
The chain is looking to raise prices to combat cost inflation, cut expenses and introduce new menu items “to reduce COGS but remain competitive (recipes and prices),” Thai Union’s earnings release said.
