(Reuters) - Darden Restaurants Inc. (NYSE:DRI), under pressure from activist investor Barington Capital Group because of sliding profits, said it would sell or spin off its struggling Red Lobster chain.
Barington was pushing Darden to split into two companies -- one that operates its mature Olive Garden and Red Lobster chains and another for its growing brands such as LongHorn Steakhouse and Seasons 52.
Olive Garden parent Darden's shares were down 4.6 percent at $51 in premarket trading.
Darden reported on Thursday a 41 percent fall in quarterly profit. Red Lobster reported a 4.5 percent fall in same-restaurant sales while sales at Olive Garden dipped 0.6 percent.
New York-based Barington, which represents shareholders owning more than 2 percent of Darden, said in October that the company had become too large and complex to compete with rivals like Cheesecake Factory (NYSE:CAKE) and Brinker International's (NYSE:EAT) Chili's Grill & Bar.
Darden also said that it would buy no more restaurant brands for the foreseeable future and lower capital spending by at least $100 million annually.
The company's net income fell to $19.8 million, or 15 cents per share, in the second quarter from $33.6 million, or 26 cents per share, a year earlier.
Revenue for the largest U.S. full-service restaurant operator rose 4.5 percent to $2.05 billion in the quarter ended Nov. 24, because of growth at restaurants other then Red Lobster and Olive Garden.
(Reporting by Aditi Shrivastava in Bangalore; Editing by Kirti Pandey)