Darden Restaurants said it would sell or spin off its Red Lobster business, buckling under pressure from activist investor Barington Capital Group.
Also Thursday, Darden reported 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.
Barington wants Darden to split into two companies—one that operates its mature Olive Garden and Red Lobster chains and another that includes its higher-growth LongHorn Steakhouse, Seasons 52, Capital Grille, Yard House, Eddie V's and Bahama Breeze restaurants.
Restaurant chains such as Olive Garden and Red Lobster have suffered since the downturn, with people being more careful about their spending. People are also increasingly heading to chains such as Chipotle, where it tends to cost less and take less time than a sit-down meal at a restaurant.
Darden said it has decided it won't make any acquisitions of additional brands "for the foreseeable future."
A source familiar with the situation said Darden subsequently hired Goldman Sachs as financial adviser.
New York-based Barington, which represents shareholders that own more than 2 percent of Darden, said in October that the company had become too large and complex to compete with rivals such as Cheesecake Factory and Brinker International's 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 of 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.
Reuters and The Associated Press contributed to this report.