What’s on today’s menu
at Darden Restaurants? Try boosted profits from 11 straight quarters of Olive Garden sales growth.
An 11th straight quarter of samerestaurant sales growth at Olive Garden boosted profits at Orlandobased Darden Restaurants.
Olive Garden increased samerestaurant sales by 4.4 percent in its fiscal fourth quarter compared to a year ago, bolstering its parent company’s consolidated net earnings by 5.8 percent to $148.8 million.
To-go orders, new menu items such as stuffed pasta and a yearslong “back to basics” efforts have helped Olive Garden grow while other national restaurants chains have suffered, said Darden CEO Gene Lee.
“I know it’s not fancy or sexy, but it just comes down to pure execution,” Lee said in a call with investors Tuesday. “Simplification is the key and I’ve been saying it for three years, we’re not done yet. We think we can make these operations simpler.”
Traffic at Olive Garden was up 2 percent, as well.
The positive earnings and news about Olive Garden sales pleased investors, who sent Darden stock (NYSE: DRI) to an all-time high of $92.69 in trading Tuesday, up 3 percent. Darden’s share price is up about 50 percent in the last year, and 6.4 percent in the last month.
That report doesn’t include numbers from the newly acquired Cheddar’s Scratch Kitchen, the 165-restaurant chain Darden bought for $780 million in May. With the Cheddar’s deal included, profits dropped to $123.8 million, down from last year by about $16 million.
Total sales at Darden’s portfolio of restaurants were up 8.1 percent to $1.93 billion.
To-go orders have been one of the biggest drivers for Olive Garden’s sales growth. Take-out orders accounted for 12.9 percent of total sales for the chain in the fourth quarter, and have grown 58 percent in the last three years, Lee said.
Big dishes of pasta, salad and breadsticks have been a hit for catering and large take out orders.
“We can do a large party with an average check of approximately $300. That's where we need to focus, and that's what we decided the opportunity is,” said Darden CFO Rick Cardenas during the call.
Olive Garden may redesign restaurants to dedicate more space to its take-out business, he said. The company is still experimenting with third-party delivery services, such as Amazon Restaurants, but hasn’t committed to one group.
That increase in take-out helped the company while it depended less on promotions to drive traffic, Lee said.
Darden is the only Fortune 500 company based in Orlando and has more than 175,000 employees across its seven restaurant brands.
Same-restaurant sales at LongHorn Steakhouse, Darden’s second-largest brand, were up 3.5 percent and traffic increased 2.1 percent. Same-restaurant sales were also up 3.3 percent at Eddie V’s, 0.5 percent at Capital Grille, 0.1 percent at Yard House and 1.4 percent at Bahama Breeze. Sales were down 1.3 percent at existing Seasons 52 restaurants.
For the full fiscal year that ended May 28, Darden’s total sales from continuing operations increased 3.4 percent to $7.17 billion and net earnings were up 11.1 percent to $506.3 million.