Darden stock slips after Olive Garden reports low growth
Darden Restaurants’ sales increased 4.2% in the second quarter over last year, but the Orlando-based company’s stock fell Thursday after sluggish sales growth at its flagship Olive Garden.
At the market’s closing, Darden’s stock price was down more than 6%.
The company reported $2.06 billion in total sales with the addition of 37 restaurants and a same-restaurant sales increase of 2%. Olive Garden saw a same-restaurant sales increase of 1.5% while LongHorn Steakhouse saw same-restaurant sales jump 6.7%.
Darden CEO Gene Lee said Olive Garden started the quarter with difficulty in its Lasagna Mia promotion.
“Additionally, we made some changes to our promotional messaging and we reduced marketing spending,” he said. “As a result, we had to make up some ground from negative same-restaurant sales at the beginning of the quarter.”
Things improved as the company moved into its Never Ending Pasta Bowl promotion, Lee said.
Darden did meet the average revenue estimate from analysts, according to Yahoo! Finance.
Cheddar’s Scratch Kitchen same-restaurant sales fell 1.2%. While Darden’s Olive Garden brand is known for its breadsticks, Cheddar’s rolled out a different carbohydrate.
“In October, they began providing every guest with their most craveable and highestrated menu item: their honey butter croissants,” Lee said. “This is an element of guest service that we identified as an opportunity when we acquired the brand.”
Cheddar’s continued to see improvements in human resources and operations metrics, Lee said.
“Overall staffing levels for manager and team members remain strong during the quarter and retention levels continue to move in the right direction,” he said.
The Capital Grille’s same-restaurant sales grew by 1.8%, Yard House reported a 0.7% increase and Eddie V’s a 0.5% increase. Those numbers fell at Seasons 52 by 3.5% and at Bahama Breeze by 3.4%.
Darden owns 1,799 total restaurants, with 867 Olive Garden stores, 518 LongHorn Steakhouses and 166 Cheddar’s Scratch Kitchens.