Dar­den stock slips af­ter Olive Gar­den re­ports low growth

Orlando Sentinel - - BUSINESS - By Austin Fuller

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.

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