Darden to focus on menu revamp, pricing as major brands see sales softness
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Darden reported fourth-quarter profit of $151.2 million, or $1.15 per share, compared with earnings of $137.4 million, or 99 cents per share, a year ago. Revenue rose to $2.07 billion from $1.99 billion a year ago.
More information on Darden’s major divisions and corporate strategies covered in Friday’s analyst call:
Olive Garden: Fourth-quarter sales totaled $904 million, a 2.7-percent increase from the same prior-year period. The results were driven by revenue from 38 net new restaurants. Olive Garden has 786 restaurants in the United States and six in Canada. Annual unit volumes for Olive Garden total $4.7 million, said Brad Richmond, Darden’s chief financial officer.
Red Lobster: Fourth-quarter sales of $681 million were 2.8 percent less than in the same prior-year period. Red Lobster has 677 restaurants in the United States and 27 in Canada. Average annual unit volumes total $3.8 million.
Longhorn Steakhouse: Fourth-quarter sales rose 11.7 percent to $297 million, reflecting a net 32 new restaurants. LongHorn has 386 units. Madsen said LongHorn plans to accelerate new-unit growth in 2013, opening between 44 and 48 net new restaurants with about half of those in new markets. Average annual unit volumes total $3 million.
Specialty Restaurant Group: Darden’s specialty restaurant group has brands that “are better insulated from the economic sluggishness that we’ve seen,” Otis said. “We do expect macro-economic sluggishness to continue in our 2013.”
Fourth-quarter sales of $179 million were 26.9 percent higher than in the same prior-year period. Same-stores sales increased 2.8 percent at The Capital Grille, 2.8 percent at Bahama Breeze and 1.9 percent at Seasons 52. Sales growth reflected revenue from two net new restaurants at The Capital Grille for a total of 46, four new restaurants at Bahama Breeze for a total of 30, six new restaurants at Seasons 52 for a total of 23. The 11 Eddie V's were purchased in November.
Eugene Lee Jr., president of Darden’s Specialty Restaurant Group, said that the upper-end division had 4.6 percent blended same-store sales growth. Average annual unit volumes for restaurants in the group are $6.4 million, with average annual unit sales by concept of: The Capital Grille, $6.8 million; Bahama Breeze, $5.6 million; and Seasons 52, $6.4 million.
The specialty group this fiscal year plans to open seven to eight new Seasons 52 restaurants, three to four Bahama Breeze units, three Capital Grilles and one Eddie V’s.
“We’re continuing to build the real estate pipeline for each of our brands,” Lee said, including expansion sites for Eddie V’s.
“With new restaurant growth, we expect meaningfully stronger earnings growth in fiscal 2013 than we had in fiscal 2012,” Otis said. “And that’s because we were burdened in 2012 with food-cost inflation headwinds that we don’t anticipate in 2013.”