Olive Garden, Red Lobster sales continue to slide

NEW YORK — Darden said Friday that sales continued to slide at Olive Garden and Red Lobster, with other costs dragging down its profit by 35 percent in the latest quarter.

The results fell short of Wall Street expectations, and shares were down 2.5 percent in midday trading.

Darden Restaurants Inc. has been fighting to stop declining sales at Olive Garden and Red Lobster. Such sit-down chains were hit hard by the downturn, which prompted many customers to trade down to cheaper options. The menus at Olive Garden and Red Lobster also failed to keep pace with changing tastes.

Despite ongoing efforts to fix the marketing for the chains, sales at Olive Garden fell 3.5 percent at established locations during the quarter. At Red Lobster, the figure dropped 5.6 percent.

Under pressure to deliver better results, Darden announced late last year that it planned to get rid of Red Lobster and focus on fixing Olive Garden. The company says that Olive Garden customers are more in line with those at its smaller, more successful chains, such as The Capital Grille and Yard House.

Darden says Red Lobster chains tend to be in lower income brackets.

To revitalize Olive Garden, executives say they plan to underscore the quality and freshness of the food, which they say are increasingly important traits for customers. They’re also rolling out lighter dishes, and trying to boost the chain’s lunchtime business.

So far in June, the company said Olive Garden’s sales at established locations are flat, an improvement from the negative results over the past fiscal year.

“We’re in the early stage of exposing guests to what we call a brand renaissance plan,” said Eugene Lee, president of Darden.

For its fiscal fourth-quarter ended May 25, Darden earned $86.5 million, or 65 cents per share. A year earlier it earned $133.2 million, or $1.01 per share.

Stripping out one-time charges, such as those associated with the sale of Red Lobster, earnings were 84 cents per share. That was still short of the 94 cents per share Wall Street expected.

Total revenue rose slightly to $2.32 billion, boosted by new locations. That was also short of the $2.33 billion Wall Street predicted, according to FactSet.

Darden’s smaller chains fared better. Sales at LongHorn Steakhouse restaurants in the U.S. open at least a year increased 2.4 percent. The figure climbed 2 percent at the specialty restaurant group, which includes Bahama Breeze, The Capital Grille, Yard House, Eddie Vs and Seasons 52.

For the full year, Darden posted an adjusted profit of $2.47 per share. Annual revenue totaled $8.76 billion.

The company’s board also declared a quarterly dividend of 55 cents per share.

Shares of Darden dropped $1.24, or 2.5 percent, to $48.28 in midday trading. They had been down 9 percent so far this year through Thursday’s close.

More in Herald Business Journal

Teddy, an English bulldog, models Zentek Clothing’s heat regulating dog jacket. (Ian Terry / The Herald)
Everett clothing company keeps your dog cool and stylish

Zentek uses space-age fabrics to moderate the temperature of pets and now humans.

Everett engineers learn lessons from Mexico City catastrophe

Structural scientists went to help after the September earthquake there and studied the damage.

Providence said to be in talks for merger with Ascension

The two Catholic health organizations have been exploring joining forces, sources say.

DaVita to sell off medical groups including The Everett Clinic

Another round of health care consolidation means The Everett Clinic could soon get new ownership.

Engine trouble hits Air New Zealand’s 787 Dreamliners

A Rolls-Royce engine was shut down and was afterward found to be seriously damaged.

Washington, Amazon sue company over seller training programs

Braintree is accused of using deceptive ads promising information on how to make money on Amazon.

Bitcoin futures soar amid frenzy over virtual currency

Trading began Sunday, and theprice rose as high as $18,850.

Lockheed-Martin dominates global arms sales, Boeing is 2nd

The combined sales of U.S.-based companies totaled $217 billion.

The Marine Corps’ version of the F-35 Joint Strike Fighter is designed to land vertically like a helicopter. (Lockheed Martin)
F-35 fighter costs, $1 trillion over 60 years, draw scrutiny

Pentagon’s ability to repair F-35 parts at military depots is six years behind schedule.

Most Read