Darden Restaurants Reports Q1 Results (DRI)
Darden Restaurants Inc (NYSE: DRI) jumped 4.55% on Friday after the company reported better-than-expected fiscal first quarter results even as it focuses more on modernizing Olive Garden and Red Lobster Chains in an effort to make them trendier and affordable in the wake of economic slowdown.
Darden also known for its LongHorn Steakhouse and some other smaller chains saw its business wobble as consumer continued to spend thrifty amid high level of unemployment and uncertainty surrounding the macroeconomic environment. in order to attract higher guest—just like any other food chain in the industry-was compelled to offer attractive deals while rising both input costs and competition also weighed on company’s financials.
Besides promoting its “value deals”, the company is also revamping its restaurants’ interior designs, menu, marketing campaigns and cutting costs.
For the quarter which ended on Aug. 26, the specialty group’s sales at restaurants open at least 16 months climbed 2.2%. Same-restaurant-sales in Olive Garden rose 0.3% but it fell 2.6% at Red Lobster For LingHorn, same-restaurant-sales jumped by 3.6%.
Darden posted an overall profit of $110.8 million, or 85 cents a share, compared to $106.6 million, or 78 cents a share, in the year earlier quarter. Sales climbed 4.8% to $2.03 billion. Analysts polled by Thomson Reuters had forecasted earnings of 84 cents on revenue of $2.03 billion.
Looking ahead, the company said that it will continue offering lowly priced appetizers. For instance, its Red Lobster chain’s current menu only offers 40% of items for less than $15 but soon 60% of the entrees will be priced under $15. Darden’s , Chief operating officer Drew Madsen also said that company’s Olive Garden Chain will also see a change as the company tries to “further strengthen affordability”. Even though check amounts might go down due to prices custs, more traffic and labor costs will offset losses, said Madsen.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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