Olive Garden parent Darden's earnings slip 28%
Earnings slipped to 53.7 million, or 40 cents a share, from $74.5 million, or 53 cents a share the same quarter in 2010. Revenue for the quarter, which ended Nov. 27, was up 6.1% to $1.83 billion.
Orlando, Fla.-based Darden said its other brands had “strong momentum.” Red Lobster’s same-store sales were up 6.8% and LongHorn Steakhouse saw a 6% sales increase. Seasons 52 locations open more than a year pulled in 2.9% more revenue this quarter, while Bahama Breeze enjoyed a 0.5% uptick and the Capital Grille attracted 5.7% more sales.
But Darden Chief Executive Clarence Otis said in a statement that the strong sales were “offset by below expectation sales results at Olive Garden, pressure on check averages as guests continue to be cautious about spending and unfavorable year-over-year food costs.”
Olive Garden, which serves Italian fare and has dozens of branches in California, needs to get “back on track,” Darden executives said. Same-store sales were down 2.5% over the quarter, with a 5.7% plunge in November alone.
The chain will attempt new promotions and advertising efforts while changing up its core menu and remodeling dowdy old restaurants, executives said.
Earlier this month, the company anticipated Olive Garden’s weakness by cutting Darden’s earnings forecast, saying that it expects earnings per share to increase 4% to 7% instead of the 12% to 15% bump it predicted earlier in the fall. Revenue in 2012 is expected to be slightly less than Darden had previously anticipated.
The earnings report, which was announced before the market opened, sent Darden shares down nearly 2% to $42.91 in midday trading in New York.
-- Tiffany Hsu
Photo: Olive Garden. Credit: Darden Restaurants