"When you're here, you're family" is the marketing slogan at Olive Garden. It's a pity that parent company Darden Restaurants
Shares of Darden fell by as much as 15% this morning, after the world's largest casual dining restaurant operator talked down its latest quarter and reduced its fiscal 2009 guidance.
Darden isn't messing around. Its first quarter ended on Sunday, and it's already on the horn with bad news.
Darden sees continuing earnings for the quarter, before small accounting dings related to its integration of RARE Hospitality, at $0.60 to $0.62 a share when it officially reports next month. Hungrier analysts were set on $0.75 a share.
It stays ugly through the rest of the year. After posting an adjusted profit of $2.74 a share for fiscal 2008, Darden is looking for earnings to be flat to 5% higher in this fiscal year. That is problematic, especially because Darden's new fiscal year has an extra week in it.
Same-store sales fell by 1.1% throughout its eateries during the quarter. A 2.4% gain at Olive Garden was weighed down by sharp weakness at Red Lobster and the recently acquired LongHorn Steakhouse. The company's portfolio of more than 1,700 units includes concepts like the tropical Bahama Breeze, the swanky Capital Grille, and the health-conscious Seasons 52, but those chains are too small to move the needle here.
With Darden being a bellwether for casual dining, the market isn't just killing the messenger. Shares of Brinker International
There will come a time when the shakeout is complete -- and consumer spending bounces back -- but it apparently isn't right now.
With LongHorn Steakhouse taking the biggest hit in same-store sales -- off by nearly 5% during the quarter -- rival Texas Roadhouse
It's undeniable that when Darden hurts, the rest of the industry stings. I guess Olive Garden is right. When you're here, you really are family -- a family in mourning.
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