Please ensure Javascript is enabled for purposes of website accessibility

Why Darden Restaurants Stock Gained Today

By Evan Niu, CFA - Apr 28, 2020 at 5:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company has reopened roughly 100 Olive Garden locations as Georgia eases lockdown restrictions.

What happened

Shares of Darden Restaurants (DRI 1.62%) gained today, closing up 3% after the company said it had reopened most of its Olive Garden locations in Georgia. Some Olive Garden restaurants in Tennessee have also started to resume dine-in operations.

So what

Darden will reopen approximately 100 Olive Garden locations in Georgia, a meaningful chunk of the 870 company-owned Olive Garden restaurants it had at the end of last quarter. Olive Garden is Darden's biggest chain, followed by LongHorn Steakhouse with 522 locations.

Olive Garden exterior

Image source: Darden Restaurants.

States around the country are taking steps toward reopening following broad lockdowns in recent weeks related to the COVID-19 pandemic. Georgia has been criticized for potentially easing restrictions too quickly, which some health experts have warned could result in a resurgence in coronavirus cases.

Olive Garden will implement safety precautions and follow social distancing guidelines imposed by the state, such as limiting the number of guests to 10 people per 500 square feet, only serving smaller parties of six or less, requiring all employees to wear masks, and encouraging contactless payment options and takeout orders, among others.

Now what

The novel coronavirus outbreak has wrecked the restaurant industry, and Darden said last week that same-restaurant sales had plunged by 45% quarter to date through April 19. The company's ongoing weekly cash burn rate has improved to $20 million per week. Looking at the prior two weeks of sales, same-restaurant sales improved modestly for the week ending April 19.

More recently, Darden conducted a secondary offering to raise capital in order to manage liquidity during the crisis, selling 9 million shares at $58.50 per share. The company confirmed that the underwriters exercised their options and Darden raised over $505.4 million in net proceeds.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Darden Restaurants, Inc. Stock Quote
Darden Restaurants, Inc.
DRI
$134.35 (1.62%) $2.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
403%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.