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Why Darden Restaurants Stock Is Falling Today

By Rich Duprey - May 12, 2020 at 3:29PM

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The industry has been on the rise as states begin opening for business once again.

What happened

Shares of Darden Restaurants (DRI 1.11%) were down 5% on Tuesday after a three-day run that saw its stock rise over 8%.

So what

Restaurants in general rose in tandem last week in the hope the economy would soon open again to allow restaurants to serve diners in their dining rooms. While that's happening in a number of states, most casual dining chains were trading lower today.

Friends eating out

Image source: Getty Images.

Now what

There is still pent up demand among consumers to go out for dinner after having spent two months dining in, whether they were making their own meals or ordering takeout.

Off-premise service has been a life raft for restaurants, particularly Darden, which saw its takeout business triple or more at Olive Garden and LongHorn Steakhouse, but they'll be opening their restaurants to guests as soon as they're able.

Darden has the financial wherewithal to ride out the storm, having raised cash and suspended its dividend, but there will remain uncertainty around its shares and those of other restaurant names as social distancing guidelines will force businesses to operate at less than capacity.

Rich Duprey 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.

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Stocks Mentioned

Darden Restaurants, Inc. Stock Quote
Darden Restaurants, Inc.
DRI
$131.68 (1.11%) $1.45

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