On Thursday, Darden Restaurants (DRI +1.25%) reported financial results for its fiscal fourth quarter, which includes the challenging sales months of March, April, and May. The period was heavily impacted by COVID-19 store closures that sent sales down by nearly 50%. But the owner of the Olive Garden and LongHorn Steakhouse franchises has only seen a modest recovery in the first three weeks of June.
Comparable-store sales fell 39% at Olive Garden and dove 45% at LongHorn Steakhouse in Q4, as nearly all its dining rooms were closed. The company reported a net loss of $3.85 per share compared to earnings per share of $1.67 a year ago.
Operating profits fell at a faster rate than sales, reflecting the high fixed costs built into the full-service dining niche. Olive Garden posted a 71% drop in operating earnings, and LongHorn's comparable figure plunged 88%.
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CEO Gene Lee said that the disruption in the industry may create space for high-performing brands to win market share as restaurants open back up for business. Darden is also predicting a return to positive earnings and cash flow in the current quarter.
However, its latest weekly demand trends suggest that the recovery could be slow. Companywide, comps were down 39% in the first week of June and fell about 30% in each of the following two weeks. Darden said over 90% of its restaurant dining rooms are now open with at least limited capacity.
