Rising numbers of coronavirus cases caused sales at Darden Restaurants' ( DRI -2.68% ) string of restaurant chains to plunge worse than expected in its fiscal second quarter.
While its LongHorn Steakhouse chain did comparatively better, Olive Garden and Darden's portfolio of high-end dining restaurants bore the brunt of the COVID-19 pandemic, and it's not getting any better. Darden said sales will fall even further in the third quarter than Wall Street was expecting.
Lower sales, higher profits
Total revenue was down 19.4% to $1.66 billion at Darden, as blended comparable sales fell more than 20% from last year. Comps at Longhorn were down 11% for the quarter, but were down 20% at Olive Garden and off 31% at Yard House, Capital Grille, Seasons 52, and other fine dining establishments.
The saving grace for the quarter was restaurant profits did better than expected. Net income was $96 million, or $0.73 per share, compared to $24.7 million, or $0.20 per share last year. It was also better than analyst forecasts of $0.71 per share in earnings.
But the situation is deteriorating at the restaurant operator. Where it had 92% of its restaurants open at the start of the third quarter, it's now down to 75% and comps are hemorrhaging rapidly.
Overall, same-restaurant sales have gone from being down 23.4% for the week ending Nov. 8 to down almost 37% for the week ending Dec. 13.
It was the same situation at both Olive Garden, its largest chain, and even at LongHorn Steakhouse. The Italian themed restaurant saw comps decline from negative 22% to negative 33% while the steakhouse went from down 12% to down 23%.
Both chains, though, have been able to offset the drop by having customers place to-go orders, letting them assume a larger percentage of sales.