Darden Restaurants' (DRI -0.76%) fiscal third-quarter results were as ugly as you might expect for a restaurant operator still reeling from the COVID-19 pandemic, but the Olive Garden owner was able to beat expectations and offer up a hopeful note that business will get better.
It said it was giving its hourly workers a one-time bonus, raising their starting pay, and launching a new stock buyback program.
Image source: Getty Images.
Darden said total sales tumbled 26% in the quarter to $1.7 billion, a much steeper decline than it experienced in the second quarter, but it was not unexpected.
With the industry operating under severe seating capacity constraints of between 25% to 50% of full capacity, and outdoor dining during winter months not much of a viable option, the Olive Garden and LongHorn Steakhouse operator had warned last time out its performance would be harsh this quarter. But it also indicated business was markedly improving as the current quarter progresses.
Comparable sales were down almost 26% at Olive Garden and 17% at LongHorn, worse at both chains than in the second quarter, but each week during the fourth quarter so far they have improved.
| Restaurant |
Comps for Week Ending 2/28 |
Comps for Week Ending 3/7 |
Comps for Week Ending 3/14 |
Comps for Week Ending 3/21 |
|---|---|---|---|---|
|
Olive Garden |
(17.4%) |
(15.3%) |
(11.6%) |
5.7% |
|
LongHorn Steakhouse |
(3.4%) |
0.3% |
3.8% |
23.2% |
Data source: Darden Restaurants.
With conditions improving, Darden said it was giving hourly workers a one-time bonus totaling $17 million, and raising the minimum starting wage to $10 per hour this year, $11 per hour in January 2022, and $12 per hour in January 2023.
The board also authorized a new $500 million stock buyback program and declared a quarterly dividend of $0.88 per share.
