Back in July, Alyce Lomax gave us a glimpse of how Darden's
Earnings for the period jumped 20% to $85.5 million, or $0.53 per share, on revenues that climbed 10% to $1.41 billion. As usual, solid same-store sales gains at Olive Garden helped drive much of the top-line growth. Like its own neverending pasta bowl promotion, the chain continues to dish out pleasing results in that critical category, closing the quarter with a 7.4% increase -- its 44th consecutive quarterly improvement. Like owners of the Cheesecake Factory
The nation's largest seafood chain is no longer pulling in empty nets these days. Counting this last 5.7% comps improvement, Red Lobster has now booked four consecutive quarterly increases, reversing a string of decreases. Of course, last year's weakness has made for fairly easy year-over-year comparisons. Last month's 4% gain, for example, is stacked on a sharp 16% drop from August 2004. Nevertheless, a gain is a gain, and Darden finally appears to have the Red Lobster ship back on course.
While the company's two largest eateries capture most of the attention, its fastest-growing concept is often overlooked. Over the last 12 months, Darden has opened 34 new Smokey Bones barbecue/sports bars, which brings the total to 110. Together, they generated sales that soared 46% to $81.7 million. Better still, operating income was up 73%, driven by a pronounced drop in food and beverage costs. Companywide, food and beverage costs as a percentage of sales fell nearly 90 basis points to 29.74%. While Smokey Bones still accounts for little more than a few crumbs of Darden's overall business, it could be an important growth driver as the chain continues to expand.
It's a crowded world in the casual dining sector, with companies like Ruby Tuesday
Darden has satisfied investors of late, but it saved the sweetest news for last: Its semiannual dividend payment is being increased by 400% to $0.20 from $0.04. And with steadily improving cash flows and a modest payout ratio of just 4%, there's plenty more dessert where that came from.
Sample further restaurant-related Foolishness:
Fool contributor Nathan Slaughter has the Red Lobster menu memorized. He owns none of the companies mentioned.