Darden Restaurants (NYSE:DRI) served up a little bit of good news and a little bit of bad when it released October same-store sales after market close on Monday. While its Olive Garden chain eked out an uptick in sales, Red Lobster doesn't seem to have its claws in customers.
Olive Garden, a chain of Italian restaurants ubiquitous in many corners of "Generica," raked in 2% to 3% more in sales, with 1% fewer guests. Red Lobster's sales, however, fell 4% to 5%, due to a decline of about 10% to 11% in guest traffic.
The Red Lobster chain has had its share of struggle recently. In late September, Fool Rex Moore commented on the unusual all-you-can-eat crab debacle, when fewer-than-expected customers ate far, far more crab than anticipated, giving sales figures a little case of food coma by month's end.
Speaking of September, Darden reported a boost in same-store sales at both chains, but this was largely the result of price increases that made up for dwindling guests. While price hikes make sales look good, the risk is that customers may be put off by the extra digits in their checks. October wasn't much of a success for Red Lobster, either.
Darden, however, isn't the only restaurant operator struggling to lure guests. It seems that less patrons are queuing up for seats at many fave chains, as Reuters reported on a survey of industry wait times. The article said that average wait times in the casual-dining segment were down 27% compared to last year.
Other competitors cited for reduced wait times include P.F. Chang's (NASDAQ:PFCB) and Brinker International's (NYSE:EAT) Chili's. The bad news is, Darden's restaurants showed double-digit declines in wait times at its Olive Garden, Red Lobster, and Smokey Bones chains, with no wait at all at its Bahama Breeze units.
So where are the long lines, you ask? According to the article, guests are waiting longer to be seated at red-meat rivals Outback Steakhouse (NYSE:OSI) and Longhorn Steakhouse, owned by RARE Hospitality (NASDAQ:RARE).
Having boosted prices only to experience sluggishness in patronage, Darden is going to have to get some plans cooking to keep Olive Garden sales on the rise and revive Red Lobster.
Alyce Lomax welcomes your feedback at [email protected].
