Shares of Darden Restaurants
Darden said yesterday that comp sales at Olive Garden were up 7% to 8% for the month, as guest count and average check amount both increased year over year. Last year, the chain managed a same-restaurant sales increase in the 1%-to-2% range.
At Red Lobster, meanwhile, comps fell 6% during the month. Guest count fell 6%, while the average check stayed flat as a slim pricing increase was offset by a decrease caused by changes to the menu mix. The same-restaurant sales figure was a big disappointment, as it improved some 4% to 5% in the year-ago month.
Things look very much like they did in mid-March, when Alyce Lomax took a look at the company and its two flagship chains -- as well as a peek at its up-and-coming Smokey Bones barbecue chain, which has a simple, appealing, protein-heavy menu. In a presentation the company gave at an investor conference earlier this week, Darden reiterated a sensible growth strategy that includes continued growth at Olive Garden; a "sharpening" of Red Lobster's value proposition, brand, and menu; and continued expansion of Smokey Bones and Bahama Breeze.
Darden, which competes for the dining dollar in a sprawling market that includes Applebee's
Should this all come together, there are plenty of reasons to be optimistic about Darden in both the short and the long term. Darden brought in a new advertising agency for Red Lobster last month; it is also expected to bring in a new operational chief for the chain by next month, following Dick Rivera's defection in January. Surely, Darden has the resources to bring in an experienced hand and, perhaps, help re-energize the brand.
All in all, investors seem largely positive given the challenges at Red Lobster, which accounted for a majority of Darden's fiscal third-quarter sales: The company's shares have just outperformed the S&P 500 over the last 12 months.
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Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.
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