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At Olive Garden, Things Have Gone From Bad to Worse

By John Maxfield – Mar 9, 2014 at 3:11AM

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Things have gone from bad to worse at Olive Garden. On Monday, the chain announced its worst quarterly performance in over two decades.

Customers are abandoning Olive Garden in droves. On Monday, the company admitted that same-store sales fell by 5.4% in the three months ended Feb. 23. It was the restaurant's worst quarterly performance in over two decades.

Olive Garden's parent company, Darden Restaurants (DRI 1.37%), is blaming the weather. "During our fiscal third quarter, underlying conditions in our industry continue to be challenging," said Darden CEO Clarence Otis. "And on top of that, both the industry and our brands were hit with unusually severe winter weather in much of the country."

But is this the real reason for Olive Garden's deterioration? In the following video, Motley Fool contributor John Maxfield explains that there's more to the story than severe winter storms. According to his analysis, the Italian-themed chain's problems started three years ago, when diners began favoring fast casual chains such as Chipotle over casual dining concepts such as Olive Garden.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Chipotle Mexican Grill. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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