With summer in full swing, the casual dining sector has begun to heat up every bit as fast as the temperatures. This morning, industry leader Darden
As usual, the wine was flowing at Olive Garden, which reported a 9.9% improvement in same-store sales for the quarter. Remarkably, the Italian chain has delivered nothing but positive comps for more than a decade, or an astounding 43 consecutive quarters. The achievement puts it on the same level as Cheesecake Factory
Meanwhile, Red Lobster is far from catching up with its younger sibling, but has finally put together a winning streak of its own. Beginning late last year, the seafood specialist managed to reverse a severe slump, reporting stronger restaurant traffic for the first time in more than 14 months. That momentum was sustained in the third quarter, and counting today's 3.4% increase, same-store sales have now risen for three straight quarters. While the turnaround may seem modest, it's nice to see that the chain's fishing tackle can still attract schools of hungry customers -- particularly when rival Landry's
As for the company's other two concepts, Bahama Breeze reported a slight 1.6% drop in same-store sales for the year, but the Caribbean-inspired restaurants did finally manage to turn an operating profit. At Smokey Bones, average unit volumes slipped to $3.1 million from $3.2 million a year ago, but Darden has a few menu changes in store for the barbecue/sports bars and continues to expand the chain's presence -- with another 30 openings on tap for fiscal 2006.
Darden has already started the new year off on the right foot, with Red Lobster reporting a solid 5% to 6% increase in comps during May and Olive Garden posting a double-digit increase. Those gains, healthy in absolute terms, also stack up well relative to the firm's rivals. Applebee's
With two proven brands to anchor results, and two promising newer ones that are poised to drive growth, Darden may offer investors a well-balanced investing meal.
Sink your teeth into these other restaurant Takes:
Fool contributor Nathan Slaughter has to give Red Lobster's biscuits a slight edge over Olive Garden's breadsticks. He owns none of the companies mentioned.