Olive Garden And Red Lobster Owner Darden Continues To Underperform
Revamped menus and marketing didn't help Florida-based Darden Restaurants boost their sales in the most-recent quarter. The parent company of Red Lobster, Olive Garden, and Longhorn Steakhouse posted numbers that were even lower than analysts had forecasted.
Earnings excluding items fell to $33.6 million, or 26 cents a share, from $53.7 million, or 40 cents a share, in the year-earlier period.
Wall Street had expected Darden to report earnings excluding items of 26 cents a share on $1.95 billion in revenue, according to Thomson Reuters consensus estimates.
At the same time, revenue rose 7-percent over the same time period.
Offiicials at Darden had hoped that their recent changes would have seen greater results.
The decline in traffic comes despite the company's efforts to revamp the menus and marketing for its flagship chains. At Olive Garden, the company rolled out an updated advertising campaign and introduced more light and affordable dishes. At Red Lobster, it added options for people who don't like seafood.
One looming issue for Darden - as well as other restaurant owners all across the country is the affect that Obamacare will have on their bottom line.
Starting in 2014, big employers such as Darden will be required to provide health insurance to full-time workers. The company had tested hiring more part-time workers and replacing full-time workers who left with part-time workers at some restaurants.
Officials with the restaurant chains are hoping for a better 2013.