Darden Restaurants Reports 1Q Sales

Lower food and energy costs helped offset declining sales
Posted September 30, 2009

Darden Restaurants Inc. (Orlando, Fla.) reported first quarter sales from continuing operations dropped 2.3 percent, from $1.77 billion last year to $1.73 billion. Blended same-restaurant sales for Olive Garden, Red Lobster and LongHorn Steakhouse were down 5.3 percent for the quarter ended August 20, 2009.

Among the Darden brands, U.S. same-restaurant sales decreased 2.9 percent at Olive Garden; 7.9 percent at Red Lobster and 6.2 percent LongHorn Steakhouse. These results compare to an estimated decrease of 7.8 percent in the Knapp-Track benchmark of U.S. same-restaurant sales, excluding Darden.

First quarter sales at Olive Garden were $821 million, or a 1.2 percent increase above last year, driven by revenue from 33 net new restaurants. Seafood chain Red Lobster saw its first quarter sales drop 6.3 percent, while Longhorn Steakhouse reported a 2 percent sales decline. The Capital Grille’s first quarter sales were 8.4 percent below last year, driven by a same-restaurant sales decrease of 18 percent and partially offset by the addition of five net new restaurants. Bahama Breeze’s first quarter sales of $35 million were 1.5 percent below the prior year.

"Macro-economic conditions and full-service restaurant industry sales levels in our fiscal first quarter were softer than we anticipated," says Brad Richmond, the company's chief financial officer. "As a result, we are reducing the lower end of the range of our blended same-restaurant sales we expect this fiscal year. At the same time, food costs were also lower in the first quarter than initially expected, and are likely to remain more muted for the balance of the year than we previously anticipated."

Darden Restaurants is one of the largest company-owned and operated full-service restaurant companies with more than $7.2 billion in annual sales. The company’s brands include: Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze and Seasons 52.