Darden to cut costs, revamp Olive Garden marketing
Steve’s breakdown: Back in April we said there was a good chance this account would go into review and here’s another sign it most definitely will. Get in there now before they start making permanent changes.
ORLANDO, FL: Darden Restaurants Inc is starting a new round of cost cuts and revamping its marketing and promotions to boost results at the Olive Garden chain, which generates about half of its sales.
Shares of Darden, which also operates the Red Lobster and LongHorn Steakhouse chains, rose nearly 4 percent in morning trading on Friday.
Results from Olive Garden lately have disappointed investors. In the fourth quarter ended on May 29, the chain was the only one of Darden’s “Big Three” brands to show a fall in monthly visits.
Featured dishes and advertising campaigns at Olive Garden recently have failed to hit their mark, and the company is making changes, executives said on a conference call with analysts.
Orlando, Florida-based Darden, one of the restaurant industry’s top performers, also plans to eliminate $65 million to $75 million in costs this year.
Food costs are rising for all restaurant operators, but Darden now expects its food inflation to be in the lower half of its forecast of 5 percent to 5.5 percent.
The company has locked in food costs for the first half of this fiscal year, said Chief Financial Officer Brad Richmond, who expects food inflation to ease in the second half.
On Thursday, Darden reported a fourth-quarter profit that matched Wall Street estimates. It also forecast full-year earnings of $3.82 to $3.92 per share, above analysts’ expectations of $3.81, according to Thomson Reuters I/B/E/S.
Darden shares were up 3.6 percent at $51.54 on the New York Stock Exchange.