ORLANDO, Fla. – Focusing on “being brilliant with the basics” in its restaurants helped drive strong second-quarter results at Darden Restaurants Inc., the company’s CEO said on Dec. 18.
Net income in the second quarter ended Nov. 25 totaled $115.6 million, equal to 93 cents per share on the common stock, up 36 percent from $84.7 million, or 69 cents per share, in the same period a year ago. Sales increased 4.9 percent to $1,973.4 million from $1,881.5 million.
“As industry sales continue to improve, we made the strategic choice to further reduce our incentives during the quarter, recognizing it would likely put pressure on our same-restaurant sales and traffic,” Eugene I. Lee, president and CEO, said during a Dec. 18 conference call with analysts. “This resulted in our gap to the industry narrowing; however, it enabled us to build a stronger guest base and contributed to our margin improvement.
“We continue to focus on the relentless execution of our ‘Back to Basics’ operating philosophy anchored in food, service and atmosphere, and strengthening and leveraging our four competitive advantages.”
Darden’s Olive Garden concept had an especially strong quarter, as segment profit increased 10 percent to $184.5 million from $167.6 million. Sales rose 4.9 percent to $998.1 million from $951.6 million.
Lee attributed the gains at Olive Garden to several factors, including the flawless execution of two of the chain’s most popular and strongest value promotions, the strength of the chain’s off-premise business, which grew 10.3 percent during the second quarter, and investments made to strengthen everyday value.
“First, they redesigned their menus to more prominently showcase two everyday value platforms: Unlimited Soup, Salad, and Breadsticks; and the Cucina Mia! Create Your Own Pasta,” Lee said. “Second, they enhanced the value of one of their highest-preference entrees, chicken alfredo, by adding 50 percent more chicken. And finally, they launched their 5-for-$5 beverage platform. I remain excited about the strategic investments the Olive Garden team is making to compete effectively while continuing to highlight their everyday value proposition.”
LongHorn Steakhouse also had a solid quarter for Darden, as segment profit increased nearly 9 percent to $65.9 million from $60.5 million, and sales improved 6.4 percent to $412.6 million from $387.7 million.
Lee said the LongHorn executive team continues to make the right investments in the business focused on quality, simplicity and culture.
“This quarter, they worked to reduce complexity in their recipes and improved culinary processes to ensure their team members are able to execute every time,” he said.