Olive Garden earnings remain strong
Oct. 6, 2016
by Monica Watrous
New dishes, such as pepperoni fettuccini alfredo, helped drive sales at Olive Garden.
ORLANDO, Fla. — Olive Garden same-store sales in the recent quarter grew 2 percent, outperforming industry benchmarks, said Gene Lee, CEO of parent company Darden Restaurants Inc.
|Gene lee, CEO of Darden
“This was our eighth consecutive quarter of same-restaurant sales growth at Olive Garden,” Lee said during an earnings call with financial analysts on Oct. 4. “The primary drivers of this performance include, one, our ongoing focus on flawless execution inside the restaurants. Our teams are working hard to get better every day, which is reflected by the fact that our overall guest satisfaction scores rose to an all-time high during the quarter.
“Two, the strong performance of OG To Go. To-go sales grew 20 percent compared to the same period last year and more than 50 percent on a three-year basis. And, three, culinary innovation. During the quarter we introduced dishes that build on brand equities and flavor profiles that our loyal guests enjoy most, including pepperoni fettuccini and Italian pot pies.”
Olive Garden's to-go sales grew 20 percent compared to the same period last year.
Overall, Darden net earnings in the first quarter ended Aug. 28 rose to $110.2 million, equal to 88 cents per share on the common stock, up from $86.4 million, or 68 cents per share, in the prior-year period. Sales advanced to $1,714.4 million from $1,687 million.
At its Longhorn Steakhouse chain, same-restaurant sales grew 0.6 percent, marking the brand’s 14th consecutive quarter of growth and outperforming the industry, Lee said.
“We continue to focus on strengthening our in-restaurant execution to improve the guest experience,” he said. “One way we are doing this is through Operation Simplification, which enables our team members to better focus on delivering a quality experience for our guests. Another way we’re strengthening in-restaurant execution is through enhanced training for all culinary team members because we know perfectly grilled steaks are critical to a great steakhouse experience.”
Earlier this year, Olive Garden launched Italian pot pies.
Darden’s specialty restaurants, which include Yard House, Capital Grille, Eddie V’s, Bahama Breeze and Seasons 52, also performed well and increased share in the quarter, Lee said.
As for Olive Garden’s continued success, Lee attributed comprehensive, multi-year efforts focused at improving the brand’s positioning in the marketplace.
“I think restaurants today have to stay relevant, and they need to continue to invest in the experience,” he said. “And I believe that this quarter of outperformance has less to do with what we did this quarter but more to do with what we’ve done over the last two years to improve the overall experience in Olive Garden. We’ve been on this plan now for almost three years since Dave George has been involved, and everything cumulatively is adding up to a competitive advantage that we have in Olive Garden, which is value.
Olive Garden same-store sales in the recent quarter grew 2 percent, outperforming industry benchmarks.
“And I think our advertising’s relevant. I think, most importantly, we’re running better restaurants today than we were in the past.”
He added: “But do I feel confident that we’re going to continue to outperform at the levels we’ve outperformed? I’m not sure. We’re going to do the best we can, but I can’t predict that. I think we’ve got a good plan. I think we’ve done our work over the last few years, and we’ll continue to do our work. So, I think we’re well positioned, but those are big hurdles to get over.”