The Olive Garden on North Orlando Avenue in Winter Park, Florida, on March 19, 2020.
Joe Burbank | Orlando Sentinel | TNS
ORLANDO, Fla. — Sales at Orlando, Florida-based Darden Restaurants grew in the quarter ending Aug. 27, but its fine-dining business continued to weaken compared with last year.
Total sales improved 11.6% to $2.7 billion in the quarter, a figure that included the addition of 77 company-owned Ruth’s Chris Steak House restaurants after Darden acquired the brand in June.
Same-restaurant sales, without Ruth’s Chris, were up 5% for the company, but Darden’s other fine-dining brands saw a same-restaurant sales decrease of 2.8%. Those fine dining restaurants also experienced a dip last quarter when compared to the previous year.
Darden owns 1,998 restaurants, including Olive Garden, fine-dining restaurants Ruth’s Chris, Eddie V’s and The Capital Grille.
“We are seeing a little softness versus last year with household incomes above $125,000 and that primarily affects our fine-dining brands, but it does affect all of our brands,” CEO Rick Cardenas said on a Thursday morning call.
Darden executives have pointed out the fine-dining business is being compared to last year when business was stronger.
“Last year we do think there was a little bit of pent-up demand,” Cardenas said. “So we’re going to watch it, we’re going to see what happens for the rest of this month and the rest of next month, but it appears like now we’re getting much closer to what the seasonal patterns were.”
For this quarter last year, fine dining traffic retention was at 107% compared to before the coronavirus pandemic, but the quarter this year was at 100% compared to before the pandemic, Darden’s presentation Thursday shows.
Restaurant operators have reported declines in customer traffic for four consecutive months, according to the National Restaurant Association’s Restaurant Performance Index.
Cardenas said consumers are starting to have a little bit less confidence and are a little bit more selective.
“I think that pricing in the industry may have caused a little bit of this, but we’ve been pricing well below the industry,” Cardenas said. “We feel good about where our pricing position is compared to everybody else, and we’re just going to execute.”
Olive Garden’s Never Ending Pasta Bowl promotion is also returning Monday, amid the time of year after Labor Day that’s typically slow for restaurants before the holiday season.
Cardenas reiterated the company’s requirements for promotions. The deals must be simple to execute, not at a deep discount, and elevate the restaurant brand’s equity.
Darden’s stock price was up about 0.4% Thursday morning to just more than $150.
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