Darden Restaurants Inc. is testing a new bar concept called Atrium that serves a dual-branded Olive Garden/Red Lobster location in North Carolina.
Open about one month, Atrium is not designed to be a stand-alone concept, said Rich Jeffers, a spokesman for the Orlando, Fla.-based Darden. Rather, the company is testing the idea of giving the shared bar area a more unique identity.
Since March 2011, Darden has opened six dual-branded locations, which the company calls “synergy units” designed to work in markets that don’t have population density to support a single brand location. The synergy units have separate dining rooms and menus, and individual entrances, but they share a kitchen, bathrooms and a bar space.
At the first five synergy locations, the bar area was unbranded. At No. 6 in Wilkesboro, N.C., however, the company decided to test how a more branded bar concept would work.
“We’re trying to evaluate a different spin on what we could do with that shared bar space,” said Jeffers. “It’s almost a third concept.”
Atrium, for example, is run by an operating team separate from Olive Garden or Red Lobster. The bar has its own menu of “shareable” dishes, such as flatbreads, tacos and mini sandwiches, all ranging between $4 and $7, said Jeffers. Guests can’t order from the Red Lobster or Olive Garden menus in the bar.
The bar area also stays open a bit longer than the two restaurant dining rooms, he said.
“Early indications are that folks are enjoying it,” said Jeffers.
However, Darden plans to evaluate the six synergy locations for a year before deciding whether to open more, he said. “We’re going to take a hiatus to evaluate all six.”
Darden’s three core brands, including the 818-unit Olive Garden, the 705-unit Red Lobster and 416-unit LongHorn Steakhouse chains, have been struggling in recent months. During the company’s February-ended third quarter, the three brands reported a same-store sales decrease of 4.6 percent.
Analysts in recent weeks, however, are optimistic that the three brands will see a pivot point in May and same-store sales will turn positive.
Stephen Anderson, an analyst with Miller Tabak + Co. LLC, said in a report Monday that ongoing value initiatives will help rebuild traffic at Darden’s mass-market concepts. Though changes in the menu mix initially appeared to hurt comps, he said, that impact will stabilize.
“Since the company last reported earnings for the February quarter, same-restaurant trends improved markedly for the casual dining segment, and, based on the increased traffic we have seen in our recent checks, we argue Darden’s brands are no exception,” Anderson wrote.
Anderson projected that same-store sales at Olive Garden will rise 0.5 percent in the fourth quarter, and LongHorn will see comps up 2 percent. Red Lobster, however, will likely report a same-store sales decrease of 1.5 percent — though that’s an improvement from the negative 2 percent he had projected previously.
By contrast, Anderson expects Darden’s higher-end Specialty Restaurant Group, which includes brands like Yard House, Capital Grille,and Eddie V’s, to report a same-store sales increase of 3.3 percent because of the improved macroeconomic environment. Previously, Anderson has estimated a same-store sales increase of 2.8 percent for the Specialty Restaurant Group.