From extending the Never-Ending Pasta promotion at Olive Garden to honing steak service at LongHorn, the company smashes its second quarter
Darden Restaurant Inc. smashed its second quarter, which ended Nov. 24, after extending its Never-Ending Pasta promotion by four weeks at Olive Garden and honing its steak service at LongHorn Steakhouse, company executives said Thursday.
The Orlando, Fla.-based casual-dining company also added Chuy’s Mexican to its portfolio and started individual delivery at about 100 of its 950 Olive Garden restaurants in a deal with Uber Direct.
On Friday, Darden’s stock was trading at about $188.34 a share, compared to an opening of $183.44 a share.
After Darden’s earnings for the Nov. 24-ended second quarter were released Thursday, Rick Cardenas, the company CEO and president, told analysts that the four-week extension of the Never Ending Past Bowl promotion was instrumental in increase Olive Garden’s same-store sales 2% during the quarter.
“Never-Ending Pasta Bowls started at a price point of $13.99, marking the third consecutive year at that price point and making it an even more compelling value for our guests,” he said. “NEPB was once again well-received as evidenced by the highest refill rate ever and higher protein add-ons compared to last year.”
The add-ons were purchased by a record number of customers, he said.
Raj Vennam, Darden’s chief financial officer, added that Olive Garden “outperformed the industry benchmarks again this quarter. Same-restaurant sales were 140 basis points better than the industry, and same-restaurant guest counts also exceeded the industry by 140 basis points.”
Two weeks ago, Olive Garden introduced an updated menu, which Cardenas said featured two customer favorites: Steak Gorgonzola and Stuffed Chicken Marsala.
“These dishes were the most requested entrees that fans asked Olive Garden to bring back, and the initial response from guests is encouraging,” Cardenas said. “Starting in January, Olive Garden's advertising will feature the return of these fan favorites and an additional guest-driving news at a compelling price point.”
Cardenas added that LongHorn’s emphasis on steak helped the brand post a 7.5% increase in same-store sales.
“The performance of Yard House and Cheddar’s drove positive comps within our other segments,” he said. “Yard House has built a competitive advantage of distinctive culinary offerings with broad appeal through a range of approachable and trend=forward items. One example of how they bring this to life is the bratwurst sliders that were featured during Oktoberfest, which helped drive further sales momentum for the brand during the quarter. The Yard House team is well positioned to build on their momentum with new food news during the third quarter.”
Cheddars Scratch Kitchen, which Darden acquired in 2017, provided positive sales in the quarter as well by emphasizing value, Cardenas said.
“During the quarter two LTOs returned to their menu. Their Texas T-bone for $21.49, which was followed by their bone-in ribeye for $22.49,” he said. “And each of these entrees also include honey butter croissants and two sides for that price.”
For the second quarter ended Nov. 24, Darden’s earnings were $215.1 million, or $1.82 a share, compared to $212.1 million, or $1.76 a share, in the same period a year ago. Sales were up to $2.890 billion compared to $2.727 billion in the prior-year quarter.
Same-restaurant sales systemwide were 2.4%, including the increases of 2% at Olive Garden and 7.5% at LongHorn. Fine-dining restaurants declined 5.8% and other restaurants were up 0.7%.
As of Nov. 24, Darden had 2,152 restaurants, including 925 Olive Garden units, 580 LongHorns, 181 Cheddar’s Scratch Kitchens and 104 Chuy’s. The company also had 88 Yard House units, 82 Ruth’s Chris Steak House locations, 70 Capital Grilles, 45 Seasons 52, 43 Bahama Breeze, 30 Eddie V’s and four Capital Burger units.
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