ORLANDO Fla. Darden Restaurants Inc. is ramping up renovation plans for its Red Lobster chain, with as many as 50 units slated to be remodeled in the year ahead.
The “brand refresh” is designed “to further broaden appeal, increase same-restaurant sales and strengthen unit economics,” Andrew H. Madsen, Darden’s president and chief operating officer, told analysts in a June 24 conference call.
Red Lobster's new look is intended to remind guests of something they might encounter in Bar Harbor, Maine. When Red Lobster introduced the new design in 2007, chain officials described it as blending "more sophisticated ambience with the casual feeling of a seaside restaurant."
The remodeling program has been ongoing, but Madsen said the Darden division “plans to remodel approximately 50 restaurants this year and accelerate the pace of remodels in subsequent years." He also said Red Lobster would slow new unit growth, with three to five net new units planned for fiscal 2010, which began June 1. The chain had 10 net openings in fiscal 2009.
Red Lobster has 690 locations in the United States and Canada, with average unit volumes of $3.8 million. The chain had had total sales of $2.6 billion in fiscal 2009.
Madsen did not provide costs of the remodeling program or detail its effect on guest counts. “We think the remodel is contributing to a meaningful improvement in how current and lapsed users think about Red Lobster and use it,” he said.
Other initiatives planned for Red Lobster this year include new dishes that use the chain’s wood-fired grills and a new advertising campaign that will emphasize “value and affordability throughout the year,” Madsen said.
Darden is also the parent of the Olive Garden, LongHorn Steakhouse, Bahama Breeze and The Capital Grille chains. For the May 31-ended fourth quarter, Darden reported that earnings from continuing operations totaled $123.0 million, or 87 cents per share, up from year-ago fourth quarter earnings of $101.8 million, or 71 cents per share. Latest-quarter sales rose 8.2 percent to $1.98 billion, driven by the net openings of 70 new restaurants, including 38 Olive Garden locations.
U.S. same-store sales fell 0.6 percent at both Olive Garden and Red Lobster, while LongHorn Steakhouse’s U.S. same-store sales decreased 6.5 percent. Same-stores sales fell 22.1 percent at The Capital Grille and declined 4.3 percent at Bahama Breeze.
For the full year, earnings from continuing operations totaled $371.8 million, or $2.65 per share, versus year-ago earnings of $369.5 million, or $2.55 per share. Annual sales increased 8.9 percent to $7.22 billion.
Contact Ron Ruggless at [email protected].
