Tags: Darden Restaurants | DRI | services | restaurants | stocks

Darden Restaurants Builds On Rebound

By Mike Seemuth   |   Friday, 01 Jul 2011 10:33 AM

Darden Restaurants (DRI) has been on a steady diet of sales growth as economic recovery revives the market for casual full-service dining. Orlando, Fla.’s Darden owns the Olive Garden, Red Lobster, and Longhorn Steakhouse restaurant chains and claims to be the world's largest company-owned and -operated group of full-service restaurants, with sales totaling $7.2 billion last year.

As of mid-May, Darden owned more than 1,850 restaurants in the United States and Canada and had approximately 180,000 employees. Besides core chains Olive Garden, Red Lobster, and Longhorn, Darden owns and operates a group of specialty restaurant chains under the brand names Capital Grille, Bahama Breeze, and Seasons 52.

Darden this week reported fourth quarter earnings up 19 percent and projected growth in earnings per share of up to 15 percent. Same-store sales at its three biggest operations were up 2.2 percent, Darden said.

In the quarter, sales rose to $1.99 billion , up 6.8 percent the prior comparable period. Profit came to $138 million, or $1 a share.

As the company's 2011 fiscal year drew to a close in late May, most stock analysts following Darden recommended buying its stock. Darden estimated in March that it would report 5.1 percent revenue growth for the 2011 fiscal year compared with the previous fiscal year, reflecting a blend of organic growth and expansion. The number came in at 5.4 percent.

Growth momentum

In the years ahead, Darden's steakhouse chain may become a bigger contributor to company profits.

"Compared to other core brands of Darden including Olive Garden and Red Lobster, Longhorn Steakhouse is better positioned to sustain its growth momentum," Zacks Investment Research said in a May 24 report, noting that Darden plans to open 30 to 35 new Longhorn restaurants in fiscal 2012.

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Darden Restaurants (DRI) has been on a steady diet of sales growth as economic recovery revives the market for casual full-service dining. Orlando, Fla. s Darden owns the Olive Garden, Red Lobster, and Longhorn Steakhouse restaurant chains and claims to be the world's...
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