Darden Restaurants Inc., operator of Olive Garden, Red Lobster and additional casual-dining chains, is planning an aggressive growth strategy for the next five years, which may include the acquisition or development of new brands.
The company said this week during its annual shareholder meeting that it projects annual revenue to increase between $3 billion and $4 billion in the next five years, over the $7.53 billion it generated in fiscal 2011.
Orlando-based Darden plans to acquire and develop new brands, open new locations in international markets and new venues, such as colleges and airports, and create more “synergy” sites — units where two brands operate under one roof.
“As we look to the future, we see a company that is both more valuable and more valued,” Darden chief executive Clarence Otis said.
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Darden said Olive Garden’s annual sales are expected to increase from $3.5 billion in 2011 to $4.9 billion in 2016; Red Lobster’s annual sales from $2.5 billion to $3.1 billion over the same time frame; and LongHorn Steakhouse annual sales from $984 million in 2011 to $1.9 billion in 2016. LongHorn Steakhouse’s growth will be mainly driven by new restaurant development, the company said.
Sales for Darden’s three specialty restaurants — Bahama Breeze, The Capital Grille and Seasons 52 — are expected to climb from an aggregate of $502 million in 2011 to $1.2 billion in 2016. Growth in that division also will be driven by new restaurant development, to the tune of $600 million in revenue, Darden said.
Darden’s total unit count is projected to grow by 520 restaurants, from 1,894 units in 2011 to 2,415 in 2016, Otis said.
In fiscal 2011, Darden’s sales reached $7.53 billion, up 5.4 percent from the previous year. Operating profit totaled $741 million, a 10.3 percent increase from the previous year, and earnings per share totaled $3.41, up 55 cents, or a 19.2 percent increase from the previous year.
For fiscal 2012, Darden total sales are expected to grow between 6.5 percent and 7.5 percent from the previous year, while earnings per share are expected to increase between 12 percent and 15 percent from the previous year.
To help facilitate its planned growth, Darden plans to hire 50,000 employees, promote 1,200 workers to general manager or managing partner positions, and promote another 2,100 employees to restaurant manager positions during the next five years, Otis said.
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The company also plans to cut costs by automating its supply chain, centralizing facilities management, implementing sustainable energy practices and optimizing labor, Otis said. Those strategies are expected to save as much as $92 million through 2016, he said.
Otis did not comment about the company’s plan to acquire new brands, but said a new brand could be acquired or developed internally.
Contact Alan Snel at [email protected].
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