ORLANDO Fla. Even though same-store sales fell for each brand under Darden Restaurants Inc., the parent to Red Lobster, Olive Garden and other casual-dining chains, the company credited lower food and energy costs for helping it log a 15-percent increase in first-quarter profit.
Darden said net income for the quarter ended Aug. 30 totaled $94.3 million, or 67 cents a share, compared with $82.1 million, or 58 cents a share, in the same quarter a year earlier.
Sales fell 2.3 percent to $1.73 billion.
Blended same-store sales for Olive Garden, Red Lobster and LongHorn Steakhouse, the company’s three largest chains, fell 5.3 percent, which reflected domestic same-store sales declines of 2.9 percent at Olive Garden, 7.9 percent at Red Lobster and 6.2 percent at LongHorn Steakhouse.
Clarence Otis, chairman and chief executive of Darden said the economy was difficult, but “despite the challenges, our brands once again posted meaningfully stronger sales results than our industry.” Many casual-dining chains have posted double-digit same-store sales declines in recent months.
Otis said expenses were helped in the quarter by favorable food and energy costs and an “increasingly efficient restaurant-support platform.”
He added: “As a result of our marketing, restaurant operations and restaurant-support strengths, we look forward to emerging from the current challenging environment as a company that’s even better positioned competitively.”
Darden’s total cost of sales fell 4.1 percent from a year ago.
In its guidance for the rest of fiscal 2010, Darden said it anticipated net earnings from continuing operations to fall 2 percent or increase by up to 8 percent from fiscal 2009. It said that first-quarter macro-economic conditions and full-service sales trends were softer than anticipated and that full-year same-store sales trends are now expected to remain negative or flat at best.
Among the individual Darden brands, the company said:
— Oliver Garden’s first quarter sales of $821 million were up 1.2 percent over the same quarter 2009, driven by revenue from 33 net new restaurants. Olive Garden boasts 695 restaurants in the United States and Canada.
— Red Lobster’s first quarter sales hit $605 million, 6.3 percent less than booked in the same quarter a year ago. The company opened 11 net new restaurants during the quarter. Darden operates 690 Red Lobsters in the United States and Canada.
— LongHorn Steakhouse’s first-quarter sales totaled $211 million, down 2 percent from 2009, and reflected additional sales from 14 net new restaurants. The LongHorn chain totals 322 locations.
— The Capital Grille’s first-quarter sales totaled $50 million, down 8.4 percent from the same quarter last year. Same-store sales fell 18 percent. The company added five net new restaurants, bringing the total number of locations to 38.
— Bahama Breeze’s first quarter sales of $35 million fell 1.5 percent from the same quarter of 2009. Same-store sales fell 6.3 percent. The brand had one net new restaurant, bringing the total number of locations to 24.
— The company did not break out quarterly results for its Seasons 52 concept. Earlier on Tuesday, Darden said it planned to open its first Seasons 52 west of the Mississippi in the fall of next year. Seasons 52 debuted in 2003, and the chain includes eight stores in Florida, Georgia and New Jersey. The California store will be in South Coast Plaza in Costa Mesa and, with three other planned openings, will bring the total number of locations to 12.
Contact Ron Ruggless at [email protected].
