Earnings Preview: Red Lobster, Olive Garden update

Darden's 4Q results to give another look at Olive Garden, Red Lobster turnaround push

Associated Press

NEW YORK (AP) -- Darden Restaurants Inc. reports its fiscal fourth-quarter results Friday, which should give another look at the company's efforts to fix its struggling Olive Garden and Red Lobster chains.

WHAT TO WATCH FOR: The Orlando, Fla.-based company has been reworking the menus and marketing for its flagship chains.

At Olive Garden, the company introduced lighter options and a livelier, modern ad campaign, rather the Old World atmosphere it evoked in the past. At Red Lobster, it added more non-seafood items in hopes of eliminating the possibility that a family or group of friends wouldn't go to the restaurant just because someone in their party didn't like seafood.

Revenue at restaurants open at least a year, which strips out the impact of newly closed and opened locations, should give a clue on whether the efforts are taking hold.

THE BIG PICTURE: Since 2008, Darden Restaurants has said its customer traffic is down almost 8 percent. Part of that decline is the result of the economic downturn, which made people more careful about where they eat out. But another problem for Darden is the changing industry — chains like Chipotle and Panera are becoming more popular because people feel they provide high-quality food in a more convenient setting and for lower prices.

The shifting industry is forcing Darden to experiment with some changes. Earlier this year, Red Lobster began testing a lunch service where diners pay at the counter rather than having a waiter or waitress take their order.

WHAT'S EXPECTED: Analysts expect a profit of $1.04 on revenue of $2.27 billion.

LAST YEAR'S QUARTER: The company earned $1.15 on revenue of $2.07 billion.

View Comments (22)