September 29, 2020

Restaurants

The Next Winning Recipe?

A series of concepts has sputtered, and Darden is taking extra caution as it expands a new, healthy-eating chain of restaurants.

Amy Keller | 11/1/2007

Darden Restaurants


CEO Clarence Otis

Both Bahama Breeze and Smokey Bones were narrower than they had to be in terms of their breadth of appeal, Darden CEO Clarence Otis said in at CIBA World Market’s Consumer Growth Conference last July.

The $1-Billion Question

Darden Restaurants has been looking for a blockbuster to match the billion-dollar annual sales of Red Lobster and Olive Garden. So far, its last three concepts — China Coast, Bahama Breeze and Smokey Bones — have failed to deliver.


Chain Sales Locations
Olive Garden $2.8 billion 614
Red Lobster 2.6 billion 680
Smokey Bones* 337 million 126
Bahama Breeze 138 million 23
Seasons 52 40 million 7
* Fiscal year 2006
Source: Darden Restaurants 2006 and 2007 annual reports

Restaurants 1,397
Sales $5.6 billion
Employees 157,000
Meals Served 350 million
Source: Form 10-K for fiscal year ended May 27, 2007, as filed by
Darden Restaurants with the Securities and Exchange Commission

Shareholder Return

Joe Lee, former CEO of Darden Restaurants, once told investors he envisioned the company as the blue chip of the restaurant world. Trading at around $42 a share, DRI has outperformed the S&P 500 and its top three competitors over the past 10 years through the end of 2006.

Chain 10-Year Return
Darden 21.9%
Ruby Tuesday 19.8%
Brinker (Chili's, Romano's Macaroni Grill) 15.7
Applebee's 12.2
S&P 500 8.4
Source: Bloomberg and Research Insights

Tags: North Central

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