Darden Restaurants

Team Assignment #2

Darden Restaurant’s

by,

Sarah Martineck

Bobby Ellis

Sean Veneracion

Darden Restaurants was first started in 1938 by William (Bill) Darden. It is a full-service restaurant company that owns and operates more than 1,500 restaurants featuring a portfolio of category-leading brands that including: Olive Garden, Longhorn Steakhouse, Yard House, Bahama Breeze. Darden Restaurants are currently headquartered in Orlando, FL.

Darden restaurants markets to lower to middle class citizens seeking a delicious fine dining, or casual dining experience. Middle Class has proven to be a hard target market to successfully market to. Olive Garden’s sales have been declining 1.3% the past few years.  Also, Darden is facing problems because they are restructuring their management with their longtime chief Clarence Otis stepping down, and other board members are being replaced. All 12 members of management constantly attacked by activist shareholders and investors due to recent performance. Recently, Darden had a Never Ending Pasta promotional campaign at their Olive Garden chains. This promotion was too popular resulting in a disaster and left many customers dissatisfied, and outraged. Now it will be difficult for those customers to pay full price for a smaller portion

Of the 2,138 restaurants Darden operates in the U.S., 823 are Olive Gardens and 705 are Red Lobsters, with the two brands accounting for $6.2 billion of its nearly $8.7 billion in revenue.  Olive Garden makes up approximately 60% of Darden Company market shares.  Olive Garden and Red Lobster play a huge role in growth or decline of Darden Restaurant’s as a company.  

Darden owns several concepts including LongHorn, Capital Grille, and Yard House, but Olive Garden accounted for 55% of total restaurant sales in the just-completed fiscal year 2015. Comps at Olive Garden rose at a hearty 3.4% clip in the fiscal fourth quarter, and that's the chain's best showing in years. However, all of that growth and then some came from pricing and menu mix increase. Customer counts actually continue to decline at Olive Garden. Not even the breadsticks, it appears, can save Olive Garden from financial turmoil, says Mariah Summers from Buzz Feed.  And its sister chain under parent company Darden Restaurants’ umbrella, Red Lobster, doesn’t appear to be faring much better.After the two for one specials and $7.99 lunch promotions were taken away traffic for Olive Garden begun to dwindle away.  

Acoording to National Post, same-restaurant traffic at Olive Garden rose 0.6% in March, only to fall by 2.4% in April and a steeper 2.7% in May. This is actually something that the market saw play out during the fiscal third quarter when comps rose at Olive Garden despite posting negative year-over-year traffic comps through December, January, and February.

This wasn’t horrible news because, Folks are now paying more to eat at Olive Garden, and that's been more than enough to offset the grim reality that fewer people are actually eating at Olive Garden. Starboard Value is delivering on some if not most of the changes it made to Darden Restaurants.  However, until foot traffic at our local Olive Gardens start to pick up, it will not actually turnaround. Darden is merely finding a way to make more with less at its flagship chain. That's fine for financial purposes, but the Olive Garden brand is still not back in the hearts and mouths of consumers.