3 Takeaways from Darden’s Bombshell Announcement
Coinciding with the brand’s announcement of its Q3 earnings results, Darden Restaurants will add casual dining brand Cheddar’s to its portfolio that includes Olive Garden and LongHorn Steakhouse.
From expanding to-go offerings to focusing on real estate, here’s a look at how the company continues to improve its restaurants and how it plans to integrate Cheddar’s.
Darden believes Cheddar’s is significantly underpenetrated with 165 locations spread across 28 states.
“We think this is the right brand at the right time with a great consumer base to continue to grow this business,” says Darden president and CEO Gene Lee.
Darden plans to use its scale to ramp up growth for the 38-year-old brand. Lee says the from-scratch menu combined with 300-seat restaurants set it apart from the poorly performing bar-and-grill segment.
“We see it competing against Crack Barrel, Texas Roadhouse, and, to some degree, Olive Garden. It’s very appealing to lots and lots of people,” Lee says. “We don’t see it as a bar and grill. We see it as a very menu [focused] restaurant, almost the antithesis of bar and grills.”
Cheddar’s has an average restaurant volume of $4.4 million, bringing in 6,300 guests per week who spend an average of $13.50 per ticket.
Lee says Olive Garden and LongHorn operations “have gotten way too complex” and that Darden is focusing on simplifying the brands and investing in value and menu innovation.
Across its portfolio, Darden had same-restaurant sales of 0.9 percent for the quarter. Olive Garden’s sales increased by 1.4 percent while Longhorn sales increased by 0.2 percent.
Olive Garden’s to-go presence continues to grow, and experienced a 17 percent increase in Q3. At Longhorn, Lee says food investments—such as increasing steak size—is beginning to pay off and the brand is expanding throughout the Northeast.
Darden also sees a huge opportunity in adding a to-go component for Cheddar’s and is working to implement that platform.
As Darden seeks to add Cheddar’s locations throughout the country, it will focus on similar real estate sites to Olive Garden.
Lee says whereas Longhorn sites are smaller, Cheddar’s will require larger plots and that Darden will secure sites and then decide which brand will fit best there.
“There are a lot of places Cheddar’s can go where Olive Garden is already established,” he says.