Olive Garden accounted for $915 million, or over 55% of Darden’s overall sales
Darden Restaurants Inc. (NYSE: DRI) announced its Q2 FY17 financial results on December 20th, 2016.
Headquartered in Orlando, Florida, Darden is a full service restaurant company that owns and operates more than 1,500 restaurants. The Company’s restaurant brands include Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V’s Prime Seafood, Wildfish Seafood Grill, and Yard House. Through subsidiaries, the Company owns and operates all its restaurants in the U.S. and Canada, except for three jointly owned restaurants each in Florida and California, and managed by the Company, seven franchised restaurants in Puerto Rico and one in Atlanta. Read more about the Darden’s financial results below.
Q2 FY17 financial highlights
During Q2 FY17, Darden’s revenue grew 2.1% to $1.64 billion, almost on par with estimates of $1.65 billion. Sales at Olive Garden, the Italian casual dining restaurant chain known for its non-stop pasta passes, accounted for most of the company’s revenues at $915 million, or over 55% of Darden’s overall sales. Olive Garden has revamped its menu, with renewed focus on appetizers and desserts as well as more options for take-out and delivery over the last few months.
Comparable restaurant sales increased 1.7% for the reporting quarter, with Olive Garden, Eddie V’s and Bahama Breeze up 2.6% or more. Comp restaurant sales grew 2.6% for Olive Garden, 0.1% for LongHorn Steakhouse, 1.2% for The Capital Grille, 2.7% for Eddie V’s, 0.7% for Yard House, 2.6% for Bahama Breeze, while it fell 0.3% for Seasons 52.
During the reporting quarter, operating costs and expenses remained flat at $1.52 billion. However, as a result of lower general and administrative expenses, Darden’s Q2 FY16 operating income grew to $116.5 million versus $81.7 million in the year-ago same period. Consequently, net income jumped to $79.5 million, or $0.64 per share, from $43.2 million, or $0.33 per share, in the year-ago corresponding quarter.
During Q2 FY17, revenue from Olive Garden grew 2.5% to $915 million, while revenue from LongHorn Steakhouse remained flat at $365 million. Revenue from fine dining restaurants, The Capital Grille and Eddie V’s, grew 4.3% to $128.6 million, while other businesses brought in $233.9 million during the reporting quarter.
Share repurchase: During the reporting quarter, the Company repurchased 0.3 million shares of its common stock for about $19 million. There is now approximately $485 million remaining under the current repurchase authorization.
Restaurant count: Darden ended Q2 FY17 with 1,541 restaurants versus 1,534 in the year-ago same period, including six locations in Canada. In all, Darden owned and operated 842 Olive Garden locations, 485 LongHorn Steakhouse restaurants, 65 Yard House restaurants, 56 The Capital Grille locations, 36 Bahama Breeze restaurants, 40 Seasons 52 locations, and 17 Eddie V’s restaurants by the end of the reporting quarter.
Guidance for FY17
Going forward for FY17, the restaurant operator reaffirmed its outlook for diluted EPS of $3.87 to $3.97 and same-restaurant sales of approximately 1.0% to 2.0%. The EPS outlook reflects approximately 128.5 million diluted average common shares outstanding for the year. Sales are forecast to grow by 1.7% to 2.7% during FY17 versus the previous year.
Darden’s stock stood at $74.48, down 0.12%, at the close on Friday, December 23rd, 2016, having vacillated between an intraday high of $74.67 and a low of $73.73 during the session. The stock’s trading volume was at 633,352 for the day. The Company’s market cap was at $9.18 billion as of Friday’s close.