ORLANDO, FLA. — Boosted by strong performance from its Olive Garden and LongHorn Steakhouse operations, Darden Restaurants, Inc. posted income of $166.2 million in the first quarter ended Aug. 26, equal to $1.34 per share on the common stock, up 40% from $119 million, or 95c per share, in the same period a year ago. Net sales increased 6% to $2,061.4 million from $1,936.1 million.
“We had a great first quarter,” Eugene I. Lee, president and chief executive officer, said during a Sept. 20 conference call with analysts. “Our strategy is working. We continue to grow our sales, increase market share and improve margins while making meaningful investments in our people and brands, all while being able to return capital to our shareholders.”
Mr. Lee said Olive Garden had a strong quarter, turning in its 16th consecutive quarter of same-restaurant sales growth. Overall, total sales at Olive Garden increased 6.3% during the quarter, boosted by same-restaurant sales growth of 5.3% and 1% growth from new restaurants.
“This strong performance is a result of four years of consistently improving the value proposition at Olive Garden,” he said. “We continue to strengthen value and convenience, which was reflected in our two promotional offers during the quarter: create-your-own lasagna and buy-one, take-one. Both of these promotions, which offered our guests the opportunity to upgrade to premium entree selections, coupled with fewer incentives and an increase in preference in our Mediterranean dishes, drove menu mix growth of 1.9%.
“Additionally, the Olive Garden team continues to improve the off-premise experience. Off-premise sales grew 13% and represented 13% of total sales for the quarter.”
Darden’s LongHorn Steakhouse concept also had a strong quarter, Mr. Lee said. LongHorn turned in its 22nd consecutive quarter of same-restaurant sales growth. Total sales increased 6.4%, driven by 3.3% growth from new restaurants and same-restaurant sales growth up 3.1%.
“LongHorn’s focus on their long-term strategy continues to enable profitable sales growth while they further invest in the guest experience,” Mr. Lee said. “During the quarter, we implemented several initiatives to improve the quality of the guest experience, simplify our operations and protect our unique culture.”
Total sales within the Cheddar’s Scratch Kitchen concept increased 6.5% in the first quarter, driven by organic new restaurant growth and franchised restaurant acquisition growth of 10.5%, which was partially offset by same-restaurant sales decline of 4%.
“We remain focused on rebuilding the operations foundation at Cheddar’s and improving execution,” Mr. Lee said. “Having the right leaders in the right places is fundamental to bringing our ‘Back to Basics’ operating philosophy to life at Cheddar’s. We spent a significant amount of time during the quarter evaluating and evolving the leadership team. As a result, we named John Wilkerson president of Cheddar’s eight weeks ago.”