Sometimes there are benefits to being different from competitors, but right now, Darden’s strategy does not seem to be the right one
Darden’s expansion has led to a situation where all the eight brands operate under the direction of one management team.
When the Olive Garden and Red Lobster brands started to show slower growth, Darden’s CEO used diversification to promote growth.
In our view, Darden’s inability to achieve lower SG&A expense as a percent of sales is driven by ineffective marketing strategies.
Another key metric that Barington Capital Group showed was EBITDAR (earnings before interest, tax, depreciation, amortization, and rent).
According to Barington Group, Darden has underperformed its peers quite significantly over the past few years.
Barington Capital Group recently released an 80-page presentation explaining how Darden Restaurants Group Inc. (DRI) could unlock value.
Fast food retailers such as McDonalds Inc. (MCD), Yum! Brands Inc. (YUM), Wendy’s (WEN) and Burger King (BKW) may be negatively affected in the short to medium term.
The restaurant industry’s high employee turnover also makes it harder for fast food companies to unionize. Even within the restaurant industry, quick service shows the highest turnover.
Why the unionization of all fast food workers, which would increase the bargaining power of employees and possibly lead to higher wages, in quite unlikely.
Part-time work is most likely an industry-wide characteristic within the food retail business.
On August 29, 2013, thousands of fast food workers walked out, protesting for a wage increase to $15 an hour.
From a business perspective, restaurant owners can’t possibly increase wages to $15 per hour.
Raising the minimum wage won’t solve the fundamental problems of the labor market and the U.S. education system facing people stuck at minimum wage.
Investing in technology and capital to reduce costs as much as possible, including labor costs, has become critical.
A slight increase in wages can erase profits for these companies. To protect profits, prices will have to rise.
Nationwide walkouts appear to be gaining momentum, calling for action to increase the federal minimum wage that has remained stagnant since 2009.
The market does not yet appreciate the safety of modern rollercoasters or the defensive characteristics of the relatively small and underfollowed amusement park industry.
Strategically, management is focused on enhancing the guest experience with premium product offerings, dynamic pricing, and advance purchases.
Cedar Fair (FUN) presented investors an attractive entry point to purchase shares, now yielding nearly 6%. This is a very good business.