uploads///Revenue Trend

A Look into Darden’s Revenue Trend

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Mar. 17 2015, Updated 5:05 p.m. ET

Darden’s revenue trend

With a market cap of $7 billion, Darden Restaurants’s (DRI) total revenue from all of its restaurants in fiscal 2014 stood at $6.2 billion. In fiscal 2014, the company’s revenues were lower compared to fiscal 2013 as a result of Darden selling off its Red Lobster brand.

Darden Restaurants’s revenue includes sales from all of its brands. The majority of Darden’s fiscal 2014 revenue—58%—came from Olive Garden, followed by 22% from LongHorn Steakhouse, and the remaining ~20% from its Specialty Restaurant Group. The Specialty Restaurant Group includes all restaurants under Darden Restaurant, excluding Olive Garden and LongHorn Steakhouse.

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Revenue size of competition

In fiscal 2014, Brinker International (EAT) had $2.9 billion in revenues, which grew 2% year-over-year (or YoY) from $2.85 billion. Bloomin’ Brands (BLMN) revenue grew 7.5% YoY from $4.1 billion to $4.4 billion, and Texas Roadhouse revenue grew 11% from $1.4 billion to $1.6 billion YoY.

The Consumer Discretionary Select Sector SPDR ETF (XLY) holds about 10% of restaurant stocks in its portfolio, including Chipotle Mexican Grill (CMG).

Olive Garden is one of the most important brands for Darden Restaurants, and the company’s strategic vision with respect to Olive Garden is critical to its success. Large investors have also been active in the strategic management of Darden Restaurants. For example, activist investor Starboard Value holds about 9.4% of Darden Restaurants.

We will discuss Starboard Value’s activities with Darden later in this series. Next, we’ll explore Olive Garden’s performance.

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