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What Drove Darden’s Same-Store Sales Growth in Fiscal 4Q16?

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Jul. 12 2016, Updated 5:07 p.m. ET

Same-store sales growth

Same-store sales growth, expressed as a percentage, is a measure of the increase in revenue from existing restaurants over a certain period. Same-store sales growth is driven by ticket size and traffic. On a comparable calendar basis, in fiscal 4Q16, Darden Restaurants (DRI) reported overall same-store sales growth of 2.6% against analysts’ estimate of 2.8%.

 What Drove Darden’s Same-Store Sales Growth in 4Q16?

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Same-store sales growth of different brands

Individually, Olive Garden and LongHorn Steakhouse posted same-store sales growth of 2.4% and 2.2%, respectively. In the specialty brands, Bahama Breeze, Seasons 52, The Capital Grille, Yard House, and Eddie V’s posted same-store sales growth of 4.7%, 5%, 3.7%, 1.4%, and 2.7%, respectively.

The company’s management pointed out three key drivers for Olive Garden’s same-store sales growth: further simplification of its processes and procedures, culinary innovations, and continued growth of its successful OG To Go platform. The OG To Go platform allows guests to order meals for pickup from any of the restaurants across the United States using the company’s website. The revenue from OG To Go sales increased 19% year-over-year.

LongHorn Steakhouse’s same-store sales growth was driven by a focus on delivering operational expertise through Big Bold Steaks and LongHorn Favorites, as well as by a focus on improving guest experiences. Within the company’s specialty restaurants, Seasons 52 and Bahama Breeze posted higher same-store sales growth. By providing handcrafted cuisine that is not only tasty but also healthy, Seasons 52 was able to achieve higher same-store sales growth.

Peer comparisons

For the same period, DRI’s peers Texas Roadhouse (TXRH), Brinker International (EAT), Bloomin’ Brands (BLMN), and Buffalo Wild Wings (BWLD) are expected to post same-store sales growth of 4.4%, -0.93%, -0.8%, and 2.3%, respectively.

In the next article in this series, we’ll discuss the unit growth of Darden Restaurants, which forms 0.14% of the iShares Russell Mid-Cap ETF (IWR).

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