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Why Analysts Expect DRI to Post Positive Same-Store Sales Growth

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Same-store sales growth

Same-store sales growth (or SSSG), which is expressed as a percentage, measures the rise in revenue from existing restaurants over a certain period of time.

SSSG is driven by ticket size and traffic. It’s an important metric for investors to monitor, as it increases a company’s revenue without increasing its capital investment. It’s a direct reflection of how much traffic each location is driving without simply adding more stores.

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Fiscal 1Q17 estimates

Analysts are expecting Darden Restaurants (DRI) to post systemwide SSSG of 1.6% in fiscal 1Q17 compared to 3.4% in fiscal 1Q16. Olive Garden, which generates nearly 55% of the company’s total revenue, is expected to post SSSG of 1.5%.

Continued growth in Olive Garden’s ToGo platform and its other culinary innovations are expected to drive its SSSG. The ToGo platform allows guests to order meals for pickup from any Olive Garden restaurant across the United States using the company’s website.

LongHorn Steakhouse is expected to post SSSG of 1.1%. Its SSSG is expected to be driven by improving guest experiences and increased operational expertise through the Big Bold Steaks and LongHorn Favorites offerings. 

DRI’s brands The Capital Grille, Yard House, Bahama Breeze, Seasons 52, and Eddie V’s Prime Seafood are expected to post SSSGs of 1.9%, 1.7%, 2.3%, 2%, and 1.6%, respectively.

Peers comparisons

In the same period, Darden’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 3.5%, 0.18%, and 0.26%, respectively.

Outlook

For fiscal 2017, Darden’s management has set its SSSG guidance in the range of 1%–2%. Analysts are expecting Darden to post systemwide SSSG of 1.6%, with Olive Garden, LongHorn Steakhouse, and specialty restaurants expected to post SSSGs of 1.5%, 1.7%, and 2%, respectively. Notably, Darden forms 0.26% of the holdings of the iShares Russell Mid-Cap Growth ETF (IWP).

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