By the end of fiscal 3Q18, Darden Restaurants (DRI) operated 1,733 restaurants, which included 853 Olive Garden, 499 LongHorn Steakhouse, 154 Cheddar’s Scratch Kitchen, 71 Yard House, 57 The Capital Grille, 39 Bahama Breeze, 41 Seasons 52, and 19 Eddie V’s restaurants.
Unit growth in the last four quarters
In the last four quarters, Darden has increased its unit count by 188 units, which includes the acquisition of 154 Cheddar’s for $780 million in April 2017. The company’s management stated that the integration of Cheddar’s with Darden’s systems is in the final stages. Currently, all the Cheddar’s restaurants are using Darden’s distribution network, and Cheddar’s payroll platform has transitioned to Darden’s payroll platform. The company’s management expects the rollout of its proprietary point-of-sales systems to be completed by the end of fiscal 2018.
In the last four quarters, the unit count for Olive Garden has increased by ten restaurants, and LongHorn Steakhouse has increased by 11 units. During the same period, the company added six units of Yard House, three units of Bahama Breeze, two units of Eddie V’s, and one unit each of The Capital Grille and Seasons 52.
For fiscal 2018, Darden has maintained its new restaurant openings guidance at 40 units. For fiscal 2019, the company’s management expects to open 45 to 50 restaurants at a cost of $225 million to $260 million.
Next, we’ll look at earnings margins for Darden.