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Darden Outperforms Analysts’ Same-Store Sales Growth in Q3 2019

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Mar. 22 2019, Published 7:55 a.m. ET

Third-quarter SSSG

In the third quarter of fiscal 2019, Darden Restaurants (DRI) posted SSSG (same-store sales growth) of 2.8%, beating analysts’ expectation of 2.2%. 

Strong performances from Olive Garden, LongHorn Steakhouse, the Capital Grille, and Eddie V’s drove the company’s SSSG during the quarter.

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Brand performances

The Olive Garden brand posted SSSG of 4.3% during the quarter, which was driven by a 0.1% increase in traffic, while an increase in menu prices contributed 1.8%, and a favorable mix contributed 2.4%. During the quarter, customers reacted positively to the company’s promotions and a 50% increase in the amount of chicken in its Chicken Alfredo entrée. The company’s SSSG was also driven by its Oven Baked Pastas and Never Ending Stuffed Pastas promotions.

The brand continued to reinforce its everyday value platforms with the introduction of Lunch Duos, Early Dinner Duos, and Cucina Mia. During the quarter, Olive Garden’s off-premises business rose 13% to form 15.9% of its total sales.

During the quarter, LongHorn Steakhouse posted SSSG of 3.8%, which was driven by a 0.5% increase in traffic, while favorable pricing contributed 1.8%, and a favorable mix contributed 1.5%. The brand’s SSSG was driven by improvements in its operational executions and its “You Can’t Fake Steak” advertising campaign.

Of its other six brands, Capital Grille and Eddie V’s posted positive SSSG of 4.3% and 3.7%, respectively. However, during the quarter, the same-store sales of Cheddar’s Scratch Kitchen, Yard House, Seasons 52, and Bahama Breeze decreased 2.7%, 2.1%, 1.3%, and 3.7%, respectively.

Peer comparison

During the comparable quarter, Brinker International (EAT) posted system-wide SSSG of 1.8%, while Texas Roadhouse (TXRH) posted SSSG of 5.6% in its company-owned restaurants and 4.8% in its domestic franchised restaurants. Bloomin’ Brands (BLMN) posted system-wide SSSG of 1.6% in the United States and 2.4% in international markets.

Next, we’ll look at Darden’s EBIT margin in the third quarter.

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