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.

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

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.

Latest articles

On June 25, the soft economic data isn't an isolated case. We have been getting a flurry of dismal data points. The US economy added only 75,000 non-farm jobs in May.

French retail giant Carrefour has agreed to sell an 80% stake in its China operations for ~$705 million to, an Alibaba (BABA) backed company. While China represents a massive opportunity with its almost 1.4 billion population, it has not been an easy market for foreign companies, at least when it comes to retail and e-commerce.

On June 25, US Secretary of Agriculture Sonny Perdue told CNN in an interview that the US-China trade war has impacted US farmers. He said that farmers “are one of the casualties” of the trade war.

25 Jun

Hang Seng and Nikkei 225 Lose amid Trade Worries

WRITTEN BY Mayur Sontakke, CFA, FRM

After rising marginally yesterday, Hong Kong’s Hang Seng Index fell today. The index lost 1.15% to end at 28,185.98. Only seven stocks in the index rose, while 39 declined. Four remained unchanged. Tencent Holdings (TCEHY) was one of the worst performers with a 1.8% fall.

Square (SQ) was absent from the list of the inaugural members of the Libra Association, the entity that will ensure that Facebook’s (FB) Libra cryptocurrency works as intended. Nearly 30 companies have joined the Libra Association.

Kroger (KR) stock fell 2.2% on June 20—the day the company announced its results for the first quarter, which ended on May 25. The negative sentiment for the stock continued.