Diners wearing protective masks wait outside an Olive Garden restaurant in Thornton, Colorado, on Friday, March 19, 2021.
Chet Strange | Bloomberg | Getty Images
Darden restaurants on Thursday reported quarterly gains that exceeded analysts’ expectations as customers visited Olive Garden and its other chains more than expected.
The company expects fiscal results for the fourth quarter to show that it is recovering from the impact of the coronavirus pandemic.
The company’s shares rose 4.5% in pre-market trading.
Here’s what the company released for the quarter ended February 28, compared to what Wall Street expected, based on a survey of analysts at Refinitiv:
- Earnings per share: 98 cents versus 69 cents expected
- Revenue: $ 1.73 billion versus expected $ 1.63 billion
The company reported third-quarter fiscal net income of $ 128.7 million, or 98 cents per share, down from $ 232.3 million, or $ 1.89 per share, a year earlier. Analysts polled by Refinitiv had expected a profit of 69 cents per share.
Net sales fell 26.1%, to $ 1.73 billion, exceeding expectations of $ 1.63 billion. Darden’s total same-store sales fell 26.7% during the quarter, down from the 20.6% decline in same-store sales in the second fiscal quarter. During the three months ending February 28, many states imposed stricter restaurant mandates as new Covid-19 cases increased, hampering sales to the general industry.
Olive Garden, which accounts for about half of Darden’s revenue, reported same-store sales down 25.8%. LongHorn Steakhouse is recovering faster, with same-store sales dropping just 12.6%.
Darden’s fine dining business, which includes The Capital Grille, remains the most affected by the pandemic. Its same store sales plunged 45.2%, falling more sharply than in the previous quarter.
For Darden’s fourth fiscal quarter, the company is forecasting total sales of $ 2.1 billion and earnings per share from continuing operations of $ 1.60 to $ 1.70. The pace of vaccinations is accelerating, which will encourage more consumers to eat in restaurants, as states ease restrictions. Darden’s same-store sales were positive in the week ending March 21, when they started to drop when restaurant blocks were first implemented.
For fiscal year 2022, Darden expects about 35 restaurant openings and $ 350 million to $ 400 million in capital expenditures. Executives said it was too early to predict gains or sales for the next fiscal year.
Darden also said he plans to spend about $ 17 million to give hourly restaurant workers a unique bonus and raise wages. As of Monday, each worker who works hourly in his restaurants will earn at least $ 10 an hour, including tip. In January, the hourly wage will rise to $ 11 and, in the following January, to $ 12 an hour.
The company’s move to raise workers’ wages follows initial pressure from President Joe Biden to raise the federal minimum wage to $ 15 an hour, including tipped workers. Democrats withdrew the proposal from Covid’s relief bill, but will likely try again while Biden is in office.