Diners in protective masks wait outside an Olive Garden restaurant in Thornton, Colorado, on Friday, March 19, 2021.
Chet Strange | Bloomberg | fake images
Darden Restaurants on Thursday reported quarterly earnings that beat analysts’ expectations as customers visited Olive Garden and its other chains more than expected.
The company forecasts that its fiscal fourth-quarter results will show that it is on track to recover from the impact of the coronavirus pandemic.
The company’s shares were up 4.5% in premarket trading.
Here’s what the company reported for the quarter ending February 28 compared to what Wall Street expected, according to a Refinitiv analyst survey:
- Earnings per share: 98 cents vs. 69 expected cents
- Revenue: $ 1.73 billion vs. $ 1.63 billion expected
The company reported fiscal third-quarter 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 earnings of 69 cents a share.
Net sales fell 26.1% to $ 1.73 billion, beating expectations of $ 1.63 billion. Darden’s total same-store sales fell 26.7% during the quarter, below fiscal second-quarter same-store sales declines of 20.6%. During the three months ending February 28, many states imposed stricter mandates on restaurants as new cases of Covid-19 spiked, hurting overall industry sales.
Olive Garden, which accounts for about half of Darden’s revenue, reported same-store sales drops of 25.8%. LongHorn Steakhouse is recovering faster, with same-store sales declining of just 12.6%.
Darden’s fine dining business, which includes The Capital Grille, continues to be hit hardest by the pandemic. Its same-store sales plummeted 45.2%, with a steeper decline than the previous quarter.
For Darden’s fiscal fourth quarter, the company forecasts total sales of $ 2.1 billion and earnings per share from continuing operations of $ 1.60 to $ 1.70. The pace of vaccinations is picking up, encouraging more consumers to eat at restaurants as states ease restrictions. Same-store sales in Darden turned positive in the week ending March 21, as they began to decline when restaurant closures were first implemented.
For fiscal year 2022, Darden expects approximately 35 restaurant openings and between $ 350 million and $ 400 million in capital expenditures. Executives said it was too early to predict earnings or sales for the next fiscal year.
Darden also said he plans to spend about $ 17 million to give hourly restaurant workers a one-time bonus and raise wages. Starting Monday, every hourly worker at your restaurants will earn at least $ 10 an hour, including tip income. In January, hourly wages will go up to $ 11 and the following January they will go up to $ 12 an hour.
The company’s move to raise workers’ wages follows an initial push by President Joe Biden to raise the federal minimum wage to $ 15 an hour, including workers who receive tips. Democrats withdrew the proposed Covid relief bill, but they will likely try again while Biden is in office.