Olive Garden, Red Lobster sales continue to slide

Published on NewsOK Modified: June 20, 2014 at 10:56 am •  Published: June 20, 2014
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NEW YORK (AP) — Darden said Friday that sales continued to slide at Olive Garden and Red Lobster, with other costs dragging down its profit by 35 percent in the latest quarter.

The results fell short of Wall Street expectations, and shares were down 2.5 percent in midday trading.

Darden Restaurants Inc. has been fighting to stop declining sales at Olive Garden and Red Lobster. Such sit-down chains were hit hard by the downturn, which prompted many customers to trade down to cheaper options. The menus at Olive Garden and Red Lobster also failed to keep pace with changing tastes.

Despite ongoing efforts to fix the marketing for the chains, sales at Olive Garden fell 3.5 percent at established locations during the quarter. At Red Lobster, the figure dropped 5.6 percent.

Under pressure to deliver better results, Darden announced late last year that it planned to get rid of Red Lobster and focus on fixing Olive Garden. The company says that Olive Garden customers are more in line with those at its smaller, more successful chains, such as The Capital Grille and Yard House.

Darden says Red Lobster chains tend to be in lower income brackets.

To revitalize Olive Garden, executives say they plan to underscore the quality and freshness of the food, which they say are increasingly important traits for customers. They're also rolling out lighter dishes, and trying to boost the chain's lunchtime business.

So far in June, the company said Olive Garden's sales at established locations are flat, an improvement from the negative results over the past fiscal year.