Selling off Red Lobster didn’t help Darden Restaurants (DRI), which reported an earnings decrease and lower same store sales for Olive Garden in all three months last quarter, according to an earnings report released Friday.
Perhaps the most damning statistic was the fact that both same store-sales and traffic were down for Olive Garden stores by an average of 3.4% for the quarter. Sales were up but traffic was down at Longhorn Steakhouse, and both were down big at Red Lobster, which has been reclassified to “discontinued operations” due to the proposed sale of the business to Golden Gate Capital.
Olive Garden’s total sales were down 2.7% year-over-year, with same-store sales only partially offset by the establishment of nine new restaurants.
Family dining restaurants like the Olive Garden and Red Lobster have struggled in recent years in part due to increased competition from “fast-casual” restaurants such as Chipotle, which serve up food of a similar quality to family restaurants with a price point and convenience level closer to fast-food chains.
Net earnings for the fourth quarter of Darden’s fiscal year were $86.5 million, down from $133.2 million in the same quarter the previous year.