Red Lobster and Olive Garden cook up a mess
Parent company Darden blames the payroll tax hike for biting into sales, but its restaurants' recent performance indicates bigger problems.
Ask what's wrong with The Olive Garden and Red Lobster, and parent company Darden International (DRI) will give you a full menu of options: The specials aren't cheap enough, people are eating less seafood, the healthier menu items haven't caught on yet, the new décor and menus require some acclimation, the weather has been bad.
Now it can add a new special to the list: Rising payroll taxes.
For the second consecutive quarter, Darden issued a warning about its profits for the most recent quarter and cut its outlook for the year. It now expects revenue to slide 4.5% for the quarter ending Feb. 24, and it placed the blame on a two-percentage-point increase in the Social Security tax after a temporary tax cut expired.
This plaintive cry may sound a bit familiar, as retail giant Wal-Mart (WMT) just used the same excuse for its soft performance in January even though competitors like Target (TGT), Macy's (M) and TJX (TJX) reported rising sales during the same month. Darden's situation is somewhat more dire, however, because its attempts to fix problems that cropped up at the end of 2012 have been largely fruitless.
After the company revised expectations last quarter, sales at Darden's U.S. restaurants fell 2.7% for its three biggest chains. That included a 3.2% drop at Olive Garden, a 2.7% decline at Red Lobster and a 0.8% slump at LongHorn Steakhouse. At the time, Darden said it was still waiting for tweaks to its restaurants and menus to take hold. But it admitted misjudging its specials by offering 2-for-$25 meal deals when competitors including DineEquity's (DIN) Applebee's, Brinker Restaurants' (EAT) Chili's and Bloomin' Brands' (BLMN) Outback Steakhouse offered 2-for-$20 meal deals or $10 entrees.
Meanwhile, Darden increased the number of chicken and beef items offered at Red Lobster from 8% of the menu to nearly a quarter, added low-calorie options to Olive Garden's menu and changed its slogan from "When You're Here, You're Family" to the more fast-paced "Go Olive Garden." That move didn't work, and in January, Darden replaced Olive Garden's president in an effort to boost results.
The problem is bigger than Darden or its restaurants, though. Americans spent 5.5% more at chains that offer low-calorie menu items, but 3% less at casual-dining establishments last quarter. Combined with drops in casual-dining spending reported by NPD Group every quarter since spring of 2010 and the gradual shunning of roadside chains by people ages 18 through 47, these are grim times for the segment.
When your industry's decline predates the tax cut you're complaining about, maybe it's time to stop blaming everything beyond your restaurant's walls and start taking a good, long look at the boil-in-bag dishes being served at the vinyl-lined booths within them.
One more thing I am not callous to the plight of many Americans..I realize there are many in trouble.
A few, not as many as some would say...Have put themselves in the positions they are in..
Many others by circumstance...Yeah I know many are hurting and our Government has more then their share of shortcomings....
I also know what being poor was, many decades ago..
But I also don't blame this President, for most of what is going on...That's a cop-out..And wrong.
While many on here lament and grumble about, why they will or won't eat at these Restaurants...
And THEN try and blame Obama or the "tax take-back.."
Which even the Darden Companies try or attempt to "sluff it off to.."
And a few other's like Wally World...? Others(retail) did quite well..?? Hmmm.
AND THEN A FEW PARAGRAPHS DOWN....
"Darden Companies" admitted many other problems,,AND the "biggie", their SPECIAL MEALS were
2 for $25 and the Competition sold their's 2 for $20("they admittedly misjudged it's special offerings")
If YOU put a pencil to that, MANY might notice that is a 25% increase in price over the Competitors..
Now do you really still want to go with it being Obama's Fault?...PLEASE READ THE ARTICLE.
We used to go to Red Lobster but every time I tried to order a LOBSTER TAIL, they were out. They repeatedly denied me if I tried to order one earlier in the week. I used to go there for my birthday and my lobster dinner. I had one tail I couldn't even CHEW! I did get fifty dollar gift cert but have not used it in the last 2 years! Why the hell would you name something the Red Lobster and then not be able to furnish a damn lobster tail. I have worked in these places so your excuses won't work. Also, when I found out they are cutting hours due to Obama care and screwing their employees, I vowed to never go there again until they change to what they are suppose to be. Now we go to the Lobster Shop where I can get what I want when I want and no whining about any excuse, cause they don't need excuses!!!! They can supply what you want with warmth and a smile! And forget the Olive garden. We all went out to one and we had to stop at another place to fill up my husband!!!!!
It becomes fairly obvious that very few of you, would know good from bad dining. Should the before mentioned establishment be the choice of my guest, I will enjoy the company and the meal, as it conforms to the requirement of what they know of the restaurant franchise and its target market, If you wish for more food quantity or quality you should be prepared to pay $25.00 plus, educate yourself to obtain the skill of culinary arts to bring you more enjoyment. If your only requirement is to sit eat and discuss that ugly dress Matilda wore to Sunday service, and dine like swine at the trough, the dreaded group that typically show up in three parties of five, so you aren't required to pay these hard working gratuity dependant workers a fair wage. There are plenty of
popular franchises that budget for these groups.
Oh !!! if you can't fix a better salad at home then God bless you.
Remember about 20years ago when you could actually get fresh fish at Red Lobster like red snapper. I went there probably 6 times a month. Well that all ended when they decided to do away with the fresh catch. We decided to try them again for Valentines. That was a complete waste of a night out. Spent about 70.00 on average at best food that might have been worth 30.00 needless to say I won't be back.
I for one don't eat out much. I make my own dinners and if I want a steak dinner, lobster dinner, shrimp dinner, I go out and buy it fresh, for a 1/3 of the cost and I never complain of how my portions are.
Red Lobster is over priced and like many have mentioned here, not enough to their meals. As far as Olive Garden, I may have eaten there once or twice. Again, they load you up on the pasta and leave you hungering for more meat.
Why would I want to blow my money going out to eat, just to have to wait in line and get short changed on my meal.
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