Are Panera and Chipotle eating Darden's lunch?
The owner of Red Lobster and Olive Garden released earnings Thursday, and could be in trouble. Is the burgeoning fast-casual dining industry to blame?
Is this restaurateur in trouble? On today's Stock of the Day, Motley Fool analyst Jason Moser takes a look at Darden Restaurant's troubles, and why the competition may be eating its lunch.
With the growth of the so-called "fast-casual" dining industry, and companies in this space such as Panera Bread (PNRA) and Chipotle Mexican Grill (CMG) seeing a lot of success as the preferred option for consumers who are looking for good food at an affordable price, fewer consumers are choosing the experience of eating at casual restaurants over the value proposition of fast casual.
While this has hurt Darden across its restaurant chains, Red Lobster has been the stand out underperformer for the company, and Darden has now announced that it will be spinning off Red Lobster from the company.
So could this sell-off be considered a buying opportunity for value investors looking to pick up Darden on the cheap? Jason isn't looking at it that way. With the continued rapid growth of restaurants in the fast casual sector compared with Darden's current anemic growth rate, he sees the pinch that Darden is feeling today as a trend that could stretch on into the foreseeable future.
The Motley Fool's 12 top stocks for 2013 are now available! So if you're tired of picking stocks out of a hat and hoping that one skyrockets, check out Stocks 2013: The Investor's Guide to the Year Ahead. It's The Motley Fool's current top report, and includes Chief Investment Officer Andy Cross's top stock for 2013! This under-the-radar company is the secret winner in the war for the last precious drops of oil on the planet. Find out what it is and how you can take advantage of this unseen company's huge profits in this special, free report, just click here now.
Copyright © 2014 Microsoft. All rights reserved.
After enjoying a smooth rise in stock prices since May, investors are about to be hit with another bout of volatility.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.