Darden Restaurants Inc. earnings fall as Olive Garden’s profits continue to spiral downward

Darden Restaurants Inc. continues to struggle with bringing in revenue even after its plan to sell Red Lobster due to Olive Garden earnings remaining lower than expected.

According to Forbes , Darden’s restaurant LongHorn has been doing well with a 2.4 percent increase with in store sells and a more than 10 percent revenue increase in the fourth quarter. Darden’s other restaurants have also been bringing in cash with a combined revenue increase of 15.9 percent. Olive Garden, on the other hand, faced a 3.4 percent decrease with in store sells during the quarter and its revenue fell 2.7 percent to $926 million. Red Lobster’s store sells decreased 5.6 percent, which is part of why Darden has decided to sell it. Analysts are concerned about the Olive Garden declines because despite good profit from its other restaurants, Darden will be relying on Olive Garden to bring in over half of its revenue after it completes the plan to sell Red Lobster.

Olive Garden, Darden’s largest restaurant chain, is having a hard time competing with newer restaurants and casual fast food restaurants that are offering good tasting food for a low price. Between Olive Garden’s and Red Lobster’s struggles, Darden’s net income went down from $1.01 a share last year to 0.65 cents a share, a significant loss according to Bloomberg News.

Darden entered an agreement with Golden Gate Capital to sell its restaurant Red Lobster for $2.1 billion this past May. The company will be using the money to pay off debt and to attempt to improve Olive Garden’s performance. Darden will own a total of 1,500 restaurants after handing over Red Lobster.

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