Guests wearing protective masks wait outside a restaurant in Olive Garden in Thornton, Colorado Friday, March 19, 2021.
Chet Strange | Bloomberg | Getty Images
Darden restaurants Quarterly results were reported on Thursday that exceeded analysts’ expectations as customers visited Olive Garden and its other chains more than expected.
The company predicts that its fourth quarter fiscal year results will show that it is well on its way to recovering from the effects of the fiscal year Coronavirus pandemic.
The company’s shares rose 4.5% in premarket trading.
The company reported for the quarter ended February 28, versus Wall Street’s expectations, based on an analyst survey conducted by Refinitiv:
- Earnings per share: 98 cents compared to 69 cents expected
- Revenue: $ 1.73 billion versus $ 1.63 billion expected
The company reported net income of $ 128.7 million, or 98 cents per share, for the third quarter, compared to $ 232.3 million, or $ 1.89 per share, a year earlier. Analysts surveyed by Refinitiv expected earnings of 69 cents per share.
Net sales decreased 26.1% to $ 1.73 billion, beating expectations of $ 1.63 billion. Total Darden sales in the same store decreased 26.7% for the quarter, compared to the same store sales decrease of 20.6% in the second quarter. In the three months ended February 28, many states imposed stricter mandates on restaurants as new Covid-19 cases increased and hurt sales for the entire industry.
Olive Garden, which accounts for roughly half of Darden’s sales, posted a 25.8% drop in sales in the same store. LongHorn Steakhouse is recovering faster and is seeing sales in the same store drop just 12.6%.
Dardens gourmet business, which includes The Capital Grille, remains hardest hit by the pandemic. Sales in the same store fell by 45.2% and declined more than in the previous quarter.
For the fourth quarter of Darden’s fiscal year, the company forecasts total revenue of $ 2.1 billion and earnings per share from continuing operations of $ 1.60 to $ 1.70. The pace of vaccinations is accelerating, which will encourage more consumers to eat in restaurants as states relax restrictions. Darden’s sales in the same store turned positive for the week ending March 21 as it begins the introduction of restaurant bans.
Darden expects around 35 restaurant openings and investments of $ 350 to $ 400 million in fiscal 2022. Executives said it was too early to predict earnings or sales for the next fiscal year.
Darden also said it plans to spend about $ 17 million to give a one-time bonus to hourly restaurant workers and raise wages. As of Monday, every hour worker in their restaurants will earn at least $ 10 an hour, including tips. Hourly wages will rise to $ 11 in January and will rise to $ 12 an hour the following January.
The company’s move to increase workers’ compensation follows an early push by President Joe Biden to raise the federal minimum wage to $ 15 an hour, including workers with tips. Democrats removed the proposal from the Covid Relief Act, but they will likely try again while Biden is in office.