September 21, 2013 in Business

Darden’s restaurant makeovers unhelpful

Sales at Red Lobster, Olive Garden fall again
Candice Choi Associated Press
 

NEW YORK – Darden can’t seem to convince more people to sit down for a meal at its Olive Garden and Red Lobster restaurants.

The company reported a sharply lower quarterly profit on Friday that missed Wall Street expectations, with sales down at its two biggest chains despite ongoing attempts to revamp their menus with lighter, cheaper options. Darden said it would slash costs to prepare for future challenges, in part by reducing its workforce.

It also said its president and chief operating officer, Drew Madsen, was retiring and would be succeeded by Gene Lee, effective immediately. Lee headed Darden’s specialty restaurants such as The Capital Grille and Bahama Breeze, which had fared relatively better than the company’s flagship chains.

The shake-up comes as Darden Restaurants Inc. struggles to keep pace with a shifting industry, with more people heading to chains such as Chipotle that offer food perceived to be higher-quality at relatively cheaper prices. As traffic has declined at Olive Garden and Red Lobster over the years, Darden has been trying to win back diners with lighter dishes and promotions intended to underscore the affordability of its food.

Olive Garden, for example, recently rolled out “small plates” that can work as appetizers or side dishes. TV ads have ditched the Old World atmosphere of the past in favor of a more upbeat, modern feel. Recent promotions included two dinners for $25 and its long-running Never-Ending Pasta deal.

Despite the moves, sales fell 4 percent at Olive Garden restaurants open at least a year in the latest quarter. The figure was down 5.2 percent at Red Lobster, where the company added more non-seafood options to attract a broader audience.

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