Darden Restaurants Talks Square app, Lobster Aquaculture, Growth Plans, and Walmart Consumer Goods at Investors Conference
Darden shared some interesting news in its annual analysts and investors conference on February 25-26, 2013. The Orlando Business Journal touched on some of the big stories of the conference such as;
- Plans to cut in half Olive Garden’s growth schedule- Updated growth plans now call for 15 new openings per year verses 36 per year that was previously reported.
- Price hikes will be lowered on an average guests check. Previously price hikes averaged around 2-3% per year, now Darden will focus on keeping them at around 1%.
How Darden is investing in its own future-
- Clarence Otis - Executive Chairman, Chief Executive Officer and Chairman of Executive Committee --“we're investing in the development of lobster aquaculture because we think that's critically important in order to preserve Red Lobster's ability to offer price accessibility over the long term.”
- Andrew H. Madsen - President, Chief Operating Officer and Director --“Now the casual dining traffic decline since 2008 has been driven by both a decline in category penetration as you see on the left, as well as reduction in visit frequency, shown on the right. Now we believe one of the key dynamics driving the decline in category penetration and frequency is the reality that casual dining is just less affordable for many consumers right now. As Clarence already reviewed, this is partly the result of life stage and partly the result of macroeconomic factors. Now this has led to a significant drop in the share of casual dining traffic coming from households with incomes below $60,000 from 38% in 2008 to 33% in 2012. It's also led to a need for greater affordability in the dining experience for these guests.”
- Andrew H. Madsen - “when we compare guest perception in fiscal 2012 to fiscal 2008, this is what we see. Our 3 large brands all improved their competitive rank on future visit intent, which is very important for the long term. Regarding the individual guest experience attributes, Red Lobster has generally improved their competitive position. LongHorn is generally flat or up, while Olive Garden is generally flat but down on a couple attributes. Value is the one exception where all 3 of our large brands have moved down in ranking, despite improving their competitive position on many experience attributes, suggesting that in this environment, what you pay is potentially a bigger driver of short-term guest behavior and perceived value than what you get.”
- Andrew H. Madsen - “We're improving our digital foundation with a revamp of our mobile and primary websites.”…
"we believe we have an opportunity to more quickly take advantage of key culinary trends by prioritizing more of our culinary development resources against platform ideas that support multiple dishes and have the potential to drive step-change improvements in the breadth and appeal of our brands. We also have an opportunity to more consistently leverage our considerable culinary expertise and resources at all brands in the Darden portfolio.”
- Chris Chang- Senior Vice President of Technology Strategy at Darden -- “Square is an example of technology that has not necessarily influenced all circles, but certainly has influenced our industry. Square allows the merchant to use their mobile phone to accept credit card payment, and it certainly applies pressure to a company like Darden. Because we have team members, we have guests, asking why they could be at a farmer's market and the farmer can accept a credit card payment on their mobile phone, and yet we can't at our restaurant. And so that's certainly something for us to think about.”... “at Darden it's pretty clear that we have an obligation to embrace and adopt technology more quickly.”
- C. Bradford Richmond - Chief Financial Officer, Principal Accounting Officer and Senior Vice President --“Our near-term model also includes an expansion of our consumer products business. This year, we tested selling 5 products in Sam's Club. Not surprisingly, our Olive Garden salad dressing and Red Lobster Cheddar Bay Biscuits Mix were a big hit. Estimated annual gross sales of more than $40 million exceeded expectations and made it clear that this could be expanded. The Olive Garden salad dressing will be offered in over 3,200 Walmart locations starting in March. We believe incremental earnings contribution from this model has the potential to reach $10 million in the next 5 years.”
You may recall just last month the company had a major internal shake-up when John Caron, president of Olive Garden, left the company. This came after failed marketing campaigns and slumping sales figures.