Darden Restaurants, Inc. (NYSE:DRI) Continues To Face Serious Challenges Despite Recent Business Growth


Darden Restaurants, Inc. (NYSE:DRI) continues to struggle amid growing competition in the industry added by higher costs in the restaurant operations. Recently the company closed down its Wildfish Seafood Grille in Scottsdale and its other outlets too may face the same consequence.

Darden Restaurants is a national restaurant group that operates the famous Olive Garden, The Capital Grille, and Red Lobster chain. Its communications manager, Hunter Robinson stated that the company had to make a difficult decision of discontinuing the operations of Wildfish in Scottsdale. Reports indicate that this move by the company is in accordance with its decision to permanently shut down its 12-year-old chain of seafood restaurant related to Wildfish brand.                                                                                    

Darden acquired the Wildfish and Eddie V’s Prime Seafood brand from the restaurateurs Guy Villavaso and Larry Foles in 2011. The company will continue to serve the customers at Eddie V’s and is trying to accommodate the staff at Scottsdale here. Although this certainly is not good news for the Wildfish lovers, Darden Restaurants is still doing well business-wise thanks to its rocking sales initiatives, brand renaissance, and acquisition of Cheddar.

Cheddar Acquisition Adds Value To Darden’s Portfolio

Last year in April, the multi-brand restaurant operator acquired Scratch Kitchen, a small restaurant chain of Cheddar. This new addition is indeed been a positive move as it has somehow increased the portfolio value of the Orlando-based company. Moreover, the restaurant operator with already multiple brands to its credit now has an established and successfully running, well-managed chain under its control. It has made increasing the sales scale a bit easier for Darden.

Cheddar’s integration into the company has enhanced the overall sales of Darden dynamically with the fiscal third quarter going up by 11.3 %. Last year the restaurant operator added 34 new other restaurants apart from the 154 from Cheddar. Simultaneously, Darden also introduced a brand renaissance plan for its Olive Garden brand through which it focused on many aspects of running a restaurant smoothly including introducing simplified kitchen systems, proper scheduling, and management of sales plans, making much-needed changes in the core menu items and more.

But despite all these positive aspects, the company continues to face the challenge of improving its profit ratio which at present seems impossible because of the rise in the wages of the employees and several other factors.

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