Where exactly is the restaurant industry heading this quarter? If Darden, the world’s largest owner of casual sit down restaurants such as Red Lobster, Olive Garden and LongHorn Steakhouse is any indication, things are starting to look up in a very slow but steady way. The company had a hard time in the beginning of the fourth fiscal quarter; however, they have shown themselves to be finishing the quarter quite strongly.
This in spite of the fact that they’ve had some trouble getting the word out for some of their top brands including Red Lobster, which has proven to be a bit of a drag since consumers grew tired of the advertising quickly. Furthermore, Olive Garden’s advertising simply never got underway to begin with.
Darden is Still Looking Good – The Rest of the Industry, More of a Maybe
The trend in the restaurant industry does seem to be moving in a slow but steady upwards direction. The forecasts from UBS call for a flat to growing bottom line in the restaurant industry with Darden showing better growth than most having made some great strides in May to turn things around and move their brands forward.
Recent Study Shows Upbeat Attitude Amongst Consumers
We reported earlier that a recent study indicated that consumers were beginning to change their attitudes about going out to eat and that they are starting to look for more dining opportunities, albeit still at discount prices, reflecting the overall uncertainty in the general economy.
Restaurants Expect Strong Summer Sales
Because of that study, restaurateurs are expecting to see a fairly good summer where more travelers will be dropping in for meals; however, they are also expecting to spend an increasing amount of their funds on promotions and on discount plans to lure customers inside their doors.
Darden’s Estimates
Getting back to Darden for a moment, they are expecting to show growth for the quarter of between 2-4%. While not the kind of growth that makes industry executives jump for joy, it is still fairly solid, offering good outlooks.
Jim Balis' Blog 