10-KPeriod: FY2010

DARDEN RESTAURANTS INC Annual Report, Year Ended May 30, 2010

Filed July 23, 2010For Securities:DRI

Summary

Darden Restaurants, Inc. (DRI) in its 2010 10-K filing, reported its position as the world's largest company-owned and operated full-service restaurant company with 1,824 locations as of May 30, 2010. The company's portfolio was dominated by its core brands, Red Lobster and Olive Garden, which together comprised a significant majority of its restaurant count. The filing highlights the company's growth strategy, focusing on expanding existing brands and developing or acquiring new ones, with plans to open approximately 70-75 net new restaurants in fiscal 2011. Financially, the company presented a stable operational landscape, though the report indicates a slight decline in total sales to $7.113 billion in fiscal 2010 from $7.217 billion in fiscal 2009, attributed in part to the strategic closure of underperforming locations and a focus on optimizing the existing portfolio. The acquisition of RARE Hospitality in 2007, bringing LongHorn Steakhouse and The Capital Grille into the fold, continued to be a significant factor in the company's structure and growth narrative, with plans for continued expansion of these steakhouse brands.

Financial Highlights

54 data points
Beta

Revenue

$7.11B

22.9% Gross Margin

Net Income

$404.50M

5.7% Net Margin

EPS (Diluted)

$2.84

Total Assets

$5.28B

Cash & Equivalents

$248.80M

Free Cash Flow

$471.30M

Financial Statements
Beta
Revenue$7.11B
Cost of Revenue$5.48B
Gross Profit$1.63B
SG&A Expenses$690.70M
Operating Expenses$6.57B
Operating Income$407.00M
Interest Expense$95.70M
Net Income$404.50M
EPS (Basic)$2.90
EPS (Diluted)$2.84
Shares Outstanding (Basic)139.30M
Shares Outstanding (Diluted)142.40M

Key Highlights

  • 1Darden operated 1,824 company-owned restaurants across the U.S. and Canada as of May 30, 2010, with Red Lobster and Olive Garden being the largest brands.
  • 2The company's growth strategy centers on expanding existing brands and exploring new brand development or acquisitions, projecting 70-75 net new restaurant openings for fiscal 2011.
  • 3Total company sales slightly decreased to $7.113 billion in fiscal 2010 from $7.217 billion in fiscal 2009, reflecting strategic restaurant closures and portfolio optimization.
  • 4The integration and expansion of the LongHorn Steakhouse and The Capital Grille brands, acquired in 2007, remain a key focus for growth.
  • 5Darden emphasized its commitment to quality assurance, robust supply chain management, and strategic advertising and marketing efforts to maintain brand relevance and customer traffic.
  • 6The company highlighted investments in information technology to enhance operational efficiency, guest service, and financial control.
  • 7Risk factors disclosed included concerns related to food safety, litigation, regulatory changes (particularly healthcare reform), labor and insurance costs, and intense industry competition.

Frequently Asked Questions

Darden Restaurants operates as the world's largest company-owned and operated full-service restaurant company. As of May 30, 2010, its portfolio included a significant number of Red Lobster and Olive Garden locations, complemented by LongHorn Steakhouse, The Capital Grille, Bahama Breeze, and Seasons 52.

In fiscal year 2010, Darden's total sales were $7.113 billion, a slight decrease from the previous year. The company plans to continue expanding its restaurant footprint, projecting approximately 70-75 net new restaurant openings in fiscal year 2011, with a focus on growth across its established and newer brands.

Darden identified several key risks, including potential adverse effects from food safety concerns and food-borne illnesses, litigation risks related to employment practices and guest issues, negative publicity, evolving federal, state, and local regulations (including healthcare reform), potential increases in labor and insurance costs, reliance on information technology, health concerns related to disease outbreaks, intense competition within the restaurant industry, and challenges in driving profitable sales growth and managing expansion.

Darden places a strong emphasis on quality assurance and supply chain management. They source food and supplies from over 2,000 suppliers globally, adhering to strict quality control standards. The company uses rigorous testing, independent third-party inspections, and requires suppliers to implement comprehensive food safety programs like HACCP. Their purchasing staff actively seeks high-quality ingredients at competitive prices, leveraging long-term relationships and directly sourcing from producers to ensure a consistent supply.