10-QPeriod: Q3 FY2001

DARDEN RESTAURANTS INC Quarterly Report for Q3 Ended Feb 25, 2001

Filed April 5, 2001For Securities:DRI

Summary

Darden Restaurants, Inc. reported solid financial results for the third quarter ended February 25, 2001, showcasing continued growth and operational efficiency. Sales increased by 7.8% year-over-year, driven by strong same-restaurant sales growth at its flagship brands, Red Lobster and Olive Garden. Net earnings rose to $49.5 million, or $0.40 per diluted share, up from $46.9 million, or $0.36 per diluted share, in the prior year's quarter. The company demonstrated effective cost management, with improvements in food and beverage and labor costs as a percentage of sales, although restaurant expenses saw an increase due to higher utility costs. For the first nine months of fiscal 2001, Darden Restaurants achieved a 9.0% increase in sales to $2.9 billion and a significant rise in net earnings to $136.0 million, or $1.10 per diluted share, compared to $118.7 million, or $0.89 per diluted share, in the same period last year. The company continues to invest in growth, with increased capital expenditures primarily for new restaurant development and remodels. Overall, the report indicates a healthy operational performance and a positive outlook driven by the sustained success of its core brands and strategic expansion.

Key Highlights

  • 1Total sales for the third quarter increased by 7.8% to $988.6 million, compared to $917.5 million in the prior year's quarter.
  • 2Net earnings for the third quarter were $49.5 million, or $0.40 per diluted share, an increase from $46.9 million, or $0.36 per diluted share, in the same period last year.
  • 3Red Lobster reported a 5.5% increase in U.S. same-restaurant sales for the quarter, marking the thirteenth consecutive quarter of growth.
  • 4Olive Garden achieved a 5.6% increase in U.S. same-restaurant sales for the quarter, its twenty-sixth consecutive quarter of increases.
  • 5Food and beverage costs as a percentage of sales improved to 31.7% from 32.2% year-over-year.
  • 6Restaurant labor costs as a percentage of sales decreased to 31.8% from 32.2% year-over-year.
  • 7Capital expenditures increased significantly to $244.7 million for the first nine months of fiscal 2001, primarily for new restaurant growth and remodels.

Frequently Asked Questions

Darden Restaurants reported a total sales increase of 7.8% to $988.6 million for the third quarter ended February 25, 2001, up from $917.5 million in the same period of fiscal 2000. This growth was primarily driven by strong same-restaurant sales increases at its key brands.

Net earnings for the third quarter of fiscal 2001 increased to $49.5 million, or $0.40 per diluted share, from $46.9 million, or $0.36 per diluted share, in the third quarter of fiscal 2000. This improvement reflects higher sales and effective cost management.

The primary drivers are strong same-restaurant sales growth at Red Lobster (5.5% in the U.S.) and Olive Garden (5.6% in the U.S.), which have now achieved 13 and 26 consecutive quarters of growth, respectively. Additionally, the company has shown improvements in food and beverage costs and restaurant labor costs as a percentage of sales.

Yes, the company is actively investing in growth. Capital expenditures for the first nine months of fiscal 2001 were $244.7 million, a notable increase from the prior year, primarily allocated to opening new restaurants and remodeling existing ones. Brands like Bahama Breeze and Smokey Bones BBQ are also expanding.