Darden announces leadership shake-up as sales plummet
Darden Restaurants’ sales plummeted in its second fiscal quarter, due in larger part to dining shutdowns in many areas of the United States.
Total sales for the Orlando, Florida, U.S.A.-based operator of LongHorn Steakhouse, Olive Garden, and other restaurants chains, dropped 19.4 percent to USD 1.7 billion (EUR 1.4 billion). Same-restaurant sales also fell by 20.6 percent, the company reported.
Profits for its fine-dining sector declined 33.2 percent, while “other business” profits fell 17.6 percent. Sales at Olive Garden dropped 19 percent, and LongHorn sales decreased nearly 9 percent.
“Our second quarter start was encouraging with weekly sales building on results from the first quarter. However, as COVID-19 cases began increasing in November and many state and local governments re-imposed dining room restrictions, the last two weeks of the quarter trended down significantly,” Rick Cardenas, Darden’s senior vice president and chief financial officer, said during a call with investors.
That downward shift in sales negatively impacted operating income by approximately USD 15 million (EUR 12 million), Cardenas said.
Cardenas said Darden’s third-quarter performance is difficult to project as the company may be forced to execute further dining room closures and capacity restrictions, Cardenas said. Total sales will likely be between 65 percent and 70 percent of prior year levels, he said.
“With dining rooms closures increasing, we are focusing on our playbook of expense management and off-premises sales. While there is encouraging news on the broad distribution of COVID-19 vaccine in the spring, we currently don’t anticipate meaningful sales trend improvements until sometime in the fourth quarter of fiscal 2021,” Cardenas said.
On Friday, 18 December, Darden announced a series of promotions that elevated Cardenas to the position of president and COO. Darden’s current CEO Gene Lee, Jr. has relinquished the title of president following his election to the position of chairman of the board.
"At a time of unprecedented change in our industry, the board concluded that it is in the best interests of the company to combine the roles of chairman and CEO in order to drive the most efficient execution of its long-term strategy," Charles M. Sonsteby, the current chairman of the board, said in a press release.
Sonsteby will become the board's lead independent director. Rajesh Vennam will assume the role of chief financial officer, formerly held by Cardenas. All of the moves will become effective 4 January, 2021.
Photo courtesy of Kristi Blokhin/Shutterstock