Menu price hikes at U.S. restaurants continue to make consumers wary about eating out, especially as economic concerns like inflation remain front of mind for many Americans.
Those concerns led to unpredictable restaurant traffic this summer – a season which restaurants usually count on for upticks in foot traffic – and resulted in lower-than-expected earnings across the restaurant industry, including at many establishments that serve seafood.
Orlando, Florida, U.S.A.-based Darden Restaurants, which operates fine-dining restaurants along with popular chains like Olive Garden and LongHorn Steakhouse, reported a sales incline of just 1 percent in its most recent fiscal quarter ending 25 August, bringing in USD 2.8 billion (EUR 2.5 billion) in the period.
Its Fine Dining segment, which includes such restaurants as Ruth’s Chris Steakhouse, The Capital Grille, Eddie V’s, and Season 52, saw its sales decline 6 percent year over year in the period. Olive Garden’s sales dropped 2.9 percent, and Darden’s “Other Business” segment saw a downturn of 1.8 percent.
LongHorn Steakhouse was a bright spot for the group, with its sales increasing 3.7 percent in the quarter.
Darden’s year-over-year foot traffic declined 0.5 percent in July, according to software and data firm Placer.ai, but was up 1.6 percent in June and 5.1 percent in August, leading to a volatile season overall.
“The significant step down in traffic during July led to our first-quarter earnings being lower than expected,” Darden CFO Raj Vennam said. “Following the softness in July, our sales trend has continued to improve. Considering this recovery, as well as the planned initiatives to support the remainder of the fiscal year, we are reiterating our guidance for fiscal 2025.”
The group added 42 net new restaurants during the quarter, the gains from which were partially offset by a same-restaurant sales decrease of 1.1 percent across its portfolio.
“While we fell short of our expectations for the first quarter, I firmly believe in the strength of our business. I am confident in the actions all our brand teams are taking to address their guests’ needs, which do not compromise the long-term health of our business for short-term benefits,” Darden President and CEO Rick Cardenas said.
Darden’s soft performance is just one example of the U.S. restaurant industry's struggles. In addition to the recent bankruptcies of Red Lobster and Rubio’s Restaurants, another fast-casual restaurant operator with locations across seven Southeast U.S. states filed for bankruptcy on ...