Darden Restaurants’ recent acquisition of Yard House is expected to complement the restaurant conglomerate’s other brands, including Red Lobster, Olive Garden and Longhorn Steakhouse.
While Irvine, Calif.-based Yard House is a small upscale casual chain of 39 units in a handful of states, it is a profitable one. Sales surpassed USD 262.4 million in 2011. Darden purchased the chain for USD 585 million earlier this month.
“We believe Yard House is a great fit for Darden, and it’s a great fit because, one, it complements our brand portfolio with a unique concept that consumers crave. It’s a highly respected brand with customer demographic that complement those of our existing brands. More specifically, Yard House gives Darden greater exposure to both younger and more financially resilient customs,” said Darden CEO Clarence Otis on a recent investor conference call.
Yard House’s keys to success include its heavy focus on alcoholic beverage sales (liquor accounts for 40 percent of total sales according to foodservice consulting firm Techonomic) and its quality food offerings. The average check at Yard House is USD 20.35 and the high volume stores each make more than USD 8 million a year on average, according to Technomic.
“Alcoholic beverage sales are way over the average of Red Lobster and Olive Garden,” said Ron Paul, president and CEO of Technomic, a Chicago-based foodservice consulting firm. In addition, Yard House complements Darden’s portfolio of restaurant chains and does not compete with its other concepts.
“It is nothing like Seasons 52, Longhorn Steakhouse, Capital Grille or even Eddie V’s, which they recently acquired,” said Paul.
Yard House’s menu includes seafood “snacks” such as the Ahi Poke Bowl and Shrimp Ceviche Spoons and entrées that include Blackened Swordfish Street Tacos, Popcorn Crusted Halibut and Lobster Garlic Noodles. The brand also features quite a bit of seafood on its menu, and Paul does not expect that to change.
“Yard House is a very strong-performing chain. If it isn’t broke, Darden isn’t going to fix it,” he said.
Darden executives will be looking to expand Yard House in both the United States and abroad, according to Paul.
“Yard House is hardly built out in terms of what they can have in the U.S., and there is some international potential. Over the near term, they will probably open five to 10 stores a year,” said Paul.
Darden executives will also likely look for larger restaurant chains to acquire.
“They will likely acquire full-service chains that have a higher check average than Olive Garden and Red Lobster,” said Paul.
