Jen10122
03-19-2004, 10:58 AM
Customers Had Swallowed Restaurant Chain's Profits
DES MOINES, Iowa (March 19) - Darden Restaurants Inc. said Thursday its Red Lobster chain will cut back on all-you-can-eat promotions, which generated customer traffic but hurt profit margins.
Last year, an all-you-can-eat crab promotion went awry when diners loaded up on numerous refills that obliterated profit margins.
''We're not going to discontinue them,'' chairman and chief executive Joe R. Lee said of such promotions in a conference call.
However, the Orlando-based restaurant company will be ''moving more to a once-a-year strategy'' which Lee said would mirror a strategy used by Darden's Olive Garden chain.
Lee also said while Darden expects ''some immediate benefits'' from lower overhead at its languishing casual-dining seafood operation, turning Red Lobster around ''will take time.''
Wednesday, after the financial markets closed, Darden reported earnings for its latest quarter of $77.9 million, or 46 cents a share, compared with $61.8 million, or 35 cents a share, in the same quarter a year earlier. Wall Street had been expecting 45 cents a share for the third quarter ended Feb. 22.
In afternoon trading, shares of Darden were at $23.82, down $1.18, or 4.7 percent, on the New York Stock Exchange.
AP-NY-03-19-04 1012EST
DES MOINES, Iowa (March 19) - Darden Restaurants Inc. said Thursday its Red Lobster chain will cut back on all-you-can-eat promotions, which generated customer traffic but hurt profit margins.
Last year, an all-you-can-eat crab promotion went awry when diners loaded up on numerous refills that obliterated profit margins.
''We're not going to discontinue them,'' chairman and chief executive Joe R. Lee said of such promotions in a conference call.
However, the Orlando-based restaurant company will be ''moving more to a once-a-year strategy'' which Lee said would mirror a strategy used by Darden's Olive Garden chain.
Lee also said while Darden expects ''some immediate benefits'' from lower overhead at its languishing casual-dining seafood operation, turning Red Lobster around ''will take time.''
Wednesday, after the financial markets closed, Darden reported earnings for its latest quarter of $77.9 million, or 46 cents a share, compared with $61.8 million, or 35 cents a share, in the same quarter a year earlier. Wall Street had been expecting 45 cents a share for the third quarter ended Feb. 22.
In afternoon trading, shares of Darden were at $23.82, down $1.18, or 4.7 percent, on the New York Stock Exchange.
AP-NY-03-19-04 1012EST