Olive Garden’s parent company plans to add locations this year and into next but prime sites may come at a higher price than expected.
Darden Restaurants, the Orlando, Florida-based company that also owns LongHorn Steakhouse and Cheddar’s, opened 14 locations in its fiscal fourth quarter that ended May 30. That took Darden’s total to 1,834 restaurants.
The company is targeting 35 to 40 locations in its current fiscal year. However, Gene Lee, chief executive officer of Darden, told investors on the company’s fourth-quarter earnings call that “tremendous speculation in the real estate” is driving up prices for properties.
The pandemic hit casual dining companies such as Darden hard. Dining rooms closed for health reasons, prompting casual restaurant chains to adapt to delivery and pick-up service.
Big chains closed locations across the country. Ruby Tuesday, for example, filed for Chapter 11 bankruptcy protection last October and permanently closed 185 locations that had been shut during the pandemic.
Lee’s comment indicates that investors are betting on a recovery in casual dining.
Darden’s earnings report seems to indicate that may be the case. Consolidated sales in the quarter hit nearly $2.3 billion, just 0.5% lower than the same quarter in 2019 and 90.4% better than last year. LongHorn Steakhouse was better than 2019 by 13.5% while Olive Garden was off by just 1.5%.