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Why Cheddar’s Could Be Darden's Sleeping Giant

Darden acquired Cheddar’s Scratch Kitchen in April 2017. Since then, their same-store sales have been declining. Are their troubles over now?

Photo Courtesy of FSR Magazine.

There remains huge opportunity in the marketplace to grow Cheddar’s, which now has 159 restaurants.

As for why Darden’s optimism in Cheddar’s is surging, it comes down to the biggest gap they’ve had to cross post acquisition.

Typically, Darden doesn’t scale brands at more than 10 percent unit growth. More than that stresses the company’s human resources and that is a burden it isn’t willing to shoulder.

Darden discovered that Cheddar’s average guest isn’t all that different from one Darden knows rather well: Olive Garden.

As Darden pushed the integration process forward, Cheddar’s lost focus on basic operating fundamentals.

Dealing with Cheddar’s 25 franchised units was A1 on the list. Darden had to work in the chain’s two largest franchisees to make the deal, and weakened Cheddar’s base restaurants in doing so. It pulled resources from those units to help staff acquired ones.

Darden suspended marketing and promotional activities even though it was rolling over a heavy period of incentives the year prior to. Immediately after, Darden closed the acquisition. That kind of decision is probably one a smaller restaurant group doesn’t make.

Another serious setback in the integration process was turnover. Nearly 100 percent of Cheddar’s units finally have a general manager or managing partner. Previously, the brand didn’t even have a certified trainer program.

Cheddar’s now has reporting tools that include discount forecasting and food-waste management. They’re focusing on staffing levels, including making sure managers are present in the kitchen, lobby, and dining room during peak periods.

Cheddar’s also has had to learn how to use the tech and tools Darden typically leverages.

It’s always worth remembering as well that Darden tends to take its time with integrations of fresh brands. For LongHorn, which Darden bought in 2007, it dragged through a year of negative comp sales.

2019 FSR Magazine.

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