Darden continues to struggle with Olive Garden

Darden Restaurants' (NYSE: DRI) earnings woes continue, thanks in large part to its struggling Olive Garden brand.

Darden's fourth quarter profit plummeted 35.0 percent and its forecasted annual earnings trailed analysts' estimates. The restaurant chain's net income dropped to $86.5 million, or 65 cents a share, in the quarter. Excluding certain items, profit was 84 cents a share, whereas analysts estimated 94 cents per share.

Darden's shares fell nearly 3.6 percent to $47.72 in Friday morning trading. 

Even though Darden said in May that it was selling its Red Lobster chain to private equity firm Golden Gate Capital, the company's sales continue to be dragged down by Olive Garden, its largest chain.

Same-store sales at Olive Garden fell 3.5 percent, compared with a 5.4 percent drop in the prior quarter. Darden is struggling with Olive Garden because Americans are frequenting newer restaurants and fast-casual eateries that offer high quality food at lower prices, according to Bloomberg.

"The key metric –- comps at Olive Garden –- continued to disappoint, suggesting that the core business remains in a difficult position," Sara Senatore, analyst at Sanford C. Bernstein, wrote in a research note.

However, same-store sales for Olive Garden will advance as much as 1 percent in fiscal 2015, the company said on its earnings call. Darden has been investing in digital and social media, radio advertising and an online ordering system to attract millennial diners and boost sales.

For more:
-See this Bloomberg article

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