Darden's Back-to-Basics Approach Pays Off
Leveraging Data Insights
An analyst asked Darden to share examples on how it was able to leverage that data in fiscal ‘'23 and in the future.
“..We are starting to use a lot of AI and machine-learning to help guest count forecast and help our restaurants forecast our business better,” responded Cardenas. “... If you forecast your traffic better, you order better, you receive better, you schedule better. That's one of the big things that we've looked at is using machine-learning and AI.”
The company uses data “to help look at what our guests' patterns are, what we think about guests, and how we market to our guests,” he added. “We also improve operations execution with the data that we have. If you're asking for one big thing -- is analytics through pricing too. So, we've got a great analytics team here that does help with our pricing. They look at restaurants, they look at categories, look at items, they look at elasticity. And we can do all that in-house because of our scale.”
Darden Restaurants Inc. reported its fiscal Q4 2023 earnings on June 22. In a call with analysts, Darden executives discussed the company’s brands and its performance.
Positive Performance
The parent company of Olive Garden, LongHorn Steakhouse and Cheddar's Scratch Kitchen is performing better than its competitors. During its fourth fiscal quarter, industry same-restaurant sales decreased 0.7% and industry same-restaurant guest counts decreased 7%. Meanwhile during Darden’s full fiscal year 2023, industry same-restaurant sales increased 2.7% and industry same-restaurant guest counts decreased 5.5%, explained Kevin Kalicak, IR, citing Black Box Intelligence's casual dining benchmark (excluding Darden’s brands).
Total sales for the Q4 reached $2.8 billion, 6.4% higher than last year, driven by same-restaurant sales growth of 4% and the addition of 47 net new restaurants.
For the full fiscal year, sales increased by 8.9% to $10.5 billion.
“Despite a tough environment, we significantly outperformed the industry benchmark for same-restaurant sales and traffic and met or exceeded the financial outlook we provided at the outset of the year,” Rick Cardenas, President & CEO, said.
Consumer Mindset
Darden’s Cardenas said they are not seeing “material changes in our check trends across our core casual brands … but one area we're seeing a little bit of check management is with alcohol sales primarily at our higher-end brands.”
…”Overall, we're not seeing anything concerning,” but admits “there might be some price sensitivity in consumers overall.”
Back to Basics
“Our restaurant teams continue to execute at a high level by remaining focused on our back-to-basics operating philosophy anchored in food, service and atmosphere. Our brand's ongoing efforts to drive execution through simplification enable our restaurant teams to create great guest experiences as evidenced by a record-level performance we saw from many of our brands on key holidays throughout the year,” Cardenas explained.
Mother’s Day 2023 was a high-water mark for the Olive Garden, “which achieved the highest sales day and sales week in their history during the week of Mother's Day,” Cardenas shared. “This focus on being brilliant with the basics leads to strong guest satisfaction scores and our internal guest satisfaction metrics remain at or near all-time highs across our brands.”
Making Training Fun
Gamification is catching on in staff training, and Darden’s LongHorn Steakhouse brand is reaping positive benefits.
At LongHorn Steakhouse one of the most important KPIs is the “steaks grilled correctly” score, “which is at an all-time high,” Cardenas said. To continue to drive the knowledge and these results, LongHorn recently completed its sixth Steak Master Series, its annual grilling competition and training program. “Over the course of two months, thousands of culinary team members competed in this highly engaging training program for the right to be crowned champion and receive the $15,000 grand prize,” he explained.
A Career Path
As hiring and retaining good employees remains a challenge in hospitality businesses of all sizes, Darden is among the brands promoting from within. Nearly 1,300 hourly team members were promoted into its manager-in-training program and 320 managers were promoted to General Manager or Managing Partner positions.
Give Employees Multiple Reasons to Stay
Darden is among the brands adding benefits and environment that encourages employees to stay “...We continue to invest in our team members' development with new programs like Fast Fluency, which allows them to learn English for free. And our Next Course scholarship program that awarded post-secondary education scholarships worth $3,000 each to nearly 100 children or dependents of Darden team members,” Cardenas explained.
Darden continues to improve on its turnover and its training, he added, as longer-term staff leads to greater productivity.
“...Our brands have done a great job improving productivity … As we continue to look at improving training, having turnover come down, that should help productivity a little bit,” Cardenas added.
Earlier this month, Darden’s finished the acquisition of Ruth's Hospitality Group, known for its Ruth's Chris Steak House brand, and will be working to integrate its 5,000 employees into the company.
