Darden Restaurants

Darden Restaurants, Inc.

Type	Public
Traded as	NYSE: DRI[1] S&P 500 Component
Industry	Restaurant
Predecessor(s)	Green Frog Restaurant (1938-1967) Red Lobster Inns of America (1968-70) General Mills Restaurants (1970-95)
Founded	First Restaurant (The Green Frog) opened in 1938 in Waycross,Ga.March 1968 (1968-03) Lakeland, Florida
Founder(s)	Bill Darden
Headquarters	1000 Darden Center Drive Orlando, Florida, U.S. 32837
Number of locations	More than 2,100 (October 2013)[1]
Area served	Worldwide
Key people	Clarence Otis, Jr. (CEO, Chairman) Gene Lee (COO, President)[1]
Services	Foodservice
Revenue	US$ $7.999 billion (FY May 2012)[1]
Operating income	US$ 638.0 million (FY 2012)[2]
Net income	US$ 475.5 million[1]
Total assets	US$ 5.944 billion (FY 2012)[2]
Total equity	US$ 1.842 million (FY 2012)[2]
Employees	200,000[1]
Website	darden.com
References: [3][4]

Darden Restaurants, Inc., is a multi-brand restaurant operator headquartered in Orlando.^[3] The firm owns several casual dining restaurant brands: Olive Garden, LongHorn Steakhouse, Red Lobster, Bahama Breeze, Seasons 52, Eddie V's Prime Seafood, The Capital Grille and Yard House. Darden has more than 2,100 restaurant locations and more than 200,000 employees, making it the world's largest full-service restaurant company.^[1] As of 2012, Darden is the only Fortune 500 company with its corporate headquarters in Greater Orlando.^[5]

History

The company's former logo, used until 2009.

What would come to be known as Darden Restaurants began when William (Bill) Darden Opened his first restaurant called The Green Frog in Waycross Ga. in 1938 at the age of 19. He later founded the Red Lobster Inns of America and opened the first Red Lobster restaurant in Lakeland, Florida, in 1968.^[6] Darden chose Lakeland because he wished to see how a seafood restaurant would fare in a non-coastal region, and Lakeland was the innermost city in Florida. The initial Red Lobster franchise was applauded by diners and critics alike. The store became successful and by 1970 had expanded to three locations in the state with two more under construction. While the locations were profitable, the company lacked the resources to expand further, so Darden sold the company to food giant General Mills that year.^[7]

General Mills ownership

General Mills upgraded the chain to a more casual dining/family fare oriented format, opened a new company headquarters in Orlando and retained Darden as company manager. In 1975, when Darden was promoted to the position of Vice President at General Mills, Joseph (Joe) R. Lee, the company's first restaurant manager, was made President of Red Lobster. Under General Mills, Red Lobster grew into a chain of almost 400 locations by 1985. The company underwent several restructurings and transformed itself from an inexpensive fast-food seller into a chain of casual dining seafood restaurants by 1988.^[7]

One of the company's first ventures into the diversification of its portfolio was the York Steak House chain of English-themed steak and chop restaurants in the 1970s. The franchised steak and potatoes restaurant was a cafeteria-style restaurant with salad bar and hot station. By the end of the 1980s, the chain had been mostly closed down. However some independent locations still exist.^[8][9]

In 1982, Darden opened the first Olive Garden concept store in Orlando. The chain took off, and by 1989 General Mills had opened over 145 stores, making the chain the fastest-growing unit in the company's restaurant holdings. While Olive Garden did not meet critical success, it was popular, and its per-store sales soon grew to match those of Red Lobster. The company eventually became the largest chain of Italian-themed full-service restaurants in the U.S.^[7]

In 1990, China Coast was launched as an attempt to create a (U.S.) national casual dining restaurant that featured American Chinese cuisine. While the chain eventually expanded to some 50 restaurants, its sales were lackluster and lost an estimated $20 million USD. By the end of 1995, the company was shuttered, and the remaining locations were either converted to Red Lobsters or Olive Gardens or closed altogether.^[7][10]

Darden

In 1995, General Mills decided to spin off its restaurant chains to focus on consumer food products. The new company was named Darden Restaurants, after Red Lobster's founder. General Mills stockholders received one share of Darden for every common share of General Mills held. General Mills restaurants had $108 million net income in that year. At the end of 1995, Darden operated 1,250 restaurants in 49 states with 73 locations in Canada.^[7]

Darden Restaurants was spun off from General Mills beginning on May 9, 1995, when it began trading on when-issue basis at $9.75 a share.^[11] The company became a fully separate entity on May 31, 1995, when its shares went on sale on the NYSE. The shares opened at $10.75, 17% below expectations, but climbed to $11.125 by the close of trading.^[12]

Darden executives planned to have two additional chains in place by 1998. In March 1996, Darden launched a test of Bahama Breeze Caribbean Grille concept featuring food and drinks found in the islands of the Caribbean Sea and a Caribbean theme, was created in 1996.^[7]

Markets were over saturated with restaurants in 1997 forcing Darden to close 48 poor performing locations and lose $91 million due to the restructuring. Red Lobster and Olive Garden were given make overs in 1998. Darden also made a profit of $102 million that year.^[7]

1999 saw Darden opening additional location after recovering from the 1996-1997 losses. The company then began testing a new concept entitled Smokey Bones BBQ Sports Bar that opened in late 1999 in Orlando. The restaurant is a sports bar concept featuring barbecue and related foodstuffs in an Appalachian mountain-lodge setting.^[7]

In 2003, Seasons 52 was under development with the idea of "provide guests the opportunity to indulge while still eating well." Season 52 were only being opened in the Florida or Atlanta markets during its initial phase.^[13]

Darden announced in January 2007 that the company was willing to expand by purchasing an existing 100 location chains even considering franchisors.^[14] By May, Darden indicated that its Smokey Bones division would be sold and or shut down including the two Rocky River Grillhouse, the proposed replacement concept for Smokey Bones.^[15] In August, Darden acquired rival Atlanta-based restaurant holder Rare Hospitality for $1.4 billion USD, gaining Rare's two chains, the The Capital Grille and LongHorn Steakhouse. As part of the Rare acquisition, Darden set up its Specialty Restaurant Group to include Capital Grille, Bahama Breeze and Seasons 52.^[16] In December, Darden announced that it would sell its Smokey Bones chain to Barbeque Integrated, Inc., an affiliate of Sun Capital Partners, Inc., for approximately $80 million. The sale was completed in January, 2008.^[6][17]

In 2010, Seasons 52 started a new expansion phase opening up in 11 more states over the next three years.^[13]

In January 2011, Darden announced co-locating their Olive Garden and Red Lobster brands in smaller markets to share kitchen but continue separate menus and eating areas.^[18] As part of the February Darden analyst conference, an analyst indicated that the corporation may be targeting another restaurant chain for acquisition possibly one of BJ's, California Pizza Kitchen or Yard House.^[19] In October 2011, Darden acquired 2 chains, Eddie V’s Prime Seafood and Wildfish Seafood Grille, for $59 million cash transaction and were placed within its Specialty Restaurant Group,^[20] Also In October, Darden signed an area-development agreement with Americana Group of Kuwait to develop and operate at least 60 locations using the Red Lobster, Olive Garden and LongHorn Steakhouse concepts.^[21]

In July 2012, Darden acquired the Yard House 39 location beer-centric chain for $585 million from TSG Consumer Partners. Yard House will be alongside the other upscale restaurants in Darden's Specialty Restaurant Group.^[22] On December 23, 2013, Darden's stock rose 3 percent after activist investor Starboard Value took a stake in the company. ^[23]

On December 19, 2013, Darden announced it plans to sell or spin-off the Red Lobster brand, citing pressure from stock investors. ^[24] This is in direct response to the company spending $100 million on a new digital platform. The project is already at least one year behind schedule and above budget. Several rounds of layoffs at in its marketing department and the company's second in command. ^[25]

Units

• LongHorn Steakhouse
• Olive Garden
• Red Lobster
• Darden’s Specialty Restaurant Group
  • Eddie V’s Prime Seafood
  • Wildfish Seafood Grille
  • The Capital Grille
  • Bahama Breeze
  • Seasons 52,^[20] fresh grill and wine bar with a seasonal menu with 475 calories or less dishes^[26]
  • Yard House USA, Inc. - 39 locations^[22]
• Darden Corporation
• GMRI, Inc.
  • RARE Hospitality International, Inc.
    • RARE Hospitality Management, Inc.

References

External links

• Official Website
• Yard House
• Eddie V’s Prime Seafood
• Darden Restaurants SEC Filings