Darden Restaurants stock analysis ahead of Q1 earnings
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Sep 22, 2021
Darden Restaurant Group’s (NYSE: DRI) Longhorn Steakhouse had more people visit the restaurant in the spring quarter this year versus the 2019 equivalent, but its other dining brands were struggling. Now that Darden is set to report its Q1 results on Thursday, investors are interested in finding out if the situation changed over the summer.
Longhorn Steakhouse continues to lead
According to Placer.ai, Longhorn Steakhouse continued to lead the pack with visits up 19.9%, 34.1%, and 17.1% in the past three months, respectively, which is particularly impressive considering the nationwide visits to restaurants turned red again on a year-over-two-year basis from the week of August 16th to the week of September 6th on fear of the delta variant.
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Behind Longhorn was Darden’s Olive Garden that saw visits down only 5.3% in August compared to the same month before the pandemic. While it was still a pullback from visit growth it noted in July, it was one that aligned with the nationwide trends in dining.
Americans are looking for a more celebratory dining experience
The difference in recovery trajectories could be attributed to the “consumers’ current preference for upscale restaurants,” Placer.ai added in its recent report.
Some patrons who have gone more than a year without stepping foot in a restaurant may be looking for a more celebratory dining experience. And, going out for steak may feel more festive than going out for pasta and pizza.
Data from Darden’s other fancy restaurants like Eddie V’s Prime Seafood, the Capital Grille, and Season 52 further substantiates the thesis as all three brands saw more visits in the past three months versus the comparable period of 2019.
Data from casual restaurants supports the thesis
On top of that, its casual restaurants like Yard House and Cheddar’s Scratch Kitchen are still lagging in recovering visits to the pre-pandemic levels.
An exception, as per Placer.ai, would be Bahama Breeze, with visits up 4.2% year-over-two-year in August, beating the countrywide decline in visits to restaurants. But that could also be attributed to Americans looking for a more “festive experience” as Bahama Breeze, despite being a casual restaurant, markets itself as an “island getaway”.
Perhaps Americans looking to do something special with friends and family after a long and challenging year feel more attracted to the Caribbean concept than to another pub or sports bar brand.
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