How Far Can Darden Restaurants, Inc. (DRI) Go to Retain Its Customers?

Page 1 of 2

Darden Restaurants, Inc. (NYSE:DRI)The sluggish and uneven recovery of the US economy is posing a big threat to the restaurant industry. Almost all restaurants are experiencing a tough time maintaining their top and bottom lines due to the decrease in the customer traffic.

It seems people now prefer to cook food at home as it is much cheaper than going out and dining in a restaurant. Thus to attract the budget-constrained customers, most of the restaurants are focusing on their value meals. One such company is Darden Restaurants, Inc. (NYSE:DRI), one of the world’s biggest full-service restaurant operators,which after facing the pinch of the decreasing consumer traffic has finally starter focusing on its value items.

What’s the fix?

Darden Restaurants, Inc. (NYSE:DRI) operates more than 2,100 restaurants in the U.S. and Canada under several brands, including Red Lobster, Olive Garden, Long Horn Steakhouse and Bahama Breeze. In order to attract customers, its flagship restaurants, Olive Garden and Red Lobster, have introduced new meal combos at cheaper costs, giving consumers more choices and greater variety.

Last year, the company also added some lighter dishes to the Olive Garden menu. As per the company, the introduction of those lighter dishes has helped it to capture about 10% more orders. The company plans to add more such options to its menu in order to attract customers. This will also help the company to boost sales further.

As I have already mentioned before, attracting budget-constrained customers with value meals is not a unique strategy for Darden Restaurants, Inc. (NYSE:DRI). Many restaurants have applied the same strategy to increase the consumer traffic.

We have seen Burger King Worldwide Inc (NYSE:BKW) make some aggressive adjustments in its menu over time. The burger chain has tempted customers with its 55th anniversary Whopper hamburger deal and limited-time deal offering Whopper Junior sandwiches for only $1.29, which really paid off well. The company reported 64% surge in its fourth-quarter earnings results backed by the 2.7% rise in comp sales and a 6.7% rise in its system-wide sales.

Another restaurant chain, The Wendy’s Co (NASDAQ:WEN), has introduced menu offering options with price tiers from $0.99 cents to around $2. The company already performed decently in its last quarter as its North American company-operated restaurants generated a same-store sales increase of 2.7% and franchise same-store sales in North America increased 2.9%. The introduction of the company’s “Right Price, Right Size” menu further attracted the budget-constrained customers with more options and thus boosted The Wendy’s Co (NASDAQ:WEN) customer traffic.

However, things are yet not so good for Darden Restaurants, Inc. (NYSE:DRI). The introduction of the value meals has no doubt increased consumer traffic, but it has also increased the company’s cost of sales which has resulted in another not so good quarter for the company.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!