Darden sees potential for 1,000 more units
It’s nice to see yet another article about the hospitality industry turning around. The hospitality industry impacts so many jobs at so many levels from the actual restaurant managers and workers, to vendors and their sales reps, to uniform companies and janitorial supply companies. People do not think about the ripple effect of a restaurant closing because people stop supporting their local establishments.
Darden Restaurants Inc. president and chief operating officer Andrew Madsen laid out a plan last week that calls for more growth for the casual-dining company, to the tune of more than 1,000 additional units.
During a fast-paced luncheon presentation at last week’s International Council of Shopping Centers, Madsen highlighted Darden’s various brands, their market positioning and strategic initiatives underway to drive continued growth.
What had tongues wagging in the audience of financial types, leasing representatives and shopping center developers who’ve seen their industry wracked by the recession was Madsen’s optimistic view of Darden’s growth potential along with a compelling articulation of how the company intends to execute its strategy.
Orlando-based Darden, which operates nearly 1,800 restaurants under six brands, the largest of which include Olive Garden and Red Lobster, has been one of the best performers in the casual-dining space during the long economic downturn. It most recently upped its annual sales and earnings guidance on signs of stronger customer traffic trends.
Speaking to the company’s potential for growth, Madsen said Darden has the potential to increase its base by roughly 1,000 units as it exploits its scale, a strong balance sheet and a culture focused on reducing expenses.
To make that target a reality, Madsen said the company would “need to find ways to run our restaurants and support our businesses that are more efficient than they are today.”
He indicated that the company will remain focused on reducing incremental cost savings every year, as well as what he described as “transformative cost savings,” in areas such as supply chain, procurement and sustainability.
Reports have discussed Darden’s interest in looking to large retailers, like Wal-Mart, to gain expertise on supply chain efficiencies and save as much as $20 million annually. Chain Store Age editor Marianne Wilson wrote last year on the topic. Chain Store Age is a sister publication of Nation’s Restaurant News, published under Lebhar-Friedman Inc.
The increased efficiency that Darden is working toward is imperative, Madsen said, because of “persistent structural cost pressures beyond what we can pass along to customers and maintain a strong value equation,” especially in a tough environment for casual dining.