NEW YORK – Darden can’t seem to convince more people to sit down for a meal at its Olive Garden and Red Lobster restaurants.
The company reported a sharply lower quarterly profit on Friday that missed Wall Street expectations, with sales down at its two biggest chains despite ongoing attempts to revamp their menus with lighter, cheaper options. Darden said it would slash costs to prepare for future challenges, in part by reducing its workforce.
It also said that its president and chief operating officer, Drew Madsen, was retiring and would be succeeded by Gene Lee, effective immediately. Lee headed Darden’s specialty restaurants such as The Capital Grille and Bahama Breeze, which had fared relatively better than the company’s flagship chains.
To cut spending by about $50 million a year, the company says it’s reducing its workforce by 80 to 85 positions, as well as making program cuts. A representative said the personnel cuts will not be at the restaurant level.
For the three months ended Aug. 25, Darden said it earned $70.2 million, or 53 cents per share, which was far short of the 70 cents per share analysts expected. A year ago, the company earned $110.8 million, or 85 cents per share.
Sales rose to $2.16 billion, helped by new locations. But that was still short of the $2.19 billion Wall Street expected, according to FactSet.