DRI - Earnings call transcript Q3 2019 | Darden Restaurants, Inc.

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Operator

Welcome to the Darden Fiscal Year 2019 Third Quarter Earnings Call.

Your lines have been placed on a listen-only mode until the question and answer session [Operator instructions]. This conference is being recorded.

If you have any objections, please disconnect at this time. I will now turn the call over to Mr. Kalicak. Kevin you. Thank

begin. You may

Kevin Kalicak

Sue. participating Good thank you, everyone, morning, today's call. for on you Thank and

Joining are CFO. me Rick and today Gene Lee, CEO Darden's Cardenas,

include uncertainties in reminder, statements These Reform statements a comments to during cause XXXX. call As risks subject and made Act of as could Private the will defined are Securities that Litigation this forward-looking morning with press expectations are described risks Securities results actual release, was Commission. projections. which and to filings differ materially Those in distributed Exchange and this the the from company's our our in

highlights included presentation before We broadcasting our to plan this simultaneously the Today's posted these remarks fiscal more XXXX. opens, some quarterly will XXth the certain are providing XXXX performance in is fiscal followed we at This and results for release financial updating are in will site Investor a Gene quarter business for guidance initial questions. discussion earnings by and market the of Rick Then take conference from during a section presentation. measurements, on before brief our call, our about include on your morning, June presentation our and outlook of non-GAAP Relations We which fourth-quarter will XXXX, share and call. www.darden.com. and the fiscal detail reconciliations provide Web measurements

to call As excluding industry a to reminder, estimated Knapp Track refer references during today's benchmark all Darden.

X.X%, grew industry During our and sales grew same-restaurant quarter, same-restaurant decreased sales third X%. guest fiscal total industry industry X.X% counts

I'll turn to the Gene. Now, over call

Gene Lee

morning, everyone. Good Kevin. Thanks,

to X.X%, growth today we LongHorn Olive from drive billion, share same-restaurant is we continues an Total press strategy earnings. Lead still a the from another seen strategy were morning, continuing Darden diluted an more Steakhouse good at were sales right industry same of double earnings last sales from adjusted sales and increase This and our strong benchmark. four you've $X.XX, year's years operations implemented and As X.X% grew per than by $X.XX our net Garden it had success. increase X.X% of this restaurant quarter. ago release

service significant communicate the continue the ensuring Our I’m our better enable level our our two, go create our them to to a cultivating to simple food, three effectively; to rigorous continue planning on hard operating teams culture scale we insights and of remain extensive guest results day-in with and atmosphere concentrate data our focused and more advantages; strategic advantages; to really to operating It brand growth. Darden leveraging systematically on process; may day-out. consistency cost using accomplish achieve. to to and improve results oriented they execution teams and while fundamentals understand and four sound product one, and through our competitive at our are four, and flawless but

on remain counts of to so. X.X% grew growth teams driven the Garden business even we incentives. which the Garden results impact Garden’s Olive on XX% have from also by has more strong that across operational mix. Same guest execution, X.X% a had preference quarter X.X% focus X% Olive our growth lineup. and restaurants. same mix they X.X%, was increased grew driven and These average driven incentives were a chicken restaurant Olive sales Total new reduce find consecutive simplifying resulted sales of benchmark leadership as continue do restaurant to quarter, its by continue restaurant Our XXth and to industry in growth. pricing focused to more primarily promotions sales same positively ways guest This everyday value, Check and on driven X.X% metrics. now strong and these reduced as X.X% mix. alfredo all our entrée The consumer continued chicken. off-premise positive menu this quarter, promotional reacted by outperformed by

and Never-Ending for Mia overall also value early two levels by quarter duos new reinforce and while prepared executed highs led Oven guest the to Garden teams also exciting Pasts, deliver record lunch points. they just as busy their value promotions teams experiences, The third Restaurants' flawlessly sales ratings reaching all communication and Baked and of satisfaction. restaurant Pastas season all-time Garden’s everyday is which such for Stuffed platforms, continue as The record exceptional to Olive the touch guest well highlighted to dinner profit reached Olive Cucina were month duals, holiday December. across

operate achieved growing these continued and busiest to more new supported competing which XX% pride to during ordering to Finally, and across had of industry-leading its sales Olive quality, I'm guests the of casual find sales XX.X% online during sales of represented Longhorn leveraging a X.X% XXth quality culture drive consecutive focus from their simplify X.X%. the the execution, grew restaurant teams, and in in across dining. deliver the guest focus higher quarter quarter. was the Olive “You continue for On XX% they the XX% to unique growth. campaign effectively. team on received Fake industry Longhorn operations restaurant strategy simplifying increase all the increase To steaks workplace restaurant Thanks the of second and of among unique steakhouse engagement. guest performance This execution day team X.X%, correctly. by benchmarks correctly grew several restaurant year, orders. grew growth Garden's driven off-premise record of in took off-premise sales restaurant is advantage members. counts will Longhorn metrics. same by member continues drive of at people and of the Steak” their enable recognizes Day, on experience, them passion and business grew confident Same sales Also again to quarter. growth they Valentine's another Longhorn outperformed Longhorn X.X%, responsibilities which long-term the total driven operational Garden by advertising same solid Total improved steaks a continues award and strategic level once the to of with by from to that the high online best Can’t Longhorn efforts report, The convenience cultures ensure to team promotions the compelling ways levels anchored quarter, designed the of for business best quarter. increasing manage to team Longhorn's scored the practices retention. high growth continues the the

effectively. remains enable decline culture establishing our and quarter. same strong celebrate on introduced they the build been of this focused simplify. leadership par steaks. culinary for strategy, They program and Cheddar's Legends, and quarter, The on team focused new opening strong, stable designed grilled win, teams new members tools, continue more team The to team is the the standardize have pipeline the During is sound make which X.X%. reflected than team and X member on by decisions created. total that strategic laser focused and restaurant They restaurant three to brands, to they by offset Cheddar's have X%, sales more X.X%, Kitchen manager sales I’m strengthen with business priorities. Master increased of turnover pleased which engagement. And with partially on sales training and have the restaurant who to sales restaurants at manage from profit Longhorn Grill performance a Cheddars million They've growth driven momentum by will our first other their now is during master time, the Scratch

quicker at we While see a by I quarter, improvement some these metrics improve to I’m the encouraged HR initial of the pace. want saw in the during

During year. are controls the quarter, the skills build restaurant to implemented waste acumen cost with Cheddars this The improve their tools and teams food tools to that reporting better discount the the tools with leading productivity been across These continue included have management. that P&L. forecasting

focus during a kitchen, and led sales meaningful ratings, I’m made standards service and present Cheddar's measures, experiences implementing consistently during the speed overall the like having on to guest metrics. impact. progress positive see their are improvement and managers trend in having managers engaged peak key quarter, in improved. Finally, Ensuring encouraged service meaningful and room periods consistent while dining to the lobby the is satisfaction including

the pleased place plan While work see. I’m we're beginning to team far Cheddar's over, the the I’m results confident in that the right at is by and from has

to Before I want close saying you to thank by I members. team to XXX,XXX Rick, turn over

I due to support As that’s to be the and noted commitment to the provided And center. in beginning our call, our our restaurant of working. is strategy the support of here by teams the at with restaurant basics the team tremendous the brilliant

management everything do you on help team Rick? all you us every day. of of for our behalf and thank Directors, Board on So to the

Rick Cardenas

morning, Thank everyone. you, Gene, good and

X.X%. points of XX with from EBITDA continuing of basis EBIT adjusted adjusted share of quarter We and from restaurants XX this basis operations were and $X.XX again same with sales higher margins addition results sales per Third the restaurant margin growth restaurant of growth X.X% was X.X% share. strong net new earnings per diluted expanded of points. of level growth year's quarter than net last net total expansion the earnings XX Diluted

implementation lowest quarterly quarter this to for growth year's true of the anticipated, the as lapped we third earnings last the year-to-date reform. tax As was our related in up year tax favorable

$XXX $XX $XX During out the shares. our million in a repurchasing quarter, million we in dividends of to and total returned paying million shareholders

the Restaurant XX labor cost this and The Commodities several of driven guests beverage inflation overall mix of to the mix margin more XX.X% quarter. over impact higher-priced beverage by higher to inflation X% with increase by driven was and X.X%. providing with in just food factors Turning was value. increased guests sales. point items quarter. This of of better than XX over in basis menu labor combined offset the percentage, the Food a basis sales just analysis menu unfavorable points, XX.X% our resulted for that choosing costs net were favorable expense.

favorability. basis incremental points leverage and mix favorability XX basis of leverage productivity another XX labor contributed pricing check and of First, contributed higher points improved from sales

restaurants new XX mix. restaurant we Longhorn labor new resulting Next Garden gained brands primarily restaurant the and as improved lower skewed in to points with the favorable performance brand was overall average, than growth our of in basis labor favorability

resulted XX.X% Finally, of administrative improved to year. level, margin inflation XX Restaurant offset basis quarter. this half the this all to better year-over-year year-over-year sales XX other restaurant and approximately mark basis. as related we from to last points while was EBITDA strong of was leverage related favorability this XX mark-to-market to of than marketing expense. leverage management, X.X% a Below and the market XX.X% Half were basis general performance. basis had restaurant cost quarter, favorable points and points year-over-year in X.X% basis of on points expense expense and level, favorable sales This flat was favorability was XX expense

related in primarily the in is recorded million closing. of diluted a as we $X.X charges to impairments during last also the which net is as We unfavorable net to I the implementation our impairment tax were through Taxes reform cycled included net quarter future of last third of year earlier. $X.XX restaurant quarter, year This mentioned EPS.

segment Turning performance. to our

profit standards. of both same Segment recognition XX Olive basis management. and segments, the cost All Segment positive the and dollars. profit deleverage and of points in sales restaurant to by margin restaurant profit our grew due our segments increased driven from revenue in other declined and sales dining segments new segment negative fine adoption Longhorn, the same margin sales business Garden margin

this Now, few a note on for XXXX. to for year fiscal our items and of fiscal outlook

fiscal to total for driven XX% approximately This of $X.XX year the all previous range same sales tax this outlook in in the shares and to for between EPS diluted expect an effective average press be X.X%, million. growth growth be million we and now of approximately XXX between outlook We $X.XX $X.XX. stated and increased morning's As XXX to And X.X%. by increased XXXX. $X.XX and financial diluted sales results restaurant of X.X% release, between of rate net from outstanding our

rate Our XX% represents new growth year's last approximately outlook EPS. versus a EPS of diluted adjusted

to million total related fiscal And and million guidance spending. anticipate capital related remodels, million million, new of million ahead, which to $XXX to we to some are preliminary technology We opening. for between currently is restaurant XXXX. Looking other $XXX $XXX of spending growth is approximately $XXX ongoing restaurant XX million $XXX and $XXX providing maintenance

to quarter In the impact give and fiscal our earnings. two new third guidance typically XXXX will highlight we unit our CapEx items addition unique want we that during announcements, to

and year we positive on fiscal approximately mentioned as last we week per is net call, diluted quarter's share continuing XXXX First, from earnings XX operations impact a anticipate of at on $X.XX.

first new on we've outlined the we as this in that XXX our our consolidated standard Second, quarter our earnings. be for filings, a have will having the don't the anticipate leases ASC in material we with impact fiscal indicated of implementing accounting In SEC, filings standard we XXXX.

the negatively have statements, $X.XX. are we call by we up While of our as consolidated well estimate impact financial effect we'll to specific currently And on still impact the categories, it our of we'll new open for we approximately EPS conference with fourth consolidated June, details questions. quarter balance in standard finalizing on this as In this plan provide various more that, sheet. to P&L will our

Operator

Thank you.

We begin the Instructions]. [Operator will now session question-and-answer

Our first comes from question Morgan with John Stanley. Glass

John Glass

not? last changed the I Gene, consumption consumers on to the same to from But necessarily or year, calendar there sales. rates 'XX somehow in know patterns or have lapping believe want trends of as the is reason spending don’t really talk inter-quarter you store that reform any about tax benefits

Gene Lee

before a went you guys me giving this up there. question John, morning you warm

Let address it. me

consumer remains of strong I are across strong, parts think the be to growing the confidence continues different population. environment wages all today

last I we we tax we say business. I’m were able look were time, into this actually way think And trying quantify at if that sure reductions really the to that. their that were to back year not working the

the changes So strong. on tax is more worried there with was bit feel little based about I’m where not year-over-year they money really consumer

and the X% is I with I that strong, like about really approximately of last a I the in growth you look I'm grew total we consumer seeing position are today at And really back in. good excited think that’s it When dining. think the our really that. number. all we're Darden, quarter industry and

continue in that going grow be I to environment. think able to we're to share

I point. strong So think at is the consumer really this

John Glass

have environment for think negatively or and may Cheddar's individual just just I And idiosyncratic quarters, brands then those have you generalization, been more well to of from any discussed. comped impacted collectively they've takeaway terms do in is understand business on you that your competitive any or there those other brands But been two from how has a brands? it's

Gene Lee

no Well, that brands competitive. is doubt that that three things They the have I there think increased is There little happening. bit large taking share more are are are advertising.

propositions two, a that number we capacity the suffered and the Yard I especially in advertising our very an value House sure -- taking We back House have lot capacity really Number we is lot in from the cold the and brands that the Florida Coast. large in with think as incentives. that on And And those part West improved, to approach the we're of ensure outside dining one. and is, think cold, Florida. of quarter, it issue in and right on wet each not pull important there. was wet lost Florida. the have but Breeze long-term was lose same our of part a House with third making Yard a we brands during I think of we're it Yard really some I Breeze,

So, as bringing the able that great. as teams which seasons And goes, down been last I seasons year. readjusting think been check there. profitability the the menu dramatically there is job We've wonderful and in has improve far to average, some we've been overall done issues the And there.

So pleased where with at. I’m really they're

I out long-term think decisions some really control. impact are and their our great other making things of smaller with brands had healthy,

Operator

you. Thank

comes Bernstein. question with from Sara next Our Senatore

ahead. You go may

Sara Senatore

wanted competition. value I to up. follow and one then and question One talk about

is price, seeing. I or more think talking offset we’re of casual on dining ticket just inflationary more pressures about your heavily relying the some some to competition of perhaps an taking

you you’re it to opportunity that share opportunity that I raise So margin. to you for also case. the wondering umbrella more take pricing the broadly, and an And was maybe traffic approach to the the as yourself an or extent is that seeing that’s would more that if support

seeing So just traffic some being about bit price? competitors trade-off we’re willing trying your that is taka margin to to versus think little of in fact more

Gene Lee

some is of part with our being to I reminder long-term up really a what under-price to able our our think to enhancements competition than be more us will but Depending the but in on inflation, everybody and some bit strategy. an and others use to gain will have so a come pricing that uses scale combination to opportunity hopefully strategy we to of productivity strategy the help to able be little to share. react be the maintain it's going of do then of that’s will for both. offset I really pass try to maybe it we past, opportunity on under-pricing competition the an to also some

Sara Senatore

HR that the the more a just out then we change. know trying see And is you at improve store effect maybe figure I quickly. even and that to sales? in want sharper of And expect on up how some you just in that same Cheddar's. to saying would inflection point management follow do to you're I’m the what

Gene Lee

really impact we make to I our decisions overall need think the that we're on partners looking the an they such of we because decide restaurants, have our be what to at stability managing for really is good teams. who

as So which norms, as some teams I in is our start to is and really, learning that about will stabilizing key decisions. months, team that making better we to Paul's And levels are and the their for. getting who with on learn getting the some little decision we developing to there for our looking people what be the that -- think better who our the they Darden I business think more overall the decisions leave members And now biggest to capabilities, closer really people, when has retention six this we I’m they impact to being year, success unit. over continue management decide JW is learn is been has the will decide is team on the make, tenure most a bit the our and made they've individual that important restaurants. run And

Operator

you. Thank

next comes Will from Our question with Stephens. Slabaugh

ahead. You may go

Will Slabaugh

Olive everyday their a value seems dinner options broaden the duos think on on First with range of top I Mia bit like of platform. Cucina it launch in Garden, little early

you relative can I normal most that of transactions if are help So couple to us advertising time, quarter? lack the that maybe higher wondering of value what's historical past or more of that how same the of driving that, incentives driving with you to about pick whether you offering continue it? out of you at quarters looked check. that could share piece you up promotions than your quarters talk you're then this was it's the And

Gene Lee

Will, I I into, part was And that mix, But back on that because so that only described in I'll upgrading been up. muffled. in give address really we’re opening been the whatever you consumer to able this of a on headpiece strong the really things you can of the speaking last you driving to The microphone, menus and promotional maybe catch mix, your really or the that. check you I’m the question we've going really is strong that offered. that's promotional couple and have very seeing constructs

mix. significant overall a of been that's part So the

approximately Now as and a of when lot or mix win up, getting them add there such are that to X.X% fairly little also, X.X%. significant things you’re contributing is there you the

getting you're getting delivery, from You’re benefit from incentives, getting catering the benefit and platform you're that $X running. beverage we're from less benefit

what wine We menu and changes that couple to what call on of contributed. picture got food that work. And we and seem are going made so all to a we've a things lot we

extremely mix. increased overall, little contributing and offerings bunch is with doing the of other as the to, chicken a things So of so promo the size mentioned, the chicken and I great to alfredo really well portion

Will Slabaugh

broadened the on seems I you like give little duos value everyday part options have offering. range in Cucina of the the more bit has a the with one top platform launch dinner first been Mia of it early will that shot,

I piece quarter wondering to that look if So was this value historical share transactions you could relative our quarters? how of

Gene Lee

time, grow advertised years going keep price of and knew at full we really think to second to of really that. into we’re that create going the which Cucina starting especially which continue take sales, we didn’t gives was dinner get We launch. portion our us platform it's that duos, all to we they strong. We introduced kind excitement close to lunch is refreshing to of because to year think that when the early about knew menu old time is dual heavily that gotten take have is certainty build. of Mia XX% we there try lunch that getting preferences its to to And four I

our of with with also but consumer up other some pleased buying the pleased is menu. offerings into we’re how So, value areas we’re the

in we're Olive happy the balance, how So menu Garden working. very with is

Operator

with Thank DiFrisco question next Matt you. The Securities. Guggenheim comes from

You may ahead. go

Matt DiFrisco

being contributors new was are a respect little there store better coming the cohort. than prior think comment with margin to on being there year I maybe a openings stronger and

you curious be leaning Just 'XX. seems maybe more pace some with not you're in openings similar XXXX into to did what why to

some Cheddar's calls with expectations see So growth to previous bit coming margins. through we and on or here, the potentially greater point a expansion around maybe win portfolio strong so share maybe a to your of than up better the in look a further maybe market little overall? Could ramped little addition

Gene Lee

this level growth really of is growth to to I X% long-term restaurant new X% the to think back that. out led We right for think framework, and that pivot I we've Darden. want

resource the think us. we growth, level about talked believe that the I I of for of importance element and always that is right that human

that’s real also an want growth. important disciplined be to to We part approach that We choosing estate. in think of our

So, X% want long-term in I to our that framework. make decisions have as gotten great estate to long-range we've to we great growth we’re believe and really real discipline. X% trying restaurant that And stay new

I talk think what will think 'XX, see us I that's -- you why about be. And and so we’re we're where at that's that’s we

Matt DiFrisco

we 'XX? or benefit will the are have of we activity less brand. on where the 'XX, that number of discounting Garden Olive just to maybe look if activity at promotional especially in the now weeks pressure and incentives, of at with or of less tailwind? And the then from or Are look check into through looking we a degree How going should XXXX end follow you promotional certainly up, promotion relative its in at the a of similar we

Gene Lee

say eventually what the reduction. going to we’re that’s I'd lap

pulled the let quarter first we've back -- But probably I just say think fourth then last back and little we me quarter. a got the bit and pull in got year the interact will incentives consumers. our piece marketing are to dollars how just try with of we we and and strategy, our overall continue our to and we advertising how spend optimize we advertising just

depending competitive share on increase and strategy. as the will so to of piece try make grow And environment to to the just this needed situation, same But marketing adjustments our we sales. and continue advertising and is our one restaurant

Matt DiFrisco

first the since be the would to be or half But you and is had… it more opportunity, there quarter first going

Gene Lee

environment to it other that, not going that I’m doing. on and depends we're things to the commit depends on

So quarter obviously, the rest wrap the in is the year. the first of than less

the be more could upside quarter. first So in there there that is

Operator

Brian next Oppenheimer. The from Bittner question comes with you. Thank

You go may ahead.

Brian Bittner

this a Rick, this follow environment bps? going navigate Question to And quarter, have see earnings look labor, Or margins do goals on which restaurant to long-term I and COGS to EBIT allow But you your any the XXXX, margins do then did expanded no this more it is last But in as few you scale variables difficult this you guidance unlike it your for a is to unique up. you I again interestingly, think quarter you to points quarters. environment. through into in basis XX margins is there achieve that’s you XX make of XX going XXXX? realize more Rick. yet, expanding

Rick Cardenas

different seen that’s year. We we've what don’t anything foresee than this significantly

will But be we unless margin change. be future, for guidance foreseeable next comfortable giving things the framework in our feel to expansion for not that We’re able we year. drastically

Brian Bittner

you industry a profitability. And and this pulling get it quarter. Gene, on And nicely at when time your trying to improve back came better this you're did drive to the incentive

up You the can talked behind in your frame specifics prepared in acceleration the this the backdrop Garden But you given Olive about industry? just lot the share your of quarter remarks. drivers some a

Rick Cardenas

our operational I think I pivot to teams.

did we improving restaurants. I a busy us. very think that a time on a throughput our It's for our in job year great

prepared our for folks call busiest really we I what that. They opportunity days during their of the think maximized quarter. the

to we I fantastic think had higher probably think good I where executing are really off-premise, our back Garden creating on is And guest to really efforts our They simplify teams that's job. think think are basics of And getting of up. of at some a an But paying focused ability programs. it Olive and you that a the biggest continued we're restaurant I where is When job outstanding at operations execute improvement. operations that doing did marketing I the our level. the getting look driver to wants dividends. come pick experience

the think operational execution. our And so I giving quarter that I’m that's really the in momentum where the credit was to

Brian Bittner

not. not of I’m this can And what sure just quarter? Go I the or just Go To sales, was growth But miss say you if To the lastly in

Rick Cardenas

XX%.

Operator

Thank question Barclays. you. Jeffrey next comes with The Bernstein from

go may ahead. You

Jeffrey Bernstein

the just quarter. on one the Two up following questions, line for labor

do with continue its level, inflation similar to fiscal had the it why out or 'XX, you then tax and line any was the reason as And just wondering greater I one quarter look I I’m there's at lapping I impressive. couldn’t reinvested inflation, this I’m you follow-up? to think you said whether that to leverage have stay that year. it ability anything to the whether last were labor your believe was specifically to so we savings leverage X.X% to very believe was wondering still you perhaps

Gene Lee

are check mix of openings new had points year may few next had, favorability mark impact. But of was and the that that that little Jeff, restaurant quarter points this of One XX in to the -- not and basis brand one other impacted was bit there XX which market further mix a in things year-over-year we talked about remarks. be and an enhancements. we basis productivity depending we on restaurant

P&L Some wouldn’t that some a We for last in the of getting to enhancements was was than mix time. this bit for and versus just we stay but our been productivity to last would we've is, of about find to we anticipate couple we that anticipate future. where in anticipate significant productivity long continue labor do quarters of a very our probably that year stronger But help will inflation little offset. was it in the quarter staying

Jeffrey Bernstein

component a expect mix less fiscal big from help as the should to of and was we that benefit it look 'XX? So we

Gene Lee

Unless consumers like little from lower expect would favorability to buying, they continue we in are bit buy mix. a

Jeffrey Bernstein

lots you expanding M&A, portfolio. competitive just a advantages And I as and on opening advantage. mentioned then And scale been their leveraging mean of I there cost of your of real in guess remarks companies has Gene your talk portfolio

wondering do I I soon, just eager brands But get is correctly. you acquire and it think brand wouldn’t to just make that to of with feel to acquire as that’s the hands impression guys existing Just you the I full or your opportunistic? wanted anytime I sure understood another need anytime your more soon.

Gene Lee

to able to in our opportunities need continue for framework. important our to to acquisition evaluate, to you current focused think important foreseeable we I is the But I momentum management an mean can future And think but what shareholders deliver on look what's repeating I for our for said. and to want situation it's achieve foreseeable -- I that be to to without the obligation the not over current regaining our add to we’re the just do portfolio long-term CSK board's future. time. and the don’t really long-term current the framework portfolio reinforce in do

Operator

of comes Thank America. Gregory next you. question from with The Bank Francfort

Gregory Francfort

had just questions. I quick two

that Gene, was sourcing The was also brand. were But you've greater that confidence maybe do see brands. management first out some of to I one first gain question I brands. larger on How brands? on not you pressure your was a think smaller talent isn’t senior seeing those whether churn or the think it confidence you response level the that operation brands been smaller you’re for seeing smaller impacting

Gene Lee

really brands we've doing. which new really in the was And talent up are about of, feel that of shorter I to some Bahama portfolio. we brand by speed. there I good But we've a are to lot where have other inside I for making number think a work thing make that happy that a portfolio that to incentives. the of And I'm mean pulling some at was decisions And brand exciting with that getting back on positioned. our comp the good don't out took we're that decisions those segment just beautiful one brands installed drive we talent term got is Breeze. is long-term

just out I in a extremely there up. the companies February which by we think Coast impacted California and XX% it documented that make West Florida, capacity, important and capacity, you other to that had weather same you that in wet well losing so your lose is can't couple was problem us it's And of Southern the when were by here.

making So, I think good decisions. about to effectively good have I are the teams, management feel And good compete very I they these businesses. they're going future. in

Gregory Francfort

maybe the thoughts. just then on And the quarter. for Thanks

impact was did how had -- of mix think you another a was had much off how Is a big -- mix much quarter? that And this you preference that that impacted that component have? $X. I promotion, enough never ending took

Gene Lee

opportunities it that did see. impacted would also There few it actually consumer the up. we a than it thought -- increased is it we've -- the but preference definitely impacted we mix, added to preference, the protein Yeah. dish much buy mix -- there, the to ad higher add It seen on

Operator

comes The Hodes next with you. Mary Thank Baird. question from

You may go ahead.

Mary Hodes

you've initiative simplification. and think that about The earlier there being I talked in on

on an So throughout the front to on operating what's simplifying XXXX? processes just that on or to made could menu you and you've provide update progress then date maybe the come

Gene Lee

I on so into is really staff team 'XX. HR lock The out figuring to really on there improve is to a process don't our initiatives implementing has our we metrics. We to Improvement identified but once the solidifying figure -- be group, opportunity, few that how in the you'll out process more and has how fiscal and improvements throughout the implemented more that made this few maximize to been 'XX, tools tools. through implemented overwhelm we've and a and other our Cheddar's, see management productivity focus progress process there win want fiscal significant productivity improvements think will

Operator

Thank you.

John Our with question J.P. Morgan. next from Ivankoe comes

ahead. may You go

Brandon Sonnemaker

growth that you singles to levels able brand at fiscal high the once you X% or eventually 'XX In would concept that at accelerate for on are that Cheddar's to in past mentioned John. brand Sonnemaker norms, to that expectation Brandon you'll be different turnover unit at maybe still that is the a you'd Darden grow to growth? the XX%, need accelerate

Gene Lee

said, results. lead continue we'll then sales stay, stabilize grow that human to should there and from business. resource I we've profit to think be improve this to that need And this able to Well, metrics we as business of

at don't target. I I to put we'll number think a as it, look we're going there a that to to, out want continue

growth. the We have resources. grow think puts We unit on don't like greater at said that tremendous that, human brands than to XX% we stress

resiliency Cheddar's the evaluate -- more this still we saying consumer we're growth today the year. would But marketplace we bought each we'll more think to it. end of and and and growth than time about first we about excited we're over a going this. and to opportunity this chain, excited get the Cheddar's every the in the excited the understand comment we're I by we when is we were grow So huge opportunity consumer, responsibly

Brandon Sonnemaker

increases And should And contribution as mix and half still whether you driven help discuss desirable. expect just mix could whether first the one if could we current the you view deposit follow-up, maybe LongHorn. you Olive Garden at at check

Gene Lee

has it's lot that to confluence a utilize the to a been the promotions past Garden surprisingly and to bought as but made full and consumer some things the together, coming I continues -- in Olive we've mix, really moves we've of up try think the Well, calls, of the in individual into some in small mitigate ways said menu of it's that drove to thing for now, to Ideally, period the outsized of multiple mix us that's giving can that this we coming areas We point think we a kind this time, are want one together a that driving not this, right small don't long mix. mix. have the sustainable environment of don't but mix, in it's growth.

Operator

Thank you.

comes Miller Nicole from next Our Jaffray. with Piper question

You go may ahead.

Nicole Miller

Good does at or to. something up Garden. talked premise marketing what I'm doing you. been substantially, you Have morning. was attribute Thank momentum something this you'd for momentum? or you to you. clearly Off us like effectively. accelerated differently, signal, else Olive about wondering mean have you same-store better understand? that Thank sales correlate that And then, consistent to sales that Does what same-store does

Gene Lee

Well, I give execute to Olive the in all offering store off-premise the level the value to execution. the and Garden then growth credit

the extremely tells and time me an doing a extremely Garden accurate. you remind is its business that put values it's that, of what When offering really but guests of the to value the that in be -- some level solid, Our the and of on high them is and execution be consumers top pans their compelling, on that fettuccine to marketplace the with an, in but of there around executed out to of really a Olive count to soup lasagna, to bulk can proposition We're engaged me they consumer its of a know especially our it's and is And strong. on our at normal bulk of experience experience. there to is level. consumer best alfredo, pans high is there repeat communication -- one -- it

Nicole Miller

and a inflection for versus much point just was also question then It around Cheddar's. Cheddar's. Is an better sequentially much better this And expectations.

better? and in back-end at this comparisons not by side First, simple, now but notice, was And points. a was you is know, about why this fair I continues this XXX expectation? basis just looking territory, then I quarter it If at the current math, the this ease

Gene Lee

think around, basic CMP organization the a there -- call restaurants, State perform we Georgia. and in is are areas to struggling some still around This your is logic all inside continues I well, have was of few the we statement. business what primarily which

or to not lot that, just of I the when presented way but and months excited detailed at exactly they accomplished. and about but here be about say we're the And, about rest point in accomplished focusing get They this call getting the this Directors but business fashion excited really I an lot where what may have everything team predict to to be excited to organization, the this continue been yesterday may point want predict Board is, the going -- say to or in I'm back a the the of of went have in what to exciting. that don't flat six last I'm they've I a that's they're really and there's momentum. was and it's of We on, and on going predict sit I'm organization to progress will that to positive. inflection go, the inflection detail very management stabilize am through a

Operator

question The Goldman with comes Holthouse from Sachs. you. next Thank Karen

You may go ahead.

Karen Holthouse

clarification the excluding within question. taking for is margin XXXX's week? thanks framework, my XXrd long-term question. Hey, the just One before or The fitting on from that quick the any comment benefit including

Rick Cardenas

I don't still think would within the expect it matters, either framework. we to way, excluding be

Karen Holthouse

not likely question, to so, you growth to there is double-digit that go was a commentary maybe the back consistent different it ask year continue a then if has. and way pretty or off-premise yet And forever,

bit consumer. in is value of of a the category or continuing strong think overall do execution the and just that, gain was the post-mortem of continued a performance for Garden really steam Olive to on little So, doing you the kind selective

Gene Lee

we're spectacular is a do it's I there for this went significant in this a happening is to growth think four continue helped is demand the what both. Garden the think definitely into them Olive years, of but do that think and market I And that, to I that the over the part thought gain Karen, value execution consumer business. and combination last continues do we and the need. grow, has that share, again, and I meeting that proposition of convenience in think

Karen Holthouse

you that the on just trajectory? continue is there kind same that, Or sort What overall for the would within optimism medium-term? can is of more double-digit a skepticism have then still that of growth

Gene Lee

so I we were right bit mean, because that. able energy optimistic more into industry we've ago, now on the that being effort and think little Yeah. put than to And I space. whole a much a while sustain probably there's we're been

benefiting right. from that I think we're too,

got we've back business. best pushing to, it about yet, value talking part their when But is of come the everybody you So that and proposition.

everybody benefiting trying to and about their we're part it talking of benefiting, we're that business. So promote by

Operator

Thank you.

with Scott question next Mizuho. Our comes Jeremy from

ahead. go may You

Jeremy Scott

Just you're driven I quarters, is which last you if something some efforts, words, is what allocation inefficiencies you off-premise expect I bps labor rapid wanted grow clip, growing know, and of mix that will draw because the to eventually there being means where XX that it now, to impactful, know mix. productivity, to to other from In may bps start else. the continues mix normalize. extent extract labor XX to or be up to by mentioned simplification business not to back now that willing two as go with, something in to off-premise the that is you but that starts impacted from, live it's with

Gene Lee

increase Jeremy, mix, I increase wouldn't put in labor. off-premise growth, much off-premise of growth for in our

to As we to the need Olive off-premise continue we people off-premise. Garden to offset add growth grow to help continue in in

to provide door. growth XX% they opportunity the continue people more off-premise So, us accurately going time the sure grow, actually we and to sales get consumer as as walk I XX% at would food in in to we we're to to to that on say if the that add the that's make

Jeremy Scott

the talked spending a traffic? contribution of more places, at customer that variety mix table, coming generally about impacting your is all different impacting at table from the You of turn and

Gene Lee

table I on focused in really throughput restaurants. turns. our impacting really we've our improving mean Not been

may, not mix mix we're though Olive Olive most adding Garden of at that coming entrees, add-on sales is even in necessarily remember So the from Garden on side.

extending and been impact to business, seeing better drive not they've restaurants in coming throughput mix, but good restaurant. not always time lengthening continue LongHorn, add-on meal had that a sales has the pretty of to focus the we're the in our period, it's their at and add-on is our So from sales, mix

Operator

you. Thank

from comes Andy question next with Jefferies. Barish Our

may You ahead. go

Andy Barish

like imagine there call layer inflation it out mean you, and Garden you I the brand. particular Is what you and is I given Is Gene, it your what there then looked efficient continuing. Thanks, is productivity it's you'd lower there Is mentioned would think improvements secondly, terms margins in most wage than another showing some to retention? is any seeing. -- guys. -- Olive at I geographic? are you've the is comments at, appreciate of I any currently. anything On pretty of it industry certainly

to of is So where through the a out? call of is that making difference it's any -- brands, cycling kind other

Gene Lee

couple Andy. a things, of Well

talked around general. we X%, all, overall hourly seeing somewhere of in between X.X%. above X.X% X.X% inflation of We're higher about labor First wage inflation than to that, so

we in productive talking how the So, That but inflation, said, focusing actually to others probably they're much are is we're spent we our about with more that. and better, seeing more train on the are that being turnover necessarily, team, job, inflation hourly them do not to our because spend We of rates. because train is lower. training even don't, our be money people to our turnover their so

taking Garden productivity room other still Olive brands. some productivity more our continue go in productivity focus We in improving room lot to thing, able find operations, a in go more have simplify to has we to got we we out in of that on other we've should menu, go The as their still to to to improving enhancements. We our continue enhancements. Cheddar's. some steps be believe and and

there as is high volumes. has believe We improve as high those still be some have we've seen that we more then Cheddar's has even volumes. productivity to not we throughput. And but may I'll brands. recently, some they still in Now, throughput still the Garden Olive enhancements. mention finally, high believe room

anticipate or would enhancements leverage help to continue inflation. those to help to continuing some So, offset and we wage find

Operator

Thank you. Stephen Group. from with The comes Anderson Maxim next question

go may ahead. You

Stephen Anderson

answered, but as Olive Cheddar's. past a been see like something sales through talked opportunity, you go could maybe in both well layers some I some once you've have productivity, when mobile increasing maybe, these I've LongHorn. lot well work to sales you Garden this the through maybe regard building that and want questions know back issues about in improve gone steps of you've throughput I to revisit, the my done would of perhaps doing you've very online of at seen as this do quarters, Most think do and of you

Rick Cardenas

Stephen. Yes,

that Gene we incremental in place, teams know management the making sales, initiatives. we not mentioned, teams on in have Cheddar's. for before have start are of on lot a sure That as we place focusing we ordering sales You said, the online driving turned

ordering got kind on We ready us. trained we execute to we we've for anything those We've turned not there. have flawlessly. and they're don't we Cheddar's, right feel a sales go place, team And perfectly. those we turn and execute to for little to are on will time. to it's big on still a got like of before until things mobile potential of And initiatives that's bit are they the in We when building get ways do ready the

Stephen Anderson

once in have there that can you to to you place, be testing want you can in do like, of that, any or those decide you be on terms in as make infrastructure that having done that that flawlessly levers can. sure turn Now, you've such a as done to it way close

Rick Cardenas

brands done testing That fully the just simplifying at we these staffed. We building on the a haven't initiatives. of do other got still our operation, sure right. Well, menu improving sales menu. lot we've that how another said, some added new We're to we're on any new this learnings on making stuff, new of in to Cheddar's focused a

they is Garden do off-premise, things over able how sales those building can, to Olive have other So do from is and be other learning lot a really they if We brands. move you guest. good we've guest similar Olive think learned Garden, some to -- and our about Cheddar's, to very from the to Cheddar's Cheddar's the initiatives how

Operator

you. Thank

Capital comes Andrew question Markets. next from Strelzik Our with BMO

You go ahead. may

Andrew Strelzik

segment is the question other on My business margins.

But You being talked time to the were same flat you about, able hold in negative segment. almost I quarter. think, almost the margins the the in at

that see is, at Thanks. understanding the to to actually the margin the expansion the my dynamics brands, positive the some Are need that have at aggregate do other was segment and comps in on Cheddar's been there going kind in there. of point and for see anything of you start to the turn anomalous expand, helped we margins those the to question now start where there. margins quarter could So we

Rick Cardenas

and cost their that talked One, of Well, mentioned, improvement labor if Gene showing I as a you I productivity, example, margin on We've food management. seeing couple a lot their margins. that's we at House. we helping better think got tools about things results those We're enhancement and P&L Cheddar's are productivity about mean mentioned. waste. of Yard for those in

sales though we've productivity Cheddar's negative count, you had you brands, are same has negative had improve. an right give even So we're guest those in down when restaurant example now Cheddar's. guest for don't counts but better. Cheddar's, that I'll is that seeing productivity at a their And normally But see getting

enhancements margin all if in and to those we said, more find would other margin find segment. anticipate we those, of costs in enhancements are That even we see improvements same sales, to, but when to are restaurant we -- positive love don't, So sales same all we have our we when negative restaurant of if react when would in brands we can. brands positive, the

Operator

Thank you.

from Brian Raymond James. comes with question next Our Vaccaro

You go may ahead.

Brian Vaccaro

I very provide months on that along the to how have mentioned, wanted Rick just follow back important years, you turnover then seems each just you up. the of brand an be could and And But costs. training at a turnover, quick improving to of and to manager circle and hiring compares XX a quickly update lower XX I ago. few piece which over benefits options to last with

Rick Cardenas

me, that's the actually we focused in than, less system. focus I'm not XX would months the lower it get say, to I turnover mean, is this our management than turnover on, today on GMP individual XX% that's that's turnover, than I really ago. into just management I brands, going we think but And and less was (ph) to our key, were

Brian Vaccaro

some there then do there bit segment? expansion a on LongHorn the takes the despite segment the And that you unpack comp, for of margins, puts and

Rick Cardenas

kind -- you up repeat a of Can can you repeat you bit. little Sorry, You that? that? broke

Brian Vaccaro

-- of margins comps It year-on-year in rating. long expansion moderate despite those quarter, kind

some... So put just to wanted

Rick Cardenas

comps expanding. is think the of kind even margin with third question was I quarter moderate, in LongHorn segment your

but Let of was we which get unpacking that inflation give little to in up lot that quarter, into the there, LongHorn. don't in impacted third detail, a ticked we you as A a beef expected we that mentioned of happen. lot and necessarily me,

XX was as the it So basis unfavorable LongHorn the I cost unfavorable entire worse percentage more labor company, than sales was a not was their believe of was the so Company's on labor than points. Company. was as that, was said their as the side, I favorable

this investments in last those So, talking couple they but over margin -- in things of food. their years. offset, in investments made -- about so right significant two menu they've made mix more we're a the of impact also the higher selling was We've lot seeing and expansion, menu significant slight and their which had way food issue They end that sales. just at they're of been a mix higher steaks LongHorn, cost have

significant a sirloin, sales percentage in they've bone So and it's made those, moving if as a steak, a of you they're those. toward cost think about because investments higher or

Operator

Thank you.

Our next question Wells Tower comes Fargo. with from Jon

go may ahead. You

Jon Tower

a sales and seeing we're playing of number more prominent industry, or other the loyalty a role for programs across rewards in Just players. growth growth of

but Company? current there's learn need what the to becoming for like, if loyalty it So, in brand across appear place, where the a Company role usage stats one to given that And respect is what it keep from I'm the the doesn't today, with program. the more of you strength in cross curious prominent and this in portfolio your would place, and look perhaps sales a

Gene Lee

have see but want have what It's XX% that We our today, do what clear program than growth. are we in right talked program sure we'd been well join same we we discounts programs and over data drives data get, we do to want see We've we is or there sure is but we some to a about, We provide loyalty our consumer helpful. for place see to make year. restaurant we want believe but or the in that a cross-brand would of very lot expect in we a same more It all, of provide it, to that the loyalty incentive sources. now. and make a a in we that place sales less driving restaurant test to other it's profitable in benefits program out whatever from whatever have them. restaurants that growth, First sales that of been

it, So still we it we're if testing we're researching right once that and do. still it's believe to thing the

do. out, thing ever We will the believe it's if to roll right we it

Jon Tower

overnight allow that in brands? plug the in have systems across you the place to pretty And much

Gene Lee

Yes, and app one works it the our I have or like have, which today. we any What they in we way place. loyalty, brand things have the we system, we're don't now are mean for -- using even not build systems right are restaurant if work in it an that they in

from blown ever to So loyalty, full with there. apps we'll have update go our just we forward and if move

Operator

closing At this there no any questions. to time you. back are over I turn call further like Thank would the remarks. to for Kevin Mr. Kalicak

Kevin Kalicak

on opens, before with we to Great. results you release to follow conference And to I'd fourth our like XXth Thanks participating plan call. Thursday, remind market Sue. today's June Thanks, the concludes call that in quarter This call. for up. a

Operator

That disconnect. you. All participants may conclude Thank does today's conference.

Darden Restaurants (DRI) 21 Mar 192019 Q3 Earnings call transcript