DRI - Earnings call transcript Q1 2020 | Darden Restaurants, Inc.

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Operator

Thank you for standing by. We now welcome you to Darden Restaurants First Quarter Earnings Conference Call. At this time, all participants are in listen-only mode and we will have question-and-answer session. [Operator Instructions] Please take note that we'll only take one question and one follow-up.

Now, let me hand the call over to your host, Kevin Kalicak.

begin. may You

Kevin Kalicak

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

Joining call on Rick me the Cardenas, CEO; Lee, CFO. and Darden today are Gene

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

a during the website broadcasting simultaneously are posted of darden.com. is at call, in We Relations our section presentation this which Investor

non-GAAP on by a Today's the release plan of and followed to reconciliations are December market XXXX opens, presentation. call. discussion certain these quarter second XX We and fiscal presentation before earnings measurements included include conference measurements in the

more and results quarterly and morning Rick remarks about quarter. This our provide on some brief will business highlights Gene the first detail performance our share will from financial

references reminder, excluding Knapp-Track today's during refer call Garden a industry benchmark to estimated As specifically, LongHorn. to Olive and Darden, the all

During our was X.X% industry decreased growth industry total first industry declined counts sales X.X%. quarter, same-restaurant guest sales and same-restaurant flat, fiscal

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

Gene Lee

Thank everyone. you, Kevin, and good morning,

net this As of increase X.X%. quarter. release seen per continuing you've from a were $X.X our X.X% share billion, an Same-restaurant diluted morning, solid operations and had we earnings press $X.XX. Total increased were sales from sales

once Comparable faced same-restaurant the tougher weaken during quarter as sales the again the industry to for industry continued comparisons.

historically be industry. low negative strong considering positive for and to the continues at has comping remains a surprising all-time industry the is been However, wage growth, which there unemployment

last share protect LongHorn the And our of philosophy We to competitive their take I'm year. we and operating I'm Olive performance our performance of leveraging remain and the over Garden the and particularly first on focused pleased, back-to-basics Steakhouse, quarter continued pleased our given and difficult comparisons four industry margins. with advantages.

consecutive sales Turning which for Total of same-restaurant restaurants. same-restaurant grew quarter X.X% new sales Garden quarter. strong growth in growth its the highlights by brand Olive had growth. sales quarter, and X.X% driven to XXth resulted in X.X%,

points Olive the the Olive by since Garden the And of basis to nearly fiscal representing XXX sales gap largest the by basis same-restaurant points. sales on industry quarter, a the outperforming first industry total this basis XXX was Garden to quarter gap XX%, industry benchmark XXXX. grew two-year

reflect driven within flawless outside that and of were giving Olive delivering results inside by impressive, value, focus Guest our are everyday and four the catering Garden's delivery ongoing the execution, metrics convenience. remain intent teams team's us highest great restaurants. and to experiences on satisfaction our ratings confidence recommend brand walls the the

promotions. separate throughout their One, and Ending quarter The deliver made evenly order decision to This messaging to a Olive their the more Garden team of value change Never strongest Buy Pasta year. the was promotions; first necessary two to value the strategic One Take Bowl

strategic decision resulted last lower right the term. it While and for this with associated industry shifts change in was media traffic weakening long than year, trends the along

Garden to the catalyst advertising to One it with supported been off-premise drive strong met Recognizing of awareness. business. lineup, has which and Olive Take demand, with the Buy a be added value was will entrées One strength Everyday grow the continue national take-home to It promotion, guest $X to

and weekday resulted the the Taste introduction the in marketing including with Chicken guest of by was Everyday traffic lunch menu with of $XX, preference. Chicken new like initiative Parmigiana and options menu lunch items strengthened weekday Margarita. a integrated supported from under favorites also Mediterranean This like value guest XX and stronger was

the part of digital Garden to sales their convenience. been optimizing meet capabilities Olive guests' desktop. both A focus off-premise needs their for for team remains the channel mobile key and Finally, has focused on that

During and to represented XX% go more XX% of digital the than sales. by approximately quarter, grew sales

XX% of doing and grew an effectively. strategy of Olive focusing competing brand excellent XX%, job Garden remains is broadly sales off-premise total on Overall, a sales. representing this and team truly and the iconic appealing

as LongHorn Steakhouse new by well. Total grew growth. and XXth had from sales sales a of driven restaurants of growth same-restaurant X.X%, sales the strong X% quarter X.X%, same-restaurant quarter growth consecutive

strategy unique basis, The the outperforming by XXX culture LongHorn LongHorn to points. On team XX%, operations their a in two-year member remains quality basis increase team experience, on simplifying of the to drive benchmark and engagement. the leveraging grew long-term by their sales of industry investing focused guest total execution,

LongHorn Fire Steak and award-winning multiple Fake advertising promotions; During supported also successful their team the the by guest quality They two through menu Crafted were Flavors, supported which You Can't promotions campaign. Favorite ran story quarter, their these points. Grill reinforcing Master touch by

the experience also go to focus The order online reduced the which team process, The continued their convenience. choose this ensuring to time. equals simplified for the guests on ordering team experience significantly who in-restaurant

During XX% the almost and than of more to sales one-third total digital sales. represented quarter, grew go

go continued satisfaction they more XX%. now in restaurants. of growth sales for order and scores These accuracy helped improvement their completed a than dedicated guest actions half in Additionally, to go nearly area have to and to drive timeliness led to

strong know guest ongoing engaged team's members compared experiences, to and to industry-leading performance. labor casual better and casual during the and approximately retention that continue for Team compared tight provide get for business turnover the despite dining. XX% the quarter turnover culture the was the LongHorn building XX% market. key LongHorn's team a rates is on We quarter retention of management was dining, XXX% during better Finally, focus approximately member XX% driver even to

total was growth sales X.X%, efforts by of from The softness partially by the decreased restaurants quarter. overall driven trend sales decline and Kitchen offset X%, and X.X%. sales driven Scratch marketing same-restaurant reduced Cheddar's of new by in industry change

kitchen the decline former were quarter addition, during restaurants the restaurants sales more disruption the transformation In These they the project. to as significant continued the same-restaurant last locations. in be pronounced complete to franchise experienced

sales culture, [ph] the talk they year, see to Cheddar's people last friction the progress established reduce the the about strategic people the sales and of elements three made disappointing trend new on their fiscal a decline, they against during goal made significant priorities fundamental new repairing focused team the and building beginning priorities; it's create build year experience, with the quarter. At guest the a of While in progress results-oriented improving the trajectory. business brand of the

in During both to member manager initiatives turnover the as and quarter, led levels. see Cheddar's that they team improvements the retention trends the to higher team implemented continued

quarter progress the designed able members Cheddar's team both staffing and the for during Because made the intention, the was in better and execute enhance to levels this staffing operational improved quarter. to team manager experience. of Overall, the guest improvements

their successfully abilities serve they implemented large example, significantly standard parties. For upgraded to that

With a better other they results and all improvements, guest compared metrics. experience year these to saw last key across

diversity of Cheddar's at they Lunch more menu generating new higher These strong combos led categories at price within the quarter, to their Near the launched intend lunch value Quick and Pick have year. preference compared to are with last ratings to introduced end the and Combos starting $X.XX. return and

to are made progress operationally HR a still I recognized the encouraging. of their metrics there's work Cheddar's and improved has do, the team but lot

perspective, an Now that to working right from direction their staffing they and in feel will operation media increase they begin moving the they're spend.

and build of improve the and trial. awareness Darden upon this practices the will brand to to any is media Cheddar's intended strong position, resources has the Darden brand frequency leveraging They investment drive plan. and guest highest best implement be

of that and Finally, each pleased in locations during these quarter, a four performing level. at previously Texas, acquired the to I'm very four we say is franchise restaurants restaurant high

progress teams the the I’m made initiatives. strategic against our closing, pleased with executing In

us Our return all improve to strategy while in continuing to margins grow continue capital our is invest shareholders. people and our share, working, to to sales, market allowing increased brands, and

of I opportunity people the none course, would team guests. Of possible to thank having dining create XXX,XXX for be our this the members of memorable want who you to so to this our business, continued in experiences best take

it I'll Now, to turn Rick. over

Rick Cardenas

good growth same-restaurant net growth X.X%, with and and of new We growth had total the by morning, addition XX quarter Gene, good everyone. sales X.X%. you, X.X% restaurants from another sales of of driven Thank

First We million earnings X% diluted increase repurchased share returning diluted in and shares, dividends per an were year's of $X.XX, quarter. this share. million last to in net operations shareholders over $XXX earnings $XXX quarter million from net paid $XX per continuing from

want Before expectation estimate this of I get mention that from $X.XX will XXXX. standard I adopted into this that last we call, beginning to the we for the fiscal quarter's the accounting approximately new quarter, EPS by negatively Consistent this in detailed with discussed on the results at fiscal leases impact year.

from more you However, this impact the as sheet, to morning's our balance was saw press release. meaningful

allows related estate XXXX, fiscal segment restated of our has This non-cash for periods. and reporting. of more This segments quarter, expenses evaluation fiscal XXXX real excludes in we updated profit consistent for segment and comparability. also across change our been now calculation fiscal our business Beginning

Now improvements last particularly check margin offset and light and inflation costs of turning by in of year, initiatives X.X% and was approximately of in to sales restaurants. with restaurant flat of results. cost pricing, X% our year, Food and productivity labor being investments. commodity and X% continued flat impressed same-restaurant detailed growth mix X.X%. to to labor continued of new offset were existing inflation pricing as last savings I'm beverage Total

our comp below basis was was expense deleverage, XX Restaurant to unfavorable as points due sales inflation. growth

to unfavorable basis of year. generally favorable restaurant EBITDA last expense, and line, XX level was is which lower administrative result, in sales and basis expense mark-to-market points General last XX management leverage. the tax points lower XX.X% As incentive a than expense year and margin was offset

of be X.X% I'm our for X.X%. annual year. impressed still our fiscal guidance. with strong Our XX% the was this EAT the and of XX% tax margin range in QX below effective to slightly rate rate tax with anticipate pleased effective performance We Overall, our and between quarter our

by grew in restaurant in LongHorn Turning profit Olive and new new same-restaurant by cost-effectively. same-restaurant increased XX points, growth profit driven our sales restaurant profit positive growth. sales Segment and same-restaurant net the and growth. sales sales quarter, the and net and to quarter, Garden sales leveraging performance. margin the also driven managing basis segment positive grew by

by decreased and higher decreased elevated growth. and beef Dining Segment due new net quarter. continued well, new sales margin inefficiencies Fine the same-restaurant and restaurant driven expense profit sales inflation three investments to grew pre-opening to positive a restaurants. profit and in margin of quarter because related slightly, Segment profit as the during

grew Sales to restaurants. decreased driven deleverage margin due for our Business in this by growth sales same-restaurant the negative dollars and profit segment from Both margin new net X.X%, quarter Other segment quarter.

As our XXXX in press outlook. aspects fiscal we release, reiterated the saw of all you

open ahead are which of Looking contemplated there like before things second two we would up our questions. address in the are to guidance. Both at for performance, I our quarter call annual

second to the quarter. from second Thanksgiving the timing the shift in on same-restaurant relative closed quarter. majority are our the should to holiday positively we last, shifting into in by of XXX impact the of approximately a this year, XX quarter, corresponding with third third First, offset sales, points Darden's day, the basis this is restaurants quarter this Since

had coverage Dorian first fiscal Second, on weeks Hurricane the given quarter. a duration, a media meaningful second impact and our prolonged storms of the two

currently quarter. to are drag of We to in basis same-restaurant XX points XX second estimating sales a the

take we'll your that, with And questions.

Operator

question-and-answer We'll you. the begin is first Guggenheim session. [Operator question Thank from DiFrisco Instructions] from Our Securities. Matt now

open, is line sir. Your

Matt DiFrisco

you. lagging in year spend? and spend marketing of the in it Garden of of Can mostly, a in pullbacks of Cheddar's, attribute there to support, was could guess, much how either Olive so get last we you terms respect sort of or versus Would LongHorn. terms question Thank that? to between My you of marketing with like understanding better I compare weeks or dollars that sounds is the difference bracket

Gene Lee

not haven't opportunity have the some granular just -- spending we're Cheddar's that to before. not we we in get enough with in transactional to I that things look do to I'm now Cheddar's. data going would our say at had

extremely And than doing, the that we were awareness big insights and is for in the is And Darden married of we brand our one brand. research frequency any up that this recognized of with that low. we some higher other our is Cheddar's that

been decided, test driven our frequency awareness how activity, out once learn during -- have we more markets. we our going this to type we we're back understand quarter, of and advertising primary towards now pulled we're pulling increase and And going go in we from the and and to best were play. insight And had that a

to this -- increase in I the to also our more to from those media that standpoint, traditional recognize We environment ever our this more markets, going and our it's say -- more drive use more be fact become develop than efficient build business. continue to in awareness would a important out media markets to

from to spend quarter was little we -- were insight the it recognize, we the bit so, good for to and going during we And a direction of standpoint decided a pulled that's that change where and really us an back really quarter. from media

Matt DiFrisco

there then, noticed the to menu in And the guess, or that ownership something change heavy, it triggered user be I may Okay. from something frequency past, or different is they is the change a that? that the to like heavy in

Gene Lee

the be for we have can get us our able transactional and it's important actually the so that that systems to now why do fact we just and so insight. data That's acquisition No, an our that to then the put to in, it's analyze analysis. we data when do have

Matt DiFrisco

you. Thank Understood.

Operator

you. Thank

Tarantino is next David from your question from is line Sir, Baird. Our open.

David Tarantino

seeing. to in you're It remarks this that that we've to wanted just trends, Good was about a especially that prepared the the seen soft like months. the Gene, Hi. in industry most trends little recent analysis surprising such seems I your morning. talk

thoughts to of And you environment speak? or strategies that's so your So secondly, marketing just curious promotional get why on think you your to the adjust to new any you happening? need to Thanks. think do

Gene Lee

morning, Good David. Yeah.

my be to the I strong for very appears As backdrop in the consumer. prepared said remarks,

We have good wage growth.

Historically, that's We strong employment. us. have for really been good

As look personally confidence look I we into their when and uncertainty the look confidence. at consumer, it's when at and the impacting behaviors, at have we I believe some -- there's that entering we data

continue the environment was there this how So, there continue? out bit believe more the appears there changed How that we this happening, nothing there's does all long structural media than a long? there in I’ve what's -- got that's see be future. around other attention to than with uncertainty little today to

do going an far with do create need our brands make up quarters. to to more we compelling need that come the become brands smaller as think that's channels As more guest effective about our how change do we I to reinforce in what that important and I we to in effectively? in and to market and to advertise value and need experiences we we're have compete think different and continue do? -- We propositions. upcoming think those how

in us. how and heading the our have We're We really Never and support to as luxury figure marketplace. more this in patient those being into we're effectively it’s of buzz Garden, pleased and I and a think we that of we decisions lot great make had for great brands test long-term Bowl Pasta Ending learn compete try a to promotion Pasta Olive year. around Pass this out

it's And where year this going consumer’s so, the into I time and think of a good at. promotion

David Tarantino

to the of guidance middle you relative where comparisons [ph] upper the how your just differently And comp think for think maybe comp about follow-up the you've know three seen degree about environment, months current the comp guidance or recently ago? does difficulty what Gene, guidance lesser the maybe make have end fiscal you coming in up. of hitting or we the year? of should you And I the a were

Gene Lee

Well, We X%. we guidance restaurant somewhere believe our I between today. the X% guess, same our year for will sales reiterated and be

David Tarantino

Thank Great. you.

Operator

you. Thank

Our from next question from is Stephens. Will Slabaugh

is Your line open.

Unidentified Analyst

guys. [ph] on Will. is for This question. Hey, Neal Thanks taking actually for the

here. You any there. to insights can Just costs? elevated spoke some quick give Wondering into one if beef costs you commodity

seen you’ve any going how whether swine effects you're about fever? forward, wondering feeling African this Just from

Ricardo Cardenas

X.X% which Thanks, is where Neal. inflation We expected were it to quarter, in Rick. we around This about is the be. first

and coming seen little bit in boards bit in more are of but favor. a have We elevation back beef, down little are our a the

of thought we at beginning year. the where fiscal inflation be we expect this our So, still to

your Flu in big to seen very result, Swine African haven't impact Swine a an we still a or question, As African Flu. as answer

pork our As in of we sales. is the mentioned only last call, really about X%

the So, prices downstream relatively small of yet. impact. a it's And seen haven't we pork impacts

Unidentified Analyst

Perfect. Thank you.

Operator

Thank you.

Next from Piper question Long Jaffray. Joshua is from

line Your is open.

Joshua Long

and trends here trends then, sort seen lately that of be lunch you to expectations? variations in And was Thank but may of needle or the the moving expected you've Great. any some terms regional kind the you've also, seen, any system? of my underlying in seen any didn't your weekend in regional across of back to circle question. I offerings for initiatives taking there, variations, strong and be got maybe or you may of like the the very if trends? You've weekday, sort you've differences ahead know wanted

Gene Lee

no I have weekend a geographic lunch all business. change question. weekday No. night, say to and have trends weekday really seen been the of much not there's areas really that, a don't any really lot a the weakened business. or the your of from add to to I We’ve trend would standpoint in weekday,

Joshua Long

this then terms as And with learnings the may, there the sort of Thanks. versus you with promising. if external always your update. learning. very business, always had in testing one any know, working To of seeing of what there, But and and you've follow-up, stuck worked if the Great. still Any there's on internally, Go on you're curious partners? the fulfillment I is on work you're strength I thought process

Gene Lee

biggest thing. doing the is, like we're else, repetition our getting a teams friction think, I is anything think, taking are process. out they’re of -- thing And, I great the it’s

You with more you to business. get as better continued it, do better and

growth find up. process. They think up, tremendous scores has has We've honed those Olive their progress. Garden their seen made on of businesses. So, scores continue in in digital with LongHorn impressed I Very, very both go really go ways. satisfaction to this the

at. something think continue look to that's to We

to compelling can me, great experience we making So with as value, possibly right. that it's really as about

the the on up, off versus come delivered. I we and be is, premise strong make being strategy and to been that's it it's our to it -- have not willing value have consumer think, pick that sure

Joshua Long

Great. Thank you.

Operator

Thank you.

Levy from is Partners. Our from Brett MKM next question

open. is line Your

Brett Levy

could some gentlemen. answer. we hone bit the a think a the Good different in you question little of If for different more, When going I'm Thanks to ask and get taking morning. way a just sentiment consumer hopefully about… call,

Gene Lee

We could try.

Brett Levy

the you off changes you? size of that? value Thank I'll about using right Obviously, try. building are consumers price they're further out seeing take-home something now, your terms changes add-ons, you. full When are parties, premise, how seeing think you in of in any any you is but like

Gene Lee

the No, look all. look haven't quarter seen the at back me Brett. when quarter. any at I change it at we And -- let No, put -- to

has done I'm Even think Garden grown with comp that business two Olive what extremely Let's Olive is has Garden the impressed XX% two-year we've incredibly the our about industry weakened, in though years. impressive. think last that approximately I at

And look industry are I today and think gaps so they're the brands; to comments strong the the of a very, made at large industry. that very about lot the our effectively. two very decelerating, The industry I I competing

So, are leaders' and and effectively quarter. to find compete think have teams yes, way with in what our these our that's way first and job but have effectively well insight our think brands industry I'm we watch you And we I very we jobs a give the a it, done to some any excited. compete this in I environment to really and to two

Brett Levy

you. Thank

Operator

is JPMorgan. Our next from Ivankoe question from John

open. Your line is

John Ivankoe

is consumer is and terms -- trending. the working actually consumer the a you. topline I consumer question -- I also income, dining previous house a question? in Where see is Yes. and what environment, of house for where that if -- strong especially or Obviously, relatively that kind to all-store first traffic mean going? has of it’s has you It’s Gene. industry been the Thank Hi. Knapp you said is that consumer of do that higher in some underlying consumer you of currently out think question an negative actually whether where just

the being see cycle you several chains? -- look are what last maybe potentially taking the independence versus And that care as supply years? we do as over in growth would some shake added out that’s to you Secondly, great a been space

are a action for there you Is in more times direct for value Cheddar’s. other you bringing of earlier think, final that few the be thought doing you mentioned to back and And couponing then Garden things environment? to traffic of at consumer the what going kind Olive described any industry and to maintain I you as call any point, and

Gene Lee

for award a questions John, you inside question. get one the most

John Ivankoe

related. all It's

think it you one I paragraph. can do in

Gene Lee

independence, got discount. was I first? I the What got

John Ivankoe

was… one first The

Gene Lee

fast don't Where John more about those are service casual think frequently. in that. industry, had quick-serve, there not the are doubt of seem about a are XX-year dining end bit and growth big casual brands And know the good share. getting Again, people you period, our no little an our trading you than seeing a people -- fair some to sure where be in focused on out have to out I'm when are income I definitely there's going. as an we and been trading of be is and lower look or a we’ve we at And we strength question. seem limited that's more both answer. we folks curve on you

taking performing impact looking more having well. independence we're areas, small chains that higher and that an see share they independence. think what share where that I would call still areas, trade is data and are I the in change regional are better, they're income and trade you The better really at the Where are saying large from taking

do and scale, look But when share take donating probably share you it, from large brands I continue little national and older a at bit to think a are both on and smaller independence still independents. better brands

whatever levers can When use we we're discounting, at our use, as grow we as look at continue one look we to at don't when piece. going incentives, to -- just far business. to look As you

digital a at standpoint. incentive our we to online, advertising standpoint, an have We television doing going program. a from from on overall what's is are and what going What look from on

ways out We there. have put to multiple incentives

way. leverage to we pull we the so on use And over time of we And can appropriately those that environment. lot have depending a our in profitable will drive a business

margins. has that protecting invest our invest teams our in we very we our proud incredibly business, thing our that, continue I portion proud while EBIT X% that this invest to we're and in our our way a I'm food, business, in invest able in think And that are protected drive as invest about, continue in And and in margins in environment. our is Rick are impressive people, talked of one size, quality, we margins. to do of, to that plus The

And so when about to think all we we about incentives, and doing our we're build over long-term. think that it brands the holistically

John Ivankoe

helpful, very great, That's answer. excellent

Operator

you. Thank

Our Strelzik BMO next Andrew question is Capital Markets. from from

open. Your line is

Andrew Strelzik

question. good morning. taking Thanks Hey, for the

given Over rates couple liability of more that the about delivery last if at renegotiated Wondering kind the your take changes on especially of digital months, for on we've the to been hearing the on thoughts of customers numbers lower. and are changes a as willingness at if engage digitally, evolving delivery? all you delivery cited perspective being your of with side down, lot for coming brands you've some the all, that the the Darden highlighted

Gene Lee

No.

haven't thoughts really any at all. -- have haven't haven't we -- -- evolved We

have the to acknowledge about you towards to consumer, and all about convenience? does of that still cost we experience But appear still from lot overall dedicate closely. think to we're are We company to watch of I that how -- and shifting will -- the This the it's concerns burden -- much that. value a be is willing the I going are

get back what value consumer off-premise to our with going definitely that is It's working much -- to is watch. said to to now so something earlier, and come focus I continue That experience seems happen. I create that it. that. a to on we'll to right willing it's we're pivot so internally but to be shift we us that and for compelling And watch to predicted would a want that job it, And

Andrew Strelzik

then just the price forward? could going was? Garden broadly I If Olive a that little X% piece huge at be Not was more been bit it's Garden The price a what just Olive for where prior, quickly. about that thinking price value deviation about underlying should the the Was you've but from on follow-up quarter.

Rick Cardenas

our in making our to be to below X.X%, long-term I that's our perception and The below believe in still to keep X%, pricing competitors investments. Rick. pricing inflation and which quarter is below was while this value due the Andrew, the to year-over-year. goal is marketplace, expect timing price We still just of our increase our great first price

was this anomaly little for just yes, So, a the quarter. of bit timing a

Andrew Strelzik

Great. much. Thank you very

Operator

Thank you.

Anderson Our from next Stephen question is Maxim. from

Your line open. is

Stephen Anderson

about rewards to Yes. underway multi-concept. your the to for see programs would you Good morning. I test have actually ask a want

of As storage, it’s is about progressing? to wanted testing potentially the to whether how that test are right X% system? you. about that entire additional your I recall, to out out I Thank ask you or locations, you're roll now. ready And

Rick Cardenas

Rick is the this Stephen, Hey, for again. Thanks question.

As you program that we test. monitoring about said, yes, have X% nation. and restaurants our in of still that the We're our loyalty across --

we’d have of our provide few take a program how the quite us, to to and said to this going nature driving have discounts consumers versus other come come. to incentives we is much times, As to to a them most time to long frequency loyal loyalty understand for the

all adding out tells says, want our long we consumers. sure the The make we fact run, that steady that what test going of Gene to overall ready going right it's pull to still not on right The of well, in the our nationally. just do well, you to sure now, that do But, how more not to to on know. but part we holding I we're as thing to And when of going kind going market be it's is okay. It's first the strategy our there, will am of restaurants. trigger test. you it's but do, We're we're

Stephen Anderson

Thank you. Yes.

Operator

question and one follow-up. one Thank Also, to limit Thank question please you. you. [Operator your Instructions]

Our next UBS. question Geiger from is from Dennis

open. is line Your

Dennis Geiger

you. Thank Great.

mix, about next puts think Thanks. this the mix importantly, if that more you mix of was few Olive you over of ask long-term et the and And to saw that Just would in of the quarters, takes, trade-up with roughly could state? to looking quarter? of contribution wanted could the highlight just on the catering above out Garden, kind prior guess make impact off-premise, I about is cetera. a and promos, then, kind line year, catering I anything or in considerations the some just the delivery expectation incentives, you quarter thinking steady remain guess some specifically

Rick Cardenas

the I which it's going addition catering premise business, two a Yes. try maybe Homes. great The continued above than things, Home slightly Take that target more of our think, above our want drive bit what for should Two do to that that growth think will mix and and real have drive delivery we and is Those mix will positive something bit the long-term. is things $X probably we are little probably a a long-term catalyst to $X the mix off Take expectations. a to in be offering a catering a to continue drive value of to little

Dennis Geiger

you. Thank Great.

Operator

Our from from Eric Markets. Capital KeyBanc next question Gonzalez is

Your is open. line

Eric Gonzalez

the Hey. Good question. taking morning. Thanks for

that in traffic extra few was you to I think the drag due Buy as the quarter weeks a I it media from a first One that on you comment But shift. pull forward. of Take you benefited One in think your said

meant So if maybe I you wondering was can there. what you clarify

part Take having perhaps those what I One impact the you quantify not the Thanks. you the in the can early extra of hurricane of second weeks of had the quarter? Buy know One And impact, but

Rick Cardenas

second weight would add moved something we somewhat. this I'll statement; again, -- not quarter We're going the back And is shifted move whether can to done. to to go spending, we and working media around, the value it's about talk to I put to it's going also have we strategically media discern and also always and not working this always you But or -- shifts what think what media; And more that where our was we our as way needed comparisons the lunch is really in only change No. to impact. promotion to my be or against, is what which some learn. -- you things is spend

more us two stack a promotions -- that And strategic performance our I caught big is I so the inside the industry. to messaging quarter. wouldn't great year, value back point balance choice value which a up strategic our We we really that in two-year important. in get a the a to separate made gives bit in shifted throughout little the great

up hung media on Let's not week-to-week a get shifts.

Eric Gonzalez

in sneak maybe follow-up there. could I If a

sort One or One Take $X Buy are the -- from next moving on table? are something take-home is similar and type similar programs, of that's that One are away the On they the year One of Buy Take you

Gene Lee

but I think different. they're No, similar,

And so will the and it's value really take-home. and it there it are you it springboard proposition. reenergize -- cannibalistic support to be the One different right, thing. It a can of take-home it's offering should move done team And you Take types One, part Buy One the rest Buy and reenergize an our of $X value One of year. shouldn't after the it continue should will important our a It if support to promotion the be Take year run that for should $X for each continue

So, that's how we're thinking about that.

So, it shouldn't -- dilutive all. not it additive at be be should

Eric Gonzalez

Thanks. helpful. That's

Operator

Our next John Morgan Glass question is Stanley. from from

open. Your line is

John Glass

Thanks much. Thanks. very

the brands and continued other just there. on softness First the

increased is there that quarter last commented you competition. think I

market talk more So, maybe scale you help of better advertising how about brands? seeing But breakthrough brands can national those to that. if what is a can those what just -- think you you we're achieve it's strategy them about here of

don't does brands, these try giving and that may worth sort do makes given delivery otherwise smaller in holistically, we sense But it's or don't some And through the they -- it they a about some not. provide sense does that in delivery aggregator make of scale some you talk be have delivery have? like scale delivery brands, that of

Gene Lee

John. interesting it's Well, concept an

As have costs about unique; I got think really marketing add money grips to probably great this can in spend for best we've They reluctant you we're going to businesses. that become with to come to lot are propositions. try work and been more think environment bit brands, find strong little environment, a the value to they've of But in and which them. finally I channels think we the -- a these digital smaller to

channel work would small brands. I think all there's not that across our one

we unique, out have talk so figure the best consumer. the are them to to what's to way of each so And

I As tests House's. have really of the for one that We smaller far upside. the third-party as off-premise, don't our Yard the as see of brands, in delivery do majority our

using are We provider. a

to in with where more get It's food. pick up in and provider a is it's about center last-mile for no so there lifestyle House embedded the Yard even parking think difficult and located. Just the

big part the So, business. of it's not a

way that as about a think really the don't I to grow So, business.

been margins We've need these I We've think long-term innovate our protect we make that, decisions. businesses. in to and continue to good attractive. really able to got to make them

looks -- one have We like restaurant going an And you great these It's lot open a impact once And you comps. the while. a are same businesses. back These we volatility that in if also on development. another to in there's in year -- brands. the have that it have recognize to to a of goes are

here the the we're We're learn we wouldn't sale the the not I'm to going a headline we're overall quarters differently long-term. a going to obviously, a brands strong to business going couple models big try because as responsively. to are go to going to, do These and I look little it in and going of on forward. number. next protect get change for and for to test put We're compete business

John Glass

I'm value sorry to Garden. make the I you. just to belabor I point this correctly. understand Olive on want Thank sure

year the the that of You or needed value some future. couponing spent you reserving and power in if reducing discounting last

suggesting now need not the really today, view is today? but still, XXXX or increased your in stands reserve, you that are it as changing on this in promotions Are it's you value you

Gene Lee

the that in extremely is think, quarters it as perform mean same Garden to the XXX stands the continues it industry. of position our couple gap well, exactly Olive past points to today, I as was over basis I

depending analyst promotion, investor in overall I we're media and support at a you what's the don't that things isolation. what to promotion spend. at picture and much whole looking kind think is standpoint. that community community needs, We'll television doing each And from of happening what too continue do of look the from have

situation must we you run because TBI or into a TBI things a that bad. be read test, a And

our that It's levers at of one And Garden many I not now look as we're just well the being analyze to business. right environment. the that's competing our to -- support the to business. in business think, way think I looking Olive extremely we have pull to

John Glass

very you. That’s helpful. Great. Thank

Operator

you. Thank

is next Bartlett from Jake from Our question SunTrust.

open. line Your is

Jake Bartlett

question taking you more the context now are Great. Cheddar's. about My wondering the I'm like in business, get improvements your the question. think position operations, of you of And in on was where active where you might the a forward? acquisitions? the integration for going now, feel you of Do in strategy turnaround and you're Thanks the acquisition and

Gene Lee

two-part question. Well, a that's

on I've more are think I ever where we I'm been. think than I optimistic today, Cheddar's?

I opening still I in think, to a do acknowledge my as work of comments there’s ton there.

have Where a high volume complex is has great we're metrics, leadership that some and aren't we This that great businesses. resource operation operational strong running challenges human systemic.

some stabilize start partner right building of businesses in these and that to Manager team. getting and place, have with We managing General then a other great

people that restaurant an a encouraged awareness got real uncovered within I'm than So, is miles HR awareness we've the our encouraged staffed. encouraged; XX to our are I new that insight are And the really operation that better I'm that, encouraged I'm very ever. metrics metrics controls And with I'm improving. is restaurants. problem. really think our we've are starting that of improve. our problem encouraged that with I'm today

problems that. going that encouraged long-term. I'm to these solve solve we But So we're the for can

a and overall This the build less represents want for than and we're fix foundation of fact business strong our to that I the X% do fix really to long-term. going right. and I'm it this We’re to right in it going resolute

much this is doing right. a opportunity. think behind concerned still it about I'm putting as it, urgency more I'm as huge And I

M&A it's on have to time. really continue far management I no this board And in add at the to look the portfolio I our use statement. a As as that at and activity, are to comment point to opportunities going standard But appropriate. when further

Jake Bartlett

a your approach significantly. question of And space Garden, two outperforming been level incentives. traffic obviously, incentives to at Got I on negative quarters last your the had and it. And your follow-up Olive the has

As that, of absolute long at positive? on to of the traffic incentives you you outperformance kind you're to of -- And kind you how look insert trying versus to would tolerate your or negative more that are try I'm going level? drive kind to wondering focused more

Gene Lee

Yeah.

I to and giving reported last of not for go grows magnitude to look is change ahead for all, the at the month our of -- multiple piece methodology let's and positive if we're doing of ourselves that any have the mean reasons. that. that. due We're traffic do chose negative counts that traffic. off of And guest traffic not we the half that could we delivery. And business premise just First we catering negative

a be with There to there look at at to I think able overall look XX, it's available times XX, going we traffic and that you are say, being you traffic business, times we driving. and when at other business or and business, XX when look there's model. I'm the the you that losing worth guests are and our week okay to protect

to everything I traffic, or everything model. let's can do so, grow let's just you to can we have, think business our do we And protect don't can

in job balance. And last to balancing it over think think years leadership outstanding really this has team of efforts. four done have done all be I an teams the I our management these and

Jake Bartlett

the for question. taking Thanks Great.

Operator

from next Thank O’Cull question you. Our is [Operator Instructions] Stifel. from Chris

open. Your is line

Chris O’Cull

Thanks. Good morning.

promotion Is you its Gene, transaction, new a a $X entrée of just investment? clarification premise Take about an to provide broaden the Cheddar's it when is add-on And considered we question. the can detail start reach some plans or see dining First a just might to and then, Home with point check? advertising? more off how to that And

Gene Lee

media different see vehicles to kind other Yeah. an testing -- can we're I that. mean, The of $X what far awareness what there with out transaction. we can as learning with goes, and Take premise digital and And off to generate traditional as we see Home is Cheddar's

out we there at we're a to small increase So that learn. scale we'll as and scale continue

Chris O’Cull

Thanks. great. Okay,

Operator

from is question Saleh BTIG. Peter next Our from

line Your open. is

Peter Saleh

those questions we couple can a guest may scores, back about that or of Great. just Are those go started to Thanks. you're of go backwards? satisfaction improving, the on Cheddar's, kind just talk direction there? seeing be Gene, have and

be to -- yet then off there? the much How the Cheddar's manager done Thanks. how crew average? are those turnover is more work are of And and on at Darden's far both level, those

Gene Lee

scores one for and gap Good we've as better too across question, great there the that operating improved close that still is challenges the there still Peter. got differential would staffing virgins, between board to I increasing say and the employee down. and Guest we've is satisfaction management, are the stores and the opportunity

it's their the As are us norms, get point Darden metrics for far this inside them turnover, is on industry is while still a take time. but they norms are and industry are trends think norms, they hopefully to to a -- going as in but inside trend. Darden way them at to outside really get first which time, And I good the again

Peter Saleh

you. Thank

Operator

Thank you.

next Bernstein from Barclays. is from Our Jeffrey question

Your line open. is

Jeffrey Bernstein

couple you change what past see quarters, it traffic in consumer look relatively because you the you mention One clarification that stable. the the rationale some whether to I'm Great. you tough initially weaken very do mentioned first. think industry seems as was it’s trying trend older gauge a you or -- when prepared just remarks, and your compare on much. to to Thank in think that then of seems is sort there continued two-year Gene, whether of because at I you comp behavior, comps did mention and you like

being So, consumer? don't more more get looking chance data comp broader or there's a two-year we it's in compare industry at more see the where holistically difficult change that you're just whether you to actual think or maybe again the

Gene Lee

that, combination think of think I I Well, a it's both.

what the I was industry comparisons to trying you is overall the more in tougher comment think I that, to was all were that that's but industry talked difficult. allude think some about that I facing bit little was comparison,

that positive rate if GDP I growth, would've but to it's not stay come may all we went it view negative. the industry would in that -- what to like, still We strong, it to think, surprised was I It our the get But has is, way were at was you environment. growth look thought decelerated. trying just the this back at

we So, industry a all the little I surprised were just to negative. that went think back way the

Jeffrey Bernstein

opportunity which wondering growth to was metrics frustration might then talk longer delay excited might the like would otherwise the the just just was lead just that all? I'm when at like the back things been have whether that changed seem opportunity or new you over wondering have term. pushed timeframe you are And the time, Cheddar's, getting seem in and ramp-up big on sales whether to wondering under-the-hood you Understood. I'm I short-term about about want better unit just the

Gene Lee

Only the timeframe changed. has

said the I sure ramp-up biggest and think be pretty talking so we've yet. a haven't point that is resources been that that consistent new unit not with for won thing around our would I'm growth I that human we battle

got six make I see at ramp-up don't And growth. or every can build. year, want we continue depth I -- which management I to We're in time. a still doing to we're restaurant, a that there the want to point really new that you great at five investment, open you so, And managing think point that is have that the time a you right number partner. this yet And

you in ramp-up when partners can give get growth. of we really when a do start I restaurants. that's on to and to to increases I'm these really, point focused going managing a And we to that haven't that's great don't think And I'm you But that I given timeline -- getting timeline success know then today. likelihood dramatically. when that our

Jeffrey Bernstein

Thank you.

Operator

time. more questions at this Thank you. No

hand now call to Kalicak. the Kevin Let over me

Kevin Kalicak

quarter plan Thank to follow. we Thank in opens conference to want you, all the Ray. to that December you Thursday, market you for That on remind call concludes our participating results before call. XXth today's with call. second I all release

Operator

Thank concludes participating. you conference. today's for That you. Thank

disconnect. now You may

Darden Restaurants (DRI) 19 Sep 192020 Q1 Earnings call transcript