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Unlimited Breadsticks Usher in New Era of Growth for Olive Garden, Darden

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After years of slumping sales, Darden reports positive growth

Mike Mozart/Flickr

Darden Restaurants, Inc., ”the company behind chains like Bahama Breeze, LongHorn Steakhouse and Olive Garden, ”is reporting strong sales across all its brands in new numbers released today. In a press release sent out this morning, the company reported that same-restaurant sales increased 6.2 percent for the third fiscal quarter of 2016 (November 30, 2015-February 28, 2016) versus the third quarter of 2015. The strongest growth among Darden brands came, perhaps surprisingly, from Bahama Breeze (where sales were up nearly 10 percent) and Olive Garden, where sales increased 6.8 percent.

The news is much welcome for a company that suffered from a slump in sales and foot traffic in recent years. In 2014, Darden sold its seafood chain Red Lobster for $2.1 billion, a move that then-CEO Clarence Otis said would allow it to focus on a "brand renaissance" at Olive Garden. At the time, investors argued that the pasta chain was suffering due to wasteful spending, outdated ad campaigns and failure to salt the pasta water. Of course, not everyone agreed with Otis' decision to sell Red Lobster, which eventually led to him (and some other company execs) stepping down in 2014. The corporate jets went, too.

The Olive Garden makeovers moved forward though, complete with a fresh logo, updated decor and more flexible seating options. The strategy seems to have helped. In a statement, Darden CEO Gene Lee attributed the positive growth of its brands to "better guest experiences and improved value." According to Darden Director of Communications Rich Jeffers, in a conference call to investors, Lee stressed that the biggest driver of results is that the fact that Darden is "laser-focused on running great restaurants." Looks like doling out unlimited breadsticks hasn't been too harsh on the bottom line after all.


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