DRI - Darden Restaurants: Multi-Brand Strategy Failing To Adapt To The Market

2024-06-12 06:34:08 ET

Summary

• Darden is failing to adapt to increasing the average guest check to overcome decreased traffic.
• Darden is a company that owns and operates over 2,000 restaurants in the US and Canada, with a mix of casual and fine dining brands.
• The company's multi-brand strategy aims to mitigate economic changes, but recent data shows weaknesses in sales and customer sensitivity to price increases.
• The vast majority of growth prospects seem to support the fact that Darden is very close to fair value.

Contextualization and Investment Thesis

Darden Restaurants ( DRI ) is a company that owns and operates more than 2,000 restaurants in all 50 states. The company was born 86 years ago when Bill Darden opened the first restaurant called 'The Green Frog', where they served the famous 'Swamp Breakfast'. Currently, the company's operations are spread geographically between the United States and Canada, using a variety of brands.

It is worth noting that all brands are full-service restaurants and their classification varies between casual dining and fine dining. Among the brands classified as fine dining we have: Ruth’s Chris Steak House (acquired in the last calendar year), The Capital Grille and Eddie V’s Prime Seafood. The casual dining are: Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, Bahama Breeze, Seasons 52 and The Capital Burger....

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