Darden Restaurant Financial Analysis
Executive Summary
Darden Restaurants, Inc. has been a public company since 1995. A company born of the chain Red Lobster, Darden is a recent spin-off as a result of mergers and acquisitions of various types. Publicly traded on the New York Stock Exchange, Darden (DRI) is the parent company of Red Lobster, The Olive Garden, the now-defunct China Coast concept, and a new “Floribbean” concept: Bahama Breezes.
Throughout its existence, as a part of General Mills, Pillsbury, or on its own as DRI, Darden has made waves throughout the restaurant industry. The thought processes behind the introduction of a concept are considered revolutionary, as exemplified by the strategy behind The Olive Garden and Bahama Breezes.
While Darden has not had the most stellar of income statements of late, this is a result of write-offs and write-downs of assets as a result of the failure of the chain, The China Coast. Recent years have shown consistent revenues, yet inconsistent net income, as it has been cut in half, and then redoubled it in recent years (before asset write-downs, a discrepancy that will be discussed in the introduction). In a like manner, most components of the return on equity equation have drastically swung in recent years as a result of inconsistent leadership, and shifting management goals. However, as Darden’s management begins stabilizing the company, cutting sub-quality stores, and gearing up for the nationwide expansion of Bahama Breezes, the company appears to be heading in the positive direction.
However, the entire annual report is not rosy. Upon examining Darden’s use of leverage, it would appear that the company is being careless in their management of debt. Darden did not use a great deal of debt initially, however, they are quickly adding a great deal of short-term liabilities to their reasonable level of long-term debt. This tactic was decided to be alarming to our group.
The future does indeed look bright for Darden. The company
Darden Restaurants, Inc. has been a public company since 1995. A company born of the chain Red Lobster, Darden is a recent spin-off as a result of mergers and acquisitions of various types. Publicly traded on the New York Stock Exchange, Darden (DRI) is the parent company of Red Lobster, The Olive Garden, the now-defunct China Coast concept, and a new “Floribbean” concept: Bahama Breezes.
Throughout its existence, as a part of General Mills, Pillsbury, or on its own as DRI, Darden has made waves throughout the restaurant industry. The thought processes behind the introduction of a concept are considered revolutionary, as exemplified by the strategy behind The Olive Garden and Bahama Breezes.
While Darden has not had the most stellar of income statements of late, this is a result of write-offs and write-downs of assets as a result of the failure of the chain, The China Coast. Recent years have shown consistent revenues, yet inconsistent net income, as it has been cut in half, and then redoubled it in recent years (before asset write-downs, a discrepancy that will be discussed in the introduction). In a like manner, most components of the return on equity equation have drastically swung in recent years as a result of inconsistent leadership, and shifting management goals. However, as Darden’s management begins stabilizing the company, cutting sub-quality stores, and gearing up for the nationwide expansion of Bahama Breezes, the company appears to be heading in the positive direction.
However, the entire annual report is not rosy. Upon examining Darden’s use of leverage, it would appear that the company is being careless in their management of debt. Darden did not use a great deal of debt initially, however, they are quickly adding a great deal of short-term liabilities to their reasonable level of long-term debt. This tactic was decided to be alarming to our group.
The future does indeed look bright for Darden. The company