SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 25, 2000
Darden Restaurants, Inc.
(Exact name of registrant as specified in its charter)
Florida 1-13666 59-3305930
(State or other juris- (Commission file number) (IRS employer
diction of incorporation) identification No.)
5900 Lake Ellenor Drive, Orlando, Florida 32809
(Address of principal executive offices)
Registrant's telephone number, including area code:
(407) 245-4000
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On February 25, 2000, the Registrant issued a news release
entitled "Darden Expects Casual Dining Restaurant Sales to
Double to $95 Billion and Intends To Increase Its Leading
Market Share."
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Number Description
99 Press Release dated February 25, 2000,
entitled "Darden Expects Casual Dining
Restaurant Sales to Double to $95
Billion and Intends to Increase its
Leading Market Share Position."
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 28, 2000 DARDEN RESTAURANTS, INC.
By: /s/ Paula J. Shives
-----------------------------
Paula J. Shives
Senior Vice President,
General Counsel and Secretary
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INDEX TO EXHIBITS
Exhibit Number Page
99 Press Release dated February 25, 2000,
entitled "Darden Expects Casual Dining
Restaurant Sales to Double to $95 Billion
and Intends to Increase its Leading Market
Share Position." 5
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EXHIBIT 99
DARDEN EXPECTS CASUAL DINING RESTAURANT SALES TO DOUBLE TO
$95 BILLION AND INTENDS TO INCREASE ITS LEADING MARKET SHARE POSITION
ORLANDO, FL - During its conference for investors and restaurant analysts,
Darden Restaurants said sales in the $44 billion casual dining segment could
more than double to as much as $95 billion by the end of the decade. The Company
pointed to a number of factors it believes should propel a 6% - 8% increase in
annual segment sales for at least the next 10 years.
"People in their 40's, 50's and 60's are the prime users of casual
dining restaurants, and the number of people in these age groups will increase
dramatically over the next ten years," said Joe Lee, Darden's Chairman and CEO.
"This should help drive strong casual dining growth and we intend to take full
advantage of the market opportunity expected as a result of this and other
changes in lifestyle."
"There are a number of factors that bode well for casual dining," said
Bob O'Brien, President of NPD Foodservice Information Group, who provided an
overview of the restaurant industry at the conference. He cited continued growth
in the number of dual-income couples with more resources to spend dining out and
greater time constraints limiting their ability or desire to cook at home.
O'Brien also said there is increasing consensus that other lifestyle changes
which have left consumers less inclined to prepare meals at home are unlikely to
reverse.
DARDEN'S GOAL IS INCREASED MARKET SHARE
Already the largest Company in casual dining with more than 8% market
share in 1999, Darden said it is pursuing several areas of growth as it seeks
even greater share. Clarence Otis, Darden's Chief Financial Officer said the
Company believes Red Lobster and Olive Garden, its two well-established, core
businesses, are capable of increasing their combined restaurant base by 18% -
25% while also providing strong same-restaurant sales growth. For the remaining
sales to meet its market share objectives, Otis said Darden intends to continue
to grow its newer Bahama Breeze concept and is looking to develop internally,
and acquire other restaurant businesses.
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"We are very excited about Olive Garden's long-term prospects," said
Olive Garden President Brad Blum. "Building on our twenty-one consecutive
quarters of same-restaurant sales increases, we see many opportunities to offer
our guests an even better genuine Italian dining experience. We have a
two-pronged strategy for growth. The first is continued growth in
same-restaurant sales and traffic and the second is resumption of new restaurant
expansion."
Red Lobster President Dick Rivera has similar long-term objectives.
"While we are very pleased with how much we've turned our business around," said
Rivera, "we will not be content with simply returning to historical performance
levels. We feel we can deliver a dining experience that enables us to take sales
and traffic in our existing restaurants to new heights and that also forms the
basis for a steady increase in new restaurant openings."
Darden believes the two emerging businesses it currently operates
provide a good start towards achieving the sale volumes it seeks from new
businesses. "We have a very promising emerging company in Bahama Breeze, our
Caribbean restaurant business," said Lee, "and we are extremely excited about
the prospects for Smokey Bones, the new barbecue and sports bar operation we are
now testing. We think Bahama Breeze can grow to be at least 100 - 150
restaurants and, should initial tests continue to prove successful, we believe
Smokey Bones has the potential to be at least a 200 - 300 unit business."
According to Lee, Darden is continuing efforts to develop other
concepts internally and to find small multi-unit restaurant operations it can
acquire and grow. "Even if Bahama Breeze continues to be well-received and
Smokey Bones proves as successful as we hope, we will continue exploring new
internal ideas and looking for potential acquisitions in a disciplined manner to
help meet our long-term growth objectives," he said.
ATTRACTIVE EARNINGS AND RETURNS EXPECTED
Darden said its market share goals are consistent with annual earnings
per share growth that trends between 15% and 20% over time. "There will be year
to year variations in our earnings growth based upon economic and industry
factors and decisions we make at various points in time about what's best for
the Company long term," said Otis. "These may put us above or below the 15% -
20% range in any particular year. When we think about a trend over time,
however, we believe the range is reasonable given our desire to capture for our
shareholders a meaningful portion of the substantial growth opportunity offered
by casual dining."
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Darden emphasized that its objective is to increase sales and earnings
while delivering financial returns well above its all-in cost of funds. "We
regularly discuss our efforts to grow by being the first choice of guests,
employees and the communities in which we live and work," observed Lee. "We are
always aware - in all we do - of our need to couple our growth with strong
returns to provide leadership levels of shareholder value creation."
OPERATING COMPANIES' GROWTH CONTINUES
Dick Rivera said Red Lobster's strategy is working well. He reiterated
that Red Lobster is seeking to improve the dining experience it delivers by
transforming its culture and the behavior of its employees, enhancing its food
offerings and creating marketing that makes stronger connections to guests and
communicates the changes taking place in the restaurants.
Rivera and other senior management of Red Lobster reviewed the
operating company's initiatives in these areas and offered evidence the desired
changes are taking place. "We are seeing across the board improvement in all
critical measures," Rivera announced. "Scores are improving on each of the
attributes measured in our guest satisfaction and employee experience surveys.
Manager and frontline employee turnover trends are excellent and, most
importantly, same-restaurant sales and guest counts continue to increase."
Red Lobster also detailed its progress toward returning to a historical
operating profit return on sales level. It reported that, in fiscal 1997, return
on sales fell to 23% of the level achieved in fiscal 1995 - Red Lobster's last
year of normalized returns. According to Rivera, results have steadily improved,
with operating profit return on sales rising to 55% of normal in fiscal 1998,
65% in fiscal 1999 and 74% for the twelve months through November 1999, the end
of the fiscal 2000 second quarter. Red Lobster said it expects continued
improvement.
Olive Garden detailed its strategy to build on its strong guest
satisfaction results, continued comparable restaurant sales and traffic
increases, and record-setting financial results. "Our strategy is unchanged,"
said Brad Blum. "We are a family of local restaurants focused on delighting
every guest with a genuine Italian dining experience and this is the foundation
for the sustained same-restaurant sales growth we seek at Olive Garden and for
our planned acceleration in new restaurant openings." Blum pointed to progress
on each of four key growth initiatives. He said wine sales are increasing, new
menu items inspired by Olive Garden's restaurant and Culinary Institute in
Tuscany, Italy, are being well-received by guests, the RevItalia remodel
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program continues to show strong results and Olive Garden is planning to open 15
new restaurants each year for at least the next three years.
Bahama Breeze has 10 restaurants open and said its expansion remains on
plan. According to Gary Heckel, President of Bahama Breeze, the operating
company intends to open two more restaurants in fiscal 2000 (ending May 2000),
and has a sufficient pipeline to meet its fiscal 2001 goal of at least 12 new
restaurants.
According to Bob Mock, President of Smokey Bones, and concept creator
Blaine Sweatt, Darden's consumer research indicates that the barbecue and sports
bar arenas have very strong appeal. Mock said the first restaurant's early
volumes and consumers' exceptionally positive responses to it are consistent
with the research and support Darden's confidence in Smokey Bones' potential. A
second restaurant is scheduled to open in late spring and a third test location
is also under construction.
DARDEN OUTLINES ITS STRATEGIC BUILDING BLOCKS
Joe Lee said he believes the strategic building blocks necessary for
effective long-term operation and evolution of Red Lobster and Olive Garden and
successful expansion of Bahama Breeze and other emerging concepts are the same.
"We win if we are brilliant with key basics," said Lee. "We are building a
dynamic culture of continuous improvement when it comes to daily operations in
our restaurants, our ability to develop leaders throughout our organization and
our capacity to redefine hospitality and culinary excellence within casual
dining."
Darden Restaurants, in Orlando, Florida, is the world's largest casual
dining company with more than 1,120 restaurants operating under the Red Lobster,
Olive Garden, Bahama Breeze and Smokey Bones brands, with over 115,000 employees
and annual sales of $3.5 billion. Forward-looking statements in this news
release, if any, are made under the Safe Harbor provisions of the Private
Securities Litigation Reform Act of 1995. Certain important factors could cause
results to differ materially from those anticipated by the forward-looking
statements, including the impact of changing economic or business conditions,
the impact of competition, the availability of favorable credit and trade terms,
the impact of changes in the cost or availability
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of food and real estate, government regulation, construction costs, weather
conditions and other factors discussed from time to time in reports filed by the
company with the Securities and Exchange Commission.
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