News Column

Darden Restaurants May Scale Back Expansion Plans

Dec. 20, 2012

Sandra Pedicini

Darden Restaurants said Thursday it plans to offer discounts and scale back expansion after reporting weak earnings the company said were brought on in part by its response to Obamacare.

The Orlando-based owner of Olive Garden, Red Lobster and other chains reported second-quarter profit of $33.7 million, or 26 cents per share, down from $54.1 million, or 41 cents per share, the previous year. The company had already warned investors earlier this month that its earnings would fall far short of expectations. Analysts had originally predicted between 46 and 47 cents per share.

Chief operating officer Drew Maden said the company had replanned the next few months to have "more promotions that are fundamentally about communicating a great deal and less about communicating brand building news."

In a conference call, Darden said bad publicity over its experimentation with limiting employee hours to pay for federal health care reforms was partly to blame, as well as promotions that didn't inspire consumers.

"Darden as a company and especially our three large brands was the focus of significant media coverage and online conversation," chief executive officer Clarence Otis said of the health care issue. "It's difficult to measure. We do think it had an adverse impact on our results."

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Source: (c) 2012 The Orlando Sentinel (Orlando, Fla.)