Even as customers at Darden Restaurants' biggest chains ate more appetizers instead of entrees and enjoyed less-expensive "endless" shrimp, the company posted today a 3.9 percent profit increase for the first quarter.
Net income was $110.8 million, or 85 cents a share. Overall sales rose 4.8 percent to $2 billion. But sales at established restaurants in its three biggest chains dipped 0.3 percent.
Wall Street responded well to the report, with the stock soaring more than 4.5 percent to $57.21 at noon.
Orlando-based Darden executives said they will continue offering lower prices to keep customers coming through the doors. Red Lobster, for example, will introduce a new menu later this quarter in which 60 percent of entrees will cost less than $15. Right now, it's 40 percent.
"They have to focus on the value," said Steve West, an analyst with Investment Technology Group who summed up Darden's quarter as "kinda so-so." There is "just continued malaise and kind of choppiness," he said.
Olive Garden, too, will "further strengthen affordability" in its menus, Darden chief operating officer Drew Madsen said. Check totals might go down, but more traffic and cutting labor costs should offset those decreases, Madsen said.
Red Lobster's overall sales dropped 2.6 percent during the first quarter, which ran through August. But Red Lobster had a high bar to hurdle over from last year, when sales spiked 12.3 percent after the debut of its $15 four-course seafood feast.
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