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Olive Garden pins hopes on new logo, menu

NEW YORK (AP) -- Olive Garden has a plan to win back customers: a new logo and yet more menu changes.

In a call with analysts on Monday, executives at Darden Restaurants Inc. expressed confidence they could bring about a "brand renaissance" at the Italian chain with a new look and updated menu that presented food with "flair and sophistication." The changes include more small dishes and the option to mix and match pastas and sauces.

Darden executives also continued to make the case for why it made sense to hold onto Olive Garden and spin off or sell only Red Lobster, rather than keeping the two struggling chains together and separating them from the company's more promising specialty restaurant unit, which includes Capital Grille and Yard House.

"We certainly recognize that industry dynamics have changed considerably over past two years," CEO Clarence Otis said during the call, acknowledging the need to make drastic changes.

The remarks came as Darden Restaurants Inc. reported preliminary quarterly results that fell short of Wall Street expectations as sales continue to slide at its two flagship chains. It said sales are expected to drop 5.4 percent at Olive Garden restaurants open at least a year. At Red Lobster, the figure is expected to fall 8.8 percent.

Customer traffic declines were even steeper, falling as much as 13 percent at Olive Garden in December and 19 percent at Red Lobster in January.

The Orlando, Fla.-based company partly blamed rough winter weather for the results. But Darden has been battling shifting industry trends for years now, with people moving away from casual dining chains where tips for waiters and waitresses push up a meal's cost. Darden has tried making numerous changes at Olive Garden and Red Lobster to better reflect today's eating habits, but the efforts have failed to take hold so far.

Barington Capital, an activist investor that says Olive Garden and Red Lobster should be separated as a pair from Darden's smaller chains, expressed disappointment in the company's latest results.

"Darden's deteriorating financial performance and decision to continue to separate Red Lobster without pursuing opportunities to monetize its valuable real estate have caused us to lose all confidence in the ability of Clarence Otis to manage the company," the firm said in a statement.

For the three months ended Feb. 23, Darden said it expects to earn about 82 cents per share. Analysts expected a profit of $1.02 per share, according to FactSet. In addition to the bad weather, Darden said legal, advisory and other costs related to its plan to either spin off or sell Red Lobster hurt its profit.

Meanwhile, sales for the company's specialty restaurant group are expected to be down 0.7 percent at established locations. The metric is a key measure of a retailer's health because it excludes the volatility of newly opened and closed locations.

Excluding the impact of the weather and the shift in the timing of Thanksgiving, Darden said Red Lobster stores would have posted a decline of about 6.2 percent, while Olive Garden revenue at stores open at least a year would have fallen 2.8 percent and risen 2.9 percent at LongHorn Steakhouse locations. The specialty restaurant group would have posted a 1.9 percent increase.

The company backed its previous outlook for fiscal 2014, saying that it still expects earnings per share to decline 15 percent to 20 percent, excluding restructuring costs.

Shares of Darden fell $2.91, or 5.7 percent, to $48.15 in afternoon trading Monday.

Join the discussion

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qltngrandma March 04 2014 at 3:00 AM

Hate the new LOGO !!!!

Flag Reply +2 rate up
Jacki March 04 2014 at 2:47 AM

No big deal on the logo. Should have saved their money! Can't eat a logo! The food is passable, but the service is non-existent! Having eaten at OG several times in the last two month's, I can tell you that the serving sizes vary greatly from day-to-day, too. Disappointing if you expect much more than make-believe Italian food that costs too much for what is served.

Flag Reply +3 rate up
thothsellshomes March 04 2014 at 1:49 AM

Have they stopped doing that "Happy Happy Birthday" crap ? I don't like that ... tacky.

Flag Reply +2 rate up
2 replies
mark and sheri thothsellshomes March 04 2014 at 1:56 AM

Then don't go there. Especially if you do not like to sing "Happy Birthday."

Flag Reply +2 rate up
urtheonly14me21 thothsellshomes March 04 2014 at 2:46 AM

I work in one and we dont sing anymore unless asked to and then we still dont always sing

Flag Reply 0 rate up
Greg March 04 2014 at 7:37 AM

OLD logo/sign looks much better...the logo is not the problem. Stop listening to certain high profile people in Washington as to what your menu should be like. Many people that go to an Italian eatery want traditional Italian dishes, not all the lighter fare TASTELESS new items that have been added. 2 or 3 lighter fare options are plenty along with the salad, which should be offered with a low calorie, low carb. dressing as an option. For folks craving real Italian, what about Stuffed Manicotti, Chicken Cacciatore, and Muffuletta Sandwiches w/different meats, cheeses w/olive salad, Pasta w/ artichokes, and Veal Marsala, just to name a few...?

Flag Reply +1 rate up
rjcopters March 04 2014 at 7:33 AM

Now they should invest in someone who knows how to cook....terrible excuse for Italian food....and they wonder why sales are down...go eat at Carabbas or Macoroni Grill....both chains but know how to deliver good food....

Flag Reply +1 rate up
bobbneubauer March 04 2014 at 1:07 AM

Logo looks like someone @ OG ate at the Palms Restaurant and liked & copied their colors. Also its time to change the Menu, Again, with variety.

Flag Reply +3 rate up
PhilliePhan75 March 04 2014 at 3:25 AM

Always thought it was strange that the old logo had grapes in in it yet it is called "Olive" Garden

Flag Reply +2 rate up
mark and sheri March 04 2014 at 2:00 AM

Olive Garden and especially Red Lobster used to be nice priced family restaurants. Now, they are over priced for what you get. Give me a good Asian or Mexican Restaurant. They seem to be more reasonably priced with some tasty food choices.

Flag Reply +3 rate up
diana March 04 2014 at 12:07 AM

People like it. No matter what critics say, if someone likes it, that makes it good.
Personally, give me enough glasses of wine, and I will love it!
Everyone has their own tastes, let us like what we like.

Flag Reply +4 rate up
butterbean41150 March 03 2014 at 11:50 PM


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