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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.

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betty523 March 04 2014 at 8:35 AM

I have one big favorite meal at O.G. it's Fettucine Alfredo, it's almost as good as my own. I think their minestrone soup is like homemade, so I order this meal almost always...However, I have mentioned that their food is too, too, salty and they always call the manager who has a comeback about the salt. They say it is not too salty, I disagree, so I don't go there too often. The dishes I order are not salty, so I stay safe with that. I do like that they are generous by sending out coupons which is a big help nowadays and which many dinning places do not offer. I generally do go with the coupons and then enjoy dinning in these places. I hope O.G. does not close thier doors because this country is drowning in places closing down, it's too sad to hear and see.
However, they need to listen to their clients and what they want...Not a lot of salt, coupons, and of course good prices so that all can enjoy good food and a night out...

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Danny March 03 2014 at 8:09 PM

My wife and I both agree the old logo looks the best. Most of the time the NEW & Improved product and or logo is worse than the original and will cost lots of money to change either of them. Just our honest opinions. My wife has been to Olive Garden one time and I have never been to one. My frist impression I get from others and that has kept us away is the price. I like to get something for the money I hand to the cashier.

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1 reply
mykecusa@netscap Danny March 03 2014 at 8:13 PM

I bet you buy lots of Chinese trinkets at WalMart also.

Flag Reply 0 rate up
Lynn March 03 2014 at 8:09 PM

Olive Garden suffering a sales drop ? You could have fooled me! Have you ever tried to walk right in without waiting at Olive Garden, Savannah, GA? It ain't happening!

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2 replies
mykecusa@netscap Lynn March 03 2014 at 8:11 PM

Nor in Sacramento CA

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papergirl6 Lynn March 03 2014 at 8:16 PM

Nor in Champaign, IL

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mykecusa@netscap March 03 2014 at 8:11 PM

Personally I like Olive Garden's old logo and their old menu. I always found it a decent, quiet place to have lunch, or dinner. Bummer they are not doing better.

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PressinMatters2u March 04 2014 at 8:47 AM

I am Italian and make my own Italian food so when I tried O.G. I was disappointed. Their salads are good and their breadsticks, too. I tried the lasagna and that's what turned me off. They don't use the right combo of Italian cheeses. I haven't been back since that first time.

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ad1bc March 03 2014 at 8:14 PM

But will their service improve? On the two occasions I tried to eat at Olive Garden I was seated and then ignored for so long that I got up and left. I haven't been back and a new logo won't lure me through their doors.

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1 reply
patsbest1 ad1bc March 03 2014 at 8:29 PM

go back whem it first opened it was great food was always very good but the change is terrible it gets worst everytime they change the menu go back to original

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darbpack March 03 2014 at 8:15 PM

The problem is Olive Darden not the logo.

Flag Reply +4 rate up
dvlboy66 March 03 2014 at 8:17 PM

I don't eat there, but the one here always has wait time of about a hour.

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Ruth March 03 2014 at 8:18 PM

I wish they had a drive thru. I often get hungry for pasta or soup, but have trouble finding a parking place also I don't walk as good any more or stand for a long period. Now that I'm nearly 80. Would be nice when I don't feel like cooking, that I could order then go to a drve thru to pick up a meal.

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mmj4914 March 03 2014 at 8:07 PM

I can see it all now.....in a meeting a group of upper managment eggheads at Darden are trying to figure out how to boost sales. A 28 year old MBA jumps up and says " I've got the answer! Let's change our logo and everything will be just swell! "
Don't these guys get it?

Flag Reply +3 rate up
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