Seeking Alpha

The restaurant sector is on watch after a profit warning from Darden Restaurants points to...

The restaurant sector is on watch after a profit warning from Darden Restaurants points to weakness, not in Europe or China, but at home in the U.S. While increased promotional activity in the sector is behind part of the slip from Darden, the bigger question is why are sales so weak for big players if consumer confidence is supposedly bouncing back?
Comments (12)
  • chopchop0
    , contributor
    Comments (3222) | Send Message
     
    Because darden serves entry-level restaurant "product". If I want chain Italian food, I go to Carrabas. If I want chain seafood, I'd rather go to bonefish grill.

     

    Quality will always do well
    4 Dec 2012, 09:12 AM Reply Like
  • davidingeorgia
    , contributor
    Comments (2713) | Send Message
     
    >>...the bigger question is why are sales so weak for big players if consumer confidence is supposedly bouncing back?<<

     

    Yeah, odd isn't it? And after this fabulous "recovery" has been ongoing for months and months now, you'd think sales at places like Darden would be booming, too, right along with the economy.

     

    Oh wait...
    4 Dec 2012, 09:12 AM Reply Like
  • Richard Adams
    , contributor
    Comments (165) | Send Message
     
    The Darden article mentions Q2, is that calender or Darden's version of Q2? If it was April. May, June that was a long time ago and means little here at the end of the year. But I echo David's comments on the economy, this is not a recovery. And restaurants have hit the wall on passing on food inflation to customers. Menu prices can go no higher in this economy.
    4 Dec 2012, 09:20 AM Reply Like
  • Albert Alfonso
    , contributor
    Comments (1377) | Send Message
     
    DRI has a weird fiscal year. Their Q2 is calender Q4.
    4 Dec 2012, 09:27 AM Reply Like
  • Richard Adams
    , contributor
    Comments (165) | Send Message
     
    Thanks Albert.
    4 Dec 2012, 10:15 AM Reply Like
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    Because the election hype numbers can now go back to "normal"....Obama was elected on fake confidence...so be it..
    4 Dec 2012, 09:26 AM Reply Like
  • mschultz7038
    , contributor
    Comments (11) | Send Message
     
    Darden, Applebees, Papa Johns, are all weak because they took sides to screw their employees. The word is getting out.
    4 Dec 2012, 09:58 AM Reply Like
  • chopchop0
    , contributor
    Comments (3222) | Send Message
     
    Wal-mart is doing fine ;)
    4 Dec 2012, 10:42 AM Reply Like
  • Tack
    , contributor
    Comments (12962) | Send Message
     
    All these chains "dumb down" the food, squeezing out quality to improve margins, until what's left is inedible, so that could be a factor.
    4 Dec 2012, 10:10 AM Reply Like
  • Cooter Brown
    , contributor
    Comment (1) | Send Message
     
    They "dumb down" and "squeeze out quality" to make the food you eat at the prices you demand. It's not like they want to serve less quality. It's not a choice. Stop incessantly value shopping and higher quality restaurants won't have to compromise their products in order to compete. Get it now? People who slam the restaurant industry for squeezing margins are ignorant to the facts. Restaurants are the ones being squeezed between commodity pricing, labor laws and the customers' disposable income. The restaurant industry provides a quality of life never seen before on this planet. So give them a little credit for not investing their capital elsewhere and employing millions of Americans.
    4 Dec 2012, 11:24 AM Reply Like
  • jw4golf
    , contributor
    Comments (340) | Send Message
     
    good point, look at the rise in food prices during all the QE and I know I would be hard pressed to make any money if I ran a mom/pop or big chain restaurant. in general all my local restaurants have raised prices and every increase cost them customers. thank the government for future tax hikes, to continue the trend of removing discretionary income from our pockets, before we get it of course.
    4 Dec 2012, 11:40 AM Reply Like
  • Chazuu
    , contributor
    Comments (122) | Send Message
     
    Almost every diner I have eaten in has better food at lower prices than the typical chain restaurant. Olive Garden and Red Lobster are prime examples of overpriced, too salty and too greasy food.
    The mystery to me is how they have been as successful as they have been for so long. Maybe the public is finally getting the message that fatty, heavily salted food is not really very good for one's health.
    And-- most diners have the same employees for year after year. They must treat them better! Typical chain restaurants have tremendous turn over of their employees.
    6 Dec 2012, 11:31 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|