Mar. 11, 2014, 11:24 AM| 3 Comments
Mar. 5, 2014, 5:56 PM
- Darden Restaurants (DRI) has received negative press in the past for shutting out analysts who are critical of management, and those calls likely will intensify after the company says it is canceling its analyst and investor meeting scheduled for later this month.
- "When there are problems and they don't want to take difficult questions, they shut down management access," Hedgeye analyst Howard Penney says.
- Activist investor Starboard Value, which owns 5.5% of DRI shares, and Barrington Capital, with a ~2% stake, have said DRI's plan to spin off Red Lobster should be delayed and put to a shareholder vote.
Mar. 5, 2014, 9:06 AM
- A recent poll by the Wall Street Journal and NBC indicates 63% of American support raising the minimum wage.
- Though the Republicans are expected to challenge anything brought to the floor of the House, there's a growing consensus in DC that some minimum wage legislation will eventually pass.
- Democrats argue that the current minimum wage level of $7.25 per hour is low by historical standards when adjusted for inflation.
- Related stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, CEC, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN, AEO, ANF, ARO, BBBY, BJ, CHS, COST, DG, DLTR, GPS, HD, JCP, JWN, KR, KSS, LOW, LB, NDN, ODP, PIR, PLCE, RSH, SPLS, SWY, TGT, TJX, URBN, WMT
Mar. 3, 2014, 7:57 AM
- Darden Restaurants (DRI) expects FQ3 EPS of $0.82 as the company's bottom line takes a hit from costs associated with a fresh strategic plan and severe winter weather in the U.S.
- Analysts had projected EPS would come in at $0.93 for the quarter.
- For the quarter, blended same-restaurant sales are forecast to be 0.7% lower than a year ago.
- Red Lobster continues to see abysmal traffic patterns with double-digit declines recorded in December, January, and February.
Feb. 26, 2014, 2:44 PM
- Three Senate Democrats have broken away from Majority Leader Harry Reid's $10.10/hour line in the sand on minimum wage legislation.
- Mary Landrieu of Louisiana, Mark Pryor of Arkansas, and Mark Warner of Virginia have all tipped off that they think there could be some room to negotiate over the amount of an increase over the current federal minimum wage of $7.25/hour. The GOP likes the status quo, but is viewed as likely to give some ground in an election year.
- Federal minimum wage legislation could create higher costs in the retail and restaurants sectors as companies adjust to the new higher floor.
- Last week, Gap made a preemptive move to raise its own hourly wage in a development that stirred the pot a little bit.
- Related stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, CEC, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN, AEO, ANF, ARO, BBBY, BJ, CHS, COST, DG, DLTR, GPS, HD, JCP, JWN, KR, KSS, LOW, LB, NDN, ODP, PIR, PLCE, RSH, SPLS, SWY, TGT, TJX, URBN, WMT.
Feb. 24, 2014, 6:52 AM
- Starboard Value wants to have shareholders of Darden Restaurants (DRI) vote at a special meeting on the company's plan to spin off Red Lobster.
- The hedge fund needs to win support of a majority of the shareholders in the next 60 days to force Darden to schedule the meeting.
- Starboard, which owns a 5.5% stake in the restaurant operator, would like to see Darden spin off more chains than just the one.
Feb. 20, 2014, 1:14 PM
- Starboard Value hires the former president of Olive Garden, Bradley Blum, as an adviser in a move clearly aimed at Darden Restaurants (DRI +2.8%).
- The hedge fund owns 5.5% of Darden and has been pressing the company hard for changes.
- It seems a decent bet that Blum will end up being nominated by Starboard for the Darden board.
- SEC Form 13D
Feb. 18, 2014, 7:45 AM
Feb. 11, 2014, 10:34 AM
- Same-store restaurant sales fell 0.9% in January, according to a fresh forecast from Black Box Intelligence.
- The dip in sales came off of a 2.2% decline in traffic as price/mix helped to offset.
- Chains with a higher percentage of outlets in warmer states fared better during the month.
- Related stocks: CAKE, CBRL, DNKN, DPZ, DRI, EAT, JACK, PNRA, RRGB, RT, SONC, WEN, BWLD, THI, BDL, NATH, CEC, LUB, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN.
Feb. 7, 2014, 2:31 PM
- P-E firms are paying more for large franchisees in a broad trend that could ultimately help valuations in the restaurant sector.
- The working theory is that private equity groups are bringing the multiples for franchisees back up to levels seen by brands - roughly 7X-10X EBITDA.
- If sales trends improve across the sector, the valuation rubber brand could get stretched out on publicly traded restaurants stocks.
- Related stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, CEC, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN
Jan. 30, 2014, 2:28 PM
- Barington Capital Group wants Darden Restaurants (DRI +0.1%) to name an independent chairman as it keeps applying pressure on the restaurant operator's board.
- The plan by Darden to spin off Red Lobster is a far cry from the sweeping changes Barington and fellow stakeholder Starboard Value want to see occur.
- The firms see untapped value sitting in Darden's brands (Olive Garden LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's, Yard House) and real estate.
Jan. 28, 2014, 12:57 PM
- An executive from the National Retail Federation testified before Congress today in an effort to convince the lawmakers that the Affordable Care Act should be modified.
- The group believes a full-time employee should be based on a work week of 40 hours and would like to see the heath care insurance coverage requirement be lifted to 100 employees from 50.
- Restaurant chains (MCD, BKW, DNKN, PZZA, YUM, WEN, KKD, BAGL, DRI, PLKI) operating under a franchise model have been impacted negatively by the Affordable Care Act.
Jan. 21, 2014, 2:22 PM
- Darden Restaurants (DRI -0.7%) aims to continue with its planned spin-off of Red Lobster despite renewed criticism by Starboard Value and Barrington Group.
- The company writes, "While we appreciate the views of our shareholders, we have completed a comprehensive evaluation of alternatives [...], including those suggested by Starboard and others. [...] We believe the comprehensive plan we announced in December is in the best interest of all Darden shareholders, and we are moving forward with that plan."
Jan. 21, 2014, 9:59 AM
- Joining Barrington Group in its criticism of Darden Restaurants' (DRI +0.7%) proposed spin-off of Red Lobster is Starboard Value, which in an open letter writes, "We believe a separation of Red Lobster as currently conceived could destroy substantial value" and could be "potentially even worse for shareholders than the status quo."
- Starboard believes a spin-off would create a new public entity "with a single poorly performing restaurant concept that we would expect to trade at a steep discount to Darden and other peers," damage Darden's ability to realize the value of its real estate holdings, and fails to address the underlying drivers of underperformance ("a bloated cost structure, a lack of focus on restaurant operations, and an inefficient asset base and capital structure").
- Instead, the activist "implore[s] management and the Board to delay the impending separation of Red Lobster to allow time for a broader exploration of available alternatives, as well as to provide sufficient time for communications with shareholders."
Jan. 13, 2014, 8:18 AM
- Barrington Group calls the current plan by Darden Restaurants (DRI) to create more shareholder value both incomplete and inadequate.
- In the past, the stakeholder has called for major changes at Darden - including a spinoff of assets into a REIT or more spinoffs of brands other than just Red Lobster.
- Many restaurant industry analysts think Darden's board is still on the hot seat with activist investors.
Jan. 6, 2014, 2:06 PM
- Hedgeye's Howard Penney has some strong feelings on which restaurant operators are managing themselves through the operational boom-and-bust cycles most chains endure as concepts are grown too fast.
- The research analyst thinks Starbucks (SBUX -1%) and Brinker International (EAT -1.1%) have honed in on a correct management strategy to trim capex spending and "attack" the middle of the P&L to improve EBITDA, while Darden Restaurants (DRI -2.3%) stubbornly resists the idea.
DRI vs. ETF Alternatives
Darden Restaurants Inc owns and operates dining restaurants. Some of its trade names are Red Lobster, Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, Eddie V's Prime Seafood, Wildfish Seafood Grille and Yard House.
Other News & PR