May 30, 2014, 9:16 AM
- Hedgeye's Howard Penney thinks Darden Restaurants (DRI) can be a long-term turnaround story if Starboard is successful in landing board seats.
- He writes that Starboard isn't the stereotypical activist investor out looking to make a quick buck.
- The upside is so high with Darden it gives investors a "generational opportunity," according to Penney.
May 21, 2014, 8:37 PM
- Starboard Value plans to launch a fight to take over the board of Darden Restaurants (DRI), according to the Wall Street Journal.
- The hedge fund wasn't expected to stay quiet after Darden decided to sell Red Lobster in a move Starboard thinks destroys shareholder value.
- Darden is trying to push the Red Lobster sale through without a shareholder vote.
May 16, 2014, 3:33 PM
- Starboard Value opposes the sale by Darden Restaurants (DRI -4%) of Red Lobster in no uncertain terms.
- The hedge fund says by its calculation a deal price of $2.1B destroys close to $800M of Darden shareholder value.
- "It appears that Darden has instead sold Red Lobster in a rushed transaction at a severe discount," wrote Starboard CEO Jeffrey Smith.
- Smith beat the over-under on a Starboard bashing of Darden by a few hours.
May 16, 2014, 8:32 AM
- It's a see-saw early session for Darden Restaurants (DRI) following news the company will sell Red Lobster for $2.1B.
- The company is taking the unusual measure of funneling the proceeds back to buybacks and debt retirement which is a tip-off to some that more dramatic changes are on the way.
- The deal price seems a bit low to some restaurant industry analysts, although the sale comes amid sluggish traffic patterns at Red Lobster. There's also the difficulty of uncoupling the combined Red Lobster-Olive Garden units.
- What to watch: Darden CEO Clarence Otis has been the target of activist investors and analysts for quite a while on accusations of mismanagement. If early reaction is any indication, Otis is still firmly on the hot seat.
- DRI -1.3% premarket
May 16, 2014, 8:10 AM
May 14, 2014, 3:52 PM
- Darden Restaurants (DRI -0.9%) CEO Clarence Otis is on the hot seat again with critics harping on the amount of time the exec spends attending board meetings for companies other than Darden.
- Otis earned close to $500K for sitting on the boards at Verizon and VF Corp. and all told had 76 board meetings outside of Darden that he was obligated to attend last year.
- The busy schedule for Otis comes amid slumping sales trends at Darden's Red Lobster and Olive Garden chains.
- What really has some shareholders steamed is that Darden paid to fly Otis to many of the outside meetings on the company's jets.
May 9, 2014, 11:24 AM| May 9, 2014, 11:24 AM | 2 Comments
May 6, 2014, 1:34 PM
- Restaurant chains saw sales increase at a slightly higher rate last year than sales at independent chains and concepts, according to data from GE Capital.
- The 100 largest chains saw sales grow at a rate of 3.5% vs. the industry average of 3.1%.
- Consumers spent more money per restaurant visit in 2013, but industry-wide same-store sales fell off 0.1% with traffic numbers down.
- For the 6th year in a row, sales at quick-service restaurants rose faster than sales at full-service establishments.
- Restaurant stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN.
May 2, 2014, 9:28 AM
- A report from Technomic indicates the fast-casual segment of the restaurant industry increased sales by 11% and unit count by 8% last year to easily outdistance the average growth in the sector.
- Panera (PNRA), Chipotle (CMG), and Panda Express (private) all generated double-digit sales growth during the period.
- The trend hasn't gone unnoticed by fast-food operators. Taco Bell (YUM) plans to launch two new concepts - U.S. Taco and Urban Taproom - in California, while KFC (YUM) is experimenting with KFC Eleven. Red Lobster (DRI) is also active in testing the segment with its Seaside Express concept.
Apr. 28, 2014, 2:51 PM
- The restaurant industry is watching with interest a late push by waiters and bartenders in Seattle to drum up support against a proposed $15-per-hour minimum wage law in the state.
- The group fears a minimum wage law hike will significantly lower the level of tips servers receive from customers.
- The big picture: The potential for minimum wage increases - either on a federal level or state by state - has been a hot topic in dissecting restaurant stocks. Some analysts see a significant bottom line pinch as companies have a difficult time passing on the extra costs to consumers in the form of higher prices.
- Related stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN.
Apr. 22, 2014, 11:30 AM
Apr. 21, 2014, 10:25 AM
- Darden Restaurants (DRI -0.8%) could be the target of a P-E buyout, speculates Restaurant Finance Monitor. The move might make sense with many activist investors pushing Darden on the same issues.
- If a consortium of private equity groups decided to make the move, the buyout would be the largest in restaurant industry history.
- Analysts note the divestiture of Red Lobster makes the company more attractive for a new buyer.
Apr. 2, 2014, 3:44 PM
- Starboard Value released yesterday to investors a detail analysis of how management at Darden Restaurants (DRI +1.1%) isn't working in the best interest of shareholders.
- The firm doesn't pull any punches as it alleges execs at Darden of looking to enrich themselves through the Red Lobster separation plan.
- Crunching the numbers: Darden's DRI real estate portfolio is estimated to be worth close to $4B. Starboard thinks a hasty Red Lobster separation would destroy $850M in value.
- Full Starboard investor presentation (.pdf)
Apr. 2, 2014, 1:17 PM
- The National Retail Federation wants Congress to pass the bipartisan Save American Workers Act to amend the Affordable Care Act’s definition of full-time employment from 30 hours per week to 40 hours a week.
- The measure could have important consequences for the restaurant industry.
- Restaurant stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, SONC, WEN, THI, BKW, CHUY, BLMN, PZZA, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN
Apr. 1, 2014, 8:44 AM
- Starboard Value is out with an appeal to shareholders of Darden Restaurants (DRI) to hold a special meeting to discuss the proposed Red Lobster spinoff.
- The firm is emphatic that shareholder value could be destroyed with the rushing of the Red Lobster separation by Darden management with "misaligned" interests.
Mar. 31, 2014, 1:40 PM
- The National Restaurant Association's Restaurant Performance Index stood above 100 for the 12th straight month after ending February at 100.5.
- The index dropped 20 bps from the level seen in January. On a year-over-year comparison, the index was 0.6% higher.
- "Looking forward, operators are generally optimistic about sales gains in the months ahead, although they aren’t as bullish about the overall economy," notes the industry association.
- Related stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, BKW, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN.
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.
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