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Not that long ago, consumers as well as investors were saying enough was enough at Olive Garden. However, the Italian food restaurant chain has made a remarkable turnaround over the last few months following its takeover by a hedge fund that shook things up.
Darden Restaurants, Olive Garden restaurant’s parent company reported solid revenue and earnings on Friday. Shares of its stock was up over 4% to reach a new all time high after the earnings were posted.
The stock has now increased by 40% since Starboard the activist investment firm took control of the board of directors last October and replaced the CEO and the entire board.
Starboard took to task Darden in 2014 for what it called culinary and financial sins.
In the first earnings report for Darden’s since new CEO Eugene Lee Jr. took the helm, Lee said consumers had become more willing to run up bigger tabs which helped the company to its second straight quarter in sales growth for Olive Garden restaurants opened 16 months or more.
The results mark the most recent evidence of an ongoing recovery that is taking hold across a large part of the restaurant sector the past few months, bolstered by a better economy and more money in the pockets of consumers thanks to lower prices of gasoline.
Darden said its profit was up 22% to end the quarter at $133.7 million for the fiscal third quarter, which came to an end on February 22. That was compared to last year during the same period when profit was $109.6 million.
Same stores revenue was up 2.2% for Olive Garden and 4.4% for LongHorn Steakhouse, in part thanks to price increases and customers purchasing items that were overall pricier. Capital Grille its higher end restaurant chain recorded an increase in sales of 6.1%.
The company based in Orlando, Florida said it is expecting it earnings for the ongoing quarter to top its expectations and raised its range of per share projected earnings for its current fiscal year to 8%.
