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Food Service Industry Updates

How Darden Restaurants is Getting Creative with Social Distancing

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Darden Restaurants will install temporary barriers in about 100 restaurants to improve efficiencies, especially in Olive Garden locations.

Orlando, Fla.-based Darden Restaurants said that 91% have its dining rooms have reopened with at least limited capacity. The company, which operates Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s, has also brought 60,000 furloughed restaurant team members back to work and expects to bring at least another 40,000 back as business continues to improve.

Of course, like most all restaurants, Darden Restaurants has faced occupancy challenges to adhere to social-distancing regulations. But Gene Lee, president and CEO of Darden Restaurants, said in a fourth-quarter earnings call with analysts last week that the company is studying its options to get more people into its restaurants so they can dine safely.

“Once you’re past 25% occupancy, the only thing that matters is there’s six feet of social distancing required,” Lee said, noting that social distancing limits for dining rooms are constraining the company’s units more than capacity restrictions. “Remember, there are always significant inefficiencies in seating capacity. We’ve always got twos and fours, fours and sixes. We’ve got tables for large parties. So different layouts … inside the same brand will yield you different seating efficiencies.”

So in the next week weeks, Darden Restaurants will install temporary barriers in about 100 restaurants to improve efficiencies, especially in Olive Garden locations.

“We want to do that while maintaining the social distancing requirements,” Lee said. “We’ll analyze the sales growth after we’ve installed those barriers and decide how many more restaurants we want to add. … And we have to remember that once you’re past 25% occupancy, the six-foot restriction on social distancing trumps any other restriction there is, because you can’t get to 50%.”

Darden Restaurants lost $480 million during the fourth quarter, with a total sales decrease of 43% to $1.27 billion compared to the previous fourth quarter. Same-restaurant sales decreased 47.7%.

For fiscal 2020, total sales decreased 8.3% to $7.81 billion.

“Though I expect business to consistently improve over the summer, we are still faced with an uncertain and challenging environment,” Lee said, adding that the company has about $750 million of cash on hand and access to a $750 million credit facility if needed.

“The full-service dining industry plays a vital role in our communities, and that was evident in how consumers relied on restaurants over the last several months — even in a to-go-only environment,” Lee added. “And while off-premise will continue to play an important role as we recover, we know that consumers still want to enjoy an in-restaurant experience.”

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