Red Lobster 2000 Annual Report Download - page 21

THE INDUSTRY
Casual dining’s current
business climate is
strong, with demand
exceeding supply.
The current supply and demand dynamics in casual dining are
excellent. Traffic growth has remained strong while unit growth
has tempered, coming off the overheated levels of the mid-1990s.
The result has been a healthy balance, with the strongest operators
enjoying more traffic per unit.
Two factors enhance this favorable climate. In a tight labor
market, only employers of choice will find the capable employees
to successfully staff unit expansion. And rising interest rates and
disappointing performances by venture restaurant companies
in the 1990s make it challenging for all but the most successful
companies to secure capital to fund expansion.
DARDEN
Red Lobster and
Olive Garden are both
outperforming the
casual dining industry.
Red Lobster and Olive Garden have had same-restaurant sales
growth for 10 and 23 quarters, respectively. By staying fresh and
relevant to today’s consumers, each has outpaced the industry.
Much of this success stems from Darden’s reliance on constant
consumer research. Capitalizing on this research and the fact that
seafood has nearly universal appeal, Red Lobster differentiates
itself from the competition by offering unique regional dishes;
traffic-building promotions like its signature Lobsterfest; well-
trained, highly motivated crew members; remodeled bar areas;
and a lively, festive dining atmosphere.
Olive Garden has become a family of local restaurants providing
a genuine Italian dining experience to guests. It serves approachable,
fresh, high-quality Italian food, complemented by a great glass of
wine, in revitalized restaurants and in new restaurants with the
exciting, home-like Tuscan Farmhouse design.
Olive Garden also benefits from a unique partnership with
Rocca delle Macie, one of Tuscany’s most respected family-owned
wineries. Together they have established the Culinary Institute of
Tuscany, where Olive Garden chefs share ideas with their Italian
counterparts and create new authentic Italian dishes, while also
experiencing a total immersion in Italian culture.
Darden’s consumer research guides the Company’s search
for new concepts and appealing acquisitions. Bahama Breeze
and Smokey Bones were created through this process.
18 DARDEN RESTAURANTS 2000 ANNUAL REPORT
Supply vs. Demand
(Percentages)
94 95 96 97 98 99
Darden Fiscal Year
Total Traffic
Growth
Total Unit
Growth
Red Lobster
Same-Restaurant Sales Growth vs. The Industry
(Percentages)
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
98 99 00
Knapp Track (excluding Red Lobster and Olive Garden)
Sources: Unit Growth from RECOUNT
Traffic Growth from CREST
5.2
3.2
6.8
8.8
8.1
-0.2
6.2
3.7
4.6
6.2 6.3
4.9
1.9
-0.2
2.8
5.3
11.6
5.4
6.8
5.4
4.0
8.2
5.0
13.1
3.