Red Lobster 2001 Annual Report Download - page 2

BUSINESS DESCRIPTION
Darden Restaurants, Inc. is the largest publicly
traded casual dining company in the world,
serving almost 300,000,000 meals a year at
1,168 restaurants in 49 states across the United
States and in Canada. The Company, which
operates four distinct restaurant concepts,
has annual sales of more than $4 billion.
The flagship brands, Red Lobster
®and
Olive
Garden
,®are the market share leaders in their
segments of casual dining, making Darden
the only company in the industry to operate
more than one restaurant concept with sales
exceeding $1.7 billion. Bahama Breeze
® and
Smokey Bones
®
BBQ Sports Bar are Darden’s
two newest concepts, and both were developed
internally. Darden employs more than 128,000
individuals and is headquartered in Orlando,
Florida. The Company trades on the New York
Stock Exchange under the symbol “DRI.”
Casual dining sales totaled $47 billion in 2000, or
18 percent of the $268 billion restaurant industry in
the United States. Darden is the leading casual dining
provider, with a market share of nearly 8.5 percent,
almost twice as large as its closest competitor. The
casual dining industry is supported by a number of
compelling fundamentals and trends, including:
An Expanding Market
Casual dining sales are projected to grow between six
and eight percent on a compound annual basis over the
next decade. This compares favorably to other segments
of the restaurant industry. For example, the mid-scale
and fine dining segments are projected to grow less
than three percent, and quick service is projected to
grow between five and six percent.
Favorable Demographics
During the next decade, the number of casual diners is
expected to grow significantly, as baby boomers enter
their peak dining years of ages 45 to 65. The number of
people in their fifties will increase 39 percent, while the
number of people in their sixties will grow 31 percent.
Lifestyle Patterns
Casual dining is positioned to benefit from the con-
tinued increase in the number of women in the labor
force, which boosts family incomes and reduces the
time available for cooking. Busy lifestyles, regardless
of family composition, are also driving casual dining
demand. Consumers spend less time at home and
have less free time, placing a premium on service, con-
venience, and an atmosphere that enhances social inter-
action, all of which casual dining offers.
Economic Resilience
Historically, the casual dining segment has weathered
economic downturns remarkably well. During economic
slowdowns, casual dining restaurants offer the most
affluent diners an alternative to high-end restaurants.
At the same time, value-conscious consumers continue
to view casual dining as an affordable option for leisure
dollars. In fact, sales continued to grow during the 1990-
91 recession, and casual dining sales have been relatively
strong during the slowdown that started in the second
half of calendar 2000.
INDUSTRY OVERVIEW
Founded in 1968, Red Lobster is America’s most
successful casual dining seafood restaurant company.
It has led this segment of the industry since its inception
by continually evolving with the casual dining consumer,
and now boasts 14 consecutive quarters of positive same-
restaurant sales results and record profits.
In six years of operation, Bahama Breeze has built an
exciting brand based on its promise of a two-hour
island vacation experience, with quality Caribbean
cuisine, hand-crafted drinks, live music, and a
relaxed atmosphere.
Darden’s newest concept, Smokey Bones BBQ Sports Bar,
was introduced in September 1999. Having completed a
second successful test phase, the restaurant will begin
national expansion in fiscal 2002. Smokey Bones BBQ
Sports Bar mixes mountain lodge comfort with great
tasting barbecue and exciting sports action.
Olive Garden is a family of local restaurants that is the
leader in the highly competitive Italian segment of casual
dining. As a result of its successful repositioning to remain
relevant to today’s consumer, the 19-year-old company
has posted 27 quarters of consecutive same-restaurant
sales growth and record profits.
Gary L. Heckel President
Number of Restaurants 21
Robert W. Mock President
Number of Restaurants 9
Richard E. Rivera President
Number of Restaurants 661
Total Sales $2.20 Billion
Average Restaurant Sales $3.4 Million
Market Share of Casual Dining Seafood 46%
FY01 Same-Restaurant Sales Growth +5.9%
Bradley D. Blum President
Number of Restaurants 477
Total Sales $1.71 Billion
Average Restaurant Sales $3.6 Million
Market Share of Casual Dining Italian 35%
FY01 Same-Restaurant Sales Growth +7.2%