Red Lobster 2015 Annual Report Download - page 17

DARDEN RESTAURANTS, INC. | 2015 ANNUAL REPORT 13
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DARDEN
SALES
The following table presents our sales and U.S. same-restaurant sales (SRS) by brand for the periods indicated.
Fiscal Years Percent Change SRS (1)
(in millions) 2015 2014 2013 2015 vs 2014 2014 vs 2013 2015 vs 2014 2014 vs 2013
Olive Garden $3,789.6 $3,643.1 $3,684.8 4.0% (1.1)% 1.3% (3.4)%
LongHorn Steakhouse $1,544.7 $1,383.9 $1,231.2 11.6% 12.4% 4.4% 2.7%
Yard House $ 469.9 $ 395.4 $ 258.3 18.8% 53.1% 3.8% 0.3%
The Capital Grille $ 403.3 $ 363.2 $ 331.5 11.0% 9.6% 4.8% 3.4%
Bahama Breeze $ 209.2 $ 201.5 $ 173.7 3.8% 16.0% 1.8% 4.1%
Seasons 52 $ 238.6 $ 196.3 $ 158.0 21.5% 24.2% 2.3% (2.2)%
Eddie V’s $ 96.9 $ 78.4 $ 64.9 23.6% 20.8% 5.4% 1.1%
(1) Same-restaurant sales is a year-over-year comparison of each period’s sales volumes for a 52-week year and is limited to restaurants open at least 16 months.
The following table presents our average annual sales per restaurant
for the periods indicated. Average annual sales are calculated as net sales
divided by total restaurant operating weeks multiplied by 52 weeks.
May 31, May 25, May 26,
(in millions) 2015 2014 2013
Olive Garden $4.4 $4.4 $4.6
LongHorn Steakhouse $3.2 $3.1 $3.0
The Capital Grille $7.2 $7.1 $7.0
Bahama Breeze $5.7 $5.6 $5.5
Seasons 52 $5.7 $5.7 $6.2
Eddie V’s $6.3 $6.0 $5.8
Yard House $8.3 $8.2 $8.2
Olive Garden’s sales increase for fiscal 2015 was driven by revenue from
nine net new restaurants combined with a U.S. same-restaurant sales increase
and the impact of the 53rd week. The increase in U.S. same-restaurant sales
in fiscal 2015 resulted from a 2.9 percent increase in average check partially
offset by a 1.6 percent decrease in same-restaurant guest counts. Olive Garden’s
sales decrease for fiscal 2014 was driven by a U.S. same-restaurant sales
decrease partially offset by revenue from nine net new restaurants. The decrease
in U.S. same-restaurant sales in fiscal 2014 resulted from a 4.2 percent
decrease in same-restaurant guest counts partially offset by a 0.8 percent
increase in average check.
LongHorn Steakhouse’s sales increase for fiscal 2015 was driven by
revenue from 16 net new restaurants combined with a same-restaurant sales
increase and the impact of the 53rd week. The increase in same-restaurant
sales in fiscal 2015 resulted from a 0.8 percent increase in same-restaurant
guest counts combined with a 3.6 percent increase in average check. LongHorn
Steakhouse’s sales increase for fiscal 2014 was driven by revenue from 34 net
new restaurants combined with same-restaurant sales increases. The increase
in same-restaurant sales in fiscal 2014 resulted from a 0.3 percent increase
in same-restaurant guest counts combined with a 2.4 percent increase in
average check.
In total, The Capital Grille, Bahama Breeze, Seasons 52, Eddie V’s and
Yard House generated sales of $1.42 billion and $1.23 billion in fiscal 2015
and 2014, which were 14.8 percent and 25.2 percent above fiscal 2014 and
fiscal 2013, respectively. The sales increases for fiscal 2015 were primarily
driven by the incremental sales from 12 net new restaurants since the end of
fiscal 2014 and the impact of the 53rd week. The sales increases for fiscal
2014 were primarily driven by incremental sales from 27 net new restaurants
since the end of fiscal 2013. Sales growth also reflected same-restaurant
sales increases at all five brands in fiscal 2015, and increases at all brands,
except Seasons 52, in fiscal 2014.
COSTS AND EXPENSES
The following table sets forth selected operating data as a percent of sales
from continuing operations for the fiscal years ended May 31, 2015, May 25,
2014 and May 26, 2013. This information is derived from the consolidated
statements of earnings found elsewhere in this report. Additionally, this infor-
mation and the following analysis have been presented with the results of
operations, costs incurred in connection with the sale of Red Lobster and the
closure of two company-owned synergy restaurants classified as discontinued
operations for all periods presented.
Fiscal Years
2015 2014 2013
Sales 100.0% 100.0% 100.0%
Costs and expenses:
Food and beverage 30.8 30.1 29.4
Restaurant labor 31.6 32.1 32.0
Restaurant expenses 16.6 17.2 16.6
Marketing expenses 3.6 4.0 4.1
General and administrative expenses 6.4 6.6 6.5
Depreciation and amortization 4.7 4.8 4.7
Impairments and disposal of assets, net 0.9 0.3 —
Total operating costs and expenses 94.6% 95.1% 93.3%
Operating income 5.4 4.9 6.7
Interest, net 2.8 2.1 2.1
Earnings before income taxes 2.6 2.8 4.6
Income tax (benefit) expense (0.3) (0.1) 0.6
Earnings from continuing operations 2.9 2.9 4.0
Earnings from discontinued operations,
net of taxes 7.6 1.7 3.0
Net earnings 10.5% 4.6% 7.0%