Red Lobster 2016 Annual Report Download - page 17

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DARDEN
DARDEN RESTAURANTS, INC. • 2016 ANNUAL REPORT 13
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) 2016 2015 2014 2016 vs 2015 2015 vs 2014 2016 vs 2015 2015 vs 2014
Olive Garden $3,838.6 $3,789.6 $3,643.1 1.3% 4.0% 3.1% 1.3%
LongHorn Steakhouse $1,587.7 $1,544.7 $1,383.9 2.8% 11.6% 3.5% 4.4%
Yard House $ 507.0 $ 469.9 $ 395.4 7.9% 18.8% 2.3% 3.8%
The Capital Grille $ 408.3 $ 403.3 $ 363.2 1.2% 11.0% 3.9% 4.8%
Bahama Breeze $ 217.9 $ 209.2 $ 201.5 4.2% 3.8% 4.8% 1.8%
Seasons 52 $ 253.8 $ 238.6 $ 196.3 6.4% 21.5% 4.7% 2.3%
Eddie V’s $ 105.8 $ 96.9 $ 78.4 9.2% 23.6% 1.8% 5.4%
(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 29, May 31, May 25,
(in millions) 2016 2015 2014
Olive Garden $4.5 $4.4 $4.4
LongHorn Steakhouse $3.3 $3.2 $3.1
Yard House $8.2 $8.3 $8.2
The Capital Grille $7.6 $7.2 $7.1
Bahama Breeze $5.9 $5.7 $5.6
Seasons 52 $6.0 $5.7 $5.7
Eddie V’s $6.6 $6.3 $6.0
Olive Garden’s sales increase for fiscal 2016 was driven by a U.S.
same- restaurant sales increase partially offset by the impact of the 53rd
week in fiscal 2015. The increase in U.S. same-restaurant sales in fiscal
2016 resulted from a 2.0 percent increase in average check combined with
a 1.1 percent increase in same-restaurant guest counts. 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.
LongHorn Steakhouse’s sales increase for fiscal 2016 was driven by
revenue from one net new restaurant combined with a same-restaurant
sales increase, partially offset by the impact of the 53rd week in fiscal
2015. The increase in same-restaurant sales in fiscal 2016 resulted from
a 3.0 percent increase in average check combined with a 0.5 percent
increase in same-restaurant guest counts. 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 3.6 percent increase in average check combined with a 0.8 percent
increase in same-restaurant guest counts.
In total, The Capital Grille, Bahama Breeze, Seasons 52, Eddie V’s and
Yard House generated sales in fiscal 2016 and 2015, which were 5.3 percent
and 14.8 percent above fiscal 2015 and fiscal 2014, respectively. The sales
increases for fiscal 2016 were primarily driven by the incremental sales from
six net new Yard House restaurants since the end of fiscal 2015 and same-
restaurant sales increases at all five brands partially offset by the impact
of the 53rd week in fiscal 2015. The sales increases for fiscal 2015 were
primarily driven by incremental sales from 12 net new restaurants since the
end of fiscal 2014 and the impact of the 53rd week. Sales growth for fiscal
2015 also reflected same-restaurant sales increases at all five brands.
COSTS AND EXPENSES
The following table sets forth selected operating data as a percent of sales
from continuing operations for the periods indicated. This information is
derived from the consolidated statements of earnings for the fiscal years
ended May 29, 2016, May 31, 2015 and May 25, 2014. Additionally, this
information and the following analysis have been presented with the results
of operations, costs incurred in connection with the sale and related gain on
the sale of Red Lobster and results for the two closed synergy restaurants
classified as discontinued operations for all periods presented.
Fiscal Years
2016 2015 2014
Sales 100.0% 100.0% 100.0%
Costs and expenses:
Food and beverage 29.4 30.8 30.1
Restaurant labor 31.6 31.6 32.1
Restaurant expenses 16.8 16.6 17.2
Marketing expenses 3.4 3.6 4.0
General and administrative expenses 5.5 6.4 6.6
Depreciation and amortization 4.2 4.7 4.8
Impairments and disposal of assets, net 0.1 0.9 0.3
Total operating costs and expenses 91.0% 94.6% 95.1%
Operating income 9.0 5.4 4.9
Interest, net 2.5 2.8 2.1
Earnings before income taxes 6.5 2.6 2.8
Income tax expense (benefit) 1.3 (0.3) (0.1)
Earnings from continuing operations 5.2 2.9 2.9
Earnings from discontinued operations,
net of taxes 0.2 7.6 1.7
Net earnings 5.4% 10.5% 4.6%