Millennials still love chain restaurants, Olive Garden's chief says

Food and Beverage FOXBusiness

(Reuters)

Chains like Olive Garden have proven that millennials still enjoy eating out at casual restaurants, Darden Restaurants (DRI) CEO Gene Lee said Tuesday.

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Darden closed its most recent quarter with higher sales than expected, bucking headwinds across the retail and restaurant industries. Younger customers contributed to increased traffic in Olive Garden and other Darden restaurants. According to Lee, millennials visit Olive Garden at a higher rate than the general population.

"Believe it or not, millennials still want to come to restaurants," Lee said, citing the company's research.

"I know you don't think millennials go to casual dining restaurants, but 30 percent of all of our guests are millennials versus 24 percent of the population," he told Wall Street analysts. Lee also said the company's flagship Olive Garden and its recently acquired Cheddar's chain both "over index" with millennials.

Darden reported a better-than-expected quarterly profit, with higher sales at Olive Garden. That's even though casual dining sector has struggled in recent years amid the proliferation of "fast casual" places, or those that market restaurant-quality at prices closer to fast food.

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For the quarter ended May 28, Darden said Olive Garden's sales rose 4.4 percent at established locations. Its other chains including LongHorn Steakhouse and The Capital Grille also saw increases.

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Profit fell 11.3 percent to $123.8 million, or 98 cents per share, mainly on higher costs. Earnings, adjusted for non-recurring items came to $1.18 per share. That was 3 cents better than Wall Street expected, according to a survey by Zacks Investment Research.

Total revenue rose 8 percent to $1.93 billion, also edging out analyst projections.

Shares of Darden rallied 3% to $92.80 in recent trading.

The Associated Press contributed to this report.

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