Darden Restaurants CEO Eugene Lee Jr. has announced he will retire from the top executive role on May 29, 2022.
Lee, who has served as president and CEO since February 2015, has recently helped navigate the company's portfolio of brands through the COVID-19 pandemic. The brands include Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V's.
Under his leadership, Darden's revenues increased by more than $2 billion and its market capitalization increased approximately threefold to nearly $20 billion. At the same time, shareholder returns were 1.5 times the S&P 500 Index, according to Darden's lead independent director, Charles Sonsteby.
In addition to his role as president and CEO, Lee was elevated to executive chairman in January. The 60-year-old will continue to serve as executive chairman until the 2022 annual meeting of shareholders, where he is expected to stand for reelection to the board and continue to serve as chairman in a nonexecutive capacity.
Lee will be replaced by Darden President and Chief Operating Officer Ricardo Cardenas, who has been unanimously elected and will become a member of the board on May 30, 2022.
"It has been a privilege to serve as Darden's CEO for the past seven years and to work with the most dedicated and talented team members and management team in the industry," Lee said. "As Chairman, I look forward to collaborating with Rick and our Board to help Darden achieve even higher levels of success."
Cardenas, who was named president and COO in January, joined Darden as an hourly team member in 1984. He later moved to the restaurant support center team in 1992 and rose through the ranks, serving as senior vice president, chief strategy officer and chief financial officer.
"It is an honor to be appointed Darden's next Chief Executive Officer, and I am grateful to Gene and the Board for their confidence in me. It is humbling to lead 170,000 outstanding team members who nourish and delight everyone we serve," Cardenas said. "I was incredibly fortunate to work with each of Darden's previous CEOs, so I have a strong appreciation for the legacy of leadership I am inheriting. By upholding our commitment to operational excellence and maximizing the power of the Darden platform, we will continue to execute our strategy to drive growth and shareholder value."
In addition to the transition announcement, Darden reported its second quarter earnings for 2022. Darden posted net income of $193 million, or diluted earnings per share of $1.48. Total sales increased 37% year-over-year to $2.27 billion, driven by a 34.4% increase in blended same-restaurant sales and the addition of 34 new restaurants.
Olive Garden, which accounts for nearly half of the company's revenue, saw same-store sales climb 29.3%, while LongHorn Steakhouse same-store sales grew 31.2%, fine dining same-store sales surged 61.6% and its "other business" segment's same- store sales rose 42.9%.
Looking ahead at full-year fiscal 2022, Darden is forecasting $7.35 to $7.60 in diluted net earnings per share from continuing operations, total sales between $9.55 and $9.7 billion, total sales growth versus pre-COVID of 9% to 11%, same-restaurant sales versus fiscal 2021 of 29% to 31% and total inflation of approximately 5.5%. Wall Street was expecting a net sales forecast of $9.33 billion to $9.74 billion.
The company also plans to open 35 to 40 new restaurants during fiscal 2022 and accelerate its planned wage hikes. In January, Darden's floor wage will be $12 per hour, including tips. The company expects that workers will earn an average of $20 per hour.
Lee told analysts on the company's earnings call that staffing is about 90% of pre-COVID levels, with the primary drag being the spread of the virus.
"There may not be enough service workers on the staff of every restaurant in America, but there’s enough service workers out there to staff Darden’s restaurants, and that’s what we’re focused on," Lee said.
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Shares of the restaurant operator have plunged 8% during Friday's trading session.