In this segment from Motley Fool Money, Motley Fool analystJason Moserbreaks down some of the good news coming fromDarden Restaurants(NYSE: DRI). While much of the restaurant industry goes hungry for customers, Darden is putting up envious results and pursuing further growth with the $780 million proposed acquisition of Cheddar's Scratch Kitchen.
A full transcript follows the video.
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This video was recorded on March 31, 2017.
Chris Hill: Shares ofDarden Restaurantshitting a new highthis week after third quarter profits came inhigher than expected. Darden is theparent company of Olive Garden,LongHorn Steakhouse,The Capital Grille, and now, Jason,Cheddar's Scratch Kitchen. Never been there,but I sure do like the name, and that's the $800 millionacquisition that Darden pulled off.
Jason Moser: Rollsright off the tongue.I'm not sure what I'm more impressed with from this reporting.Olive Garden's success in the to-gosegment of the business continues to astound. Growth of 17% for the quarter. Or, the fact that it was Olive Garden's10th consecutive quarter of same-store sales growth. Clearly, that's a concept that'sresonating with a lot of people.I have a feeling our man behind the glass thereprobably went at least once this past quarter.
I think they did a good thing in spinning off a lot of those restaurants withthe real estate where they owned,spinning that property off to theFour Corners Property Trust,I think that allowed them to monetize that real estate whilefocusing more onoperational excellence. And I think the Cheddar's acquisition seems like a pretty good one. Whenyou look at the unit economics, they'rebringing in about $4.5 million annually per restaurant. Average check of around $13.50, soit's affordable. Bringing in about $617 million to the top line immediately, with arestaurant base that should be able to grow. They have somewhere in theneighborhood of 165 restaurants today. There are a lot of reasons I think Darden couldcontinue to perform well. They obviously have a big portfolio of different restaurants, whichcertainly plays into a strength here in this restaurant segment. So, all in all, they continue to perform very well.
Chris Hill has no position in any stocks mentioned. Jason Moser has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.