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People Are Not Passing The Breadsticks

Darden Restaurants, Inc. (NYSE:DRI), which owns and operates Red Lobster, Oliver Garden, and LongHorn Steakhouse restaurants has become another causality of the sluggish restaurant industry. The company reported first quarter earnings of 53 cents per share, which was far below analyst expectations of 70 cents per share. Net income dropped to $70.2 million for the quarter. A year ago net income was $110.8 million. Consumer spending and rising prices of food (meat) were cited for the worst-than-expected earnings.

Sales were down 5.2 percent at Red Lobster and 4 percent at Oliver Garden. Darden plans on cutting its workforce and implementing cost saving programs. The company has a target to cut spending by $50 million per year. In current trading, the company is down over 5 percent. The trend now among consumers is to focus on core Items such as housing. Dining-out and retail are afterthoughts.