Restaurant chain worried about consumer spending
BY Associated Press
Saturday, February 23, 2013
2/23/13 at 4:38 AM
Darden Restaurants Inc., struggling to draw more customers into its Olive Garden and Red Lobster locations, predicted a fiscal third-quarter profit Friday that was below Wall Street's expectations and cut its outlook for the year.
The Orlando, Fla.-based chain has tried to revamp menus and marketing for its flagship chains. But revenue at Olive Garden, Red Lobster and LongHorn Steakhouse locations open at least one year is expected to fall 4.5 percent in the quarter ending Feb. 24, indicating those efforts have yet to pay off.
"We recognize there is still more to do to further address affordability and to improve other important aspects of the guest experiences we provide," CEO Clarence Otis said.
Otis said the first half of the fiscal third quarter was "encouraging," but higher payroll taxes and rising gasoline prices sent sales sliding in February.
Darden isn't the only company saying the higher payroll tax has cut into its business. On Thursday, Wal-Mart Stores Inc. cited that factor for crimping spending by its customers.
Social Security payroll taxes rose 2 percentage points Jan. 1 after a temporary tax cut expired. That sliced about $1,000 from the annual take-home pay of a household earning $50,000.
Darden Restaurants CEO Clarence Otis: "We recognize there is still more to do to further address affordability."