An Olive Garden restaurant located in Times Square, New York.
Adam Jeffery | CNBC
During a typical year, Olive Garden’s Times Square restaurant rakes in $15 million in sales.
But the coronavirus pandemic and local restrictions on dining have wiped out the business of the chain’s best location, cutting its average weekly sales from $300,000 to less than $18,000.
Darden Restaurants CEO Gene Lee told analysts on the company’s fiscal first-quarter call that sales have slowed down to just $2,500 a day for the takeout-only location. Olive Garden accounts for roughly half of Darden’s overall revenue.
And the Olive Garden isn’t the only Darden restaurant that has seen its New York business falter. Lee also said that the three New York locations of the Capital Grille, a fine-dining chain owned by Darden, are losing millions of dollars every week in sales.
Dining rooms, which are set to reopen at 25% capacity on Sept. 30, have been closed in the city since March. As of Monday, New York is the U.S. city with the hardest hit restaurant industry. According to Toast, the city’s restaurant revenue is down 65% compared with the same time a year ago.
The loss of tourism is among the factors hurting the New York restaurant industry, including the Olive Garden in Times Square. Pedestrian traffic in the New York City tourist hotspot has plunged to about 73% from the same time last year, according to the Times Square Alliance. Less than half of Times Square’s restaurants are open for outdoor dining.
Shares of Darden rose nearly 5% in morning trading after the company topped analyst estimates for its quarterly earnings. Darden’s overall sales fell 28% during its most recent quarter but it expects sales declines of only 18% next quarter.
A customer carries a to-go bag outside a Darden Restaurants Inc. Olive Garden restaurant in Clarksville, Indiana, U.S., on Thursday, March 5, 2020.
Luke Sharrett | Bloomberg | Getty Images
Darden Restaurants on Thursday reported that its revenue fell by more than 28% in its fiscal first quarter as the company’s business slowly recovers from the coronavirus pandemic.
Shares of the company fell 2% in premarket trading.
Here’s what the company reported for the quarter ended Aug. 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 28 cents vs. 5 cents expected
- Revenue: $1.53 billion vs. $1.56 billion expected
The Olive Garden parent reported fiscal first-quarter net income of $36.1 million, or 28 cents per share, down from $170.6 million, or $1.37 cents per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings of 5 cents per share.
Excluding losses from discontinued operations, Darden earned $37.3 million in the latest period, compared with $171.8 million a year ago.
Net sales dropped 28.4% to $1.53 billion, missing expectations of $1.56 billion. Same-store sales across all of its restaurant brands plunged 29% during the quarter.
The company’s fine dining business is under the most pressure, with same-store sales shrinking by 39%. Olive Garden, which accounts for roughly half of Darden’s revenue, saw its same-store sales decline by 28%. LongHorn Steakhouse’s same-store sales fell by just 18%.
Darden expects its fiscal second-quarter sales to fall 18% compared with the same time last year. The company is also forecasting diluted net earnings per share from continuing operations in a range of 65 cents to 75 cents.
Darden also said that it fully repaid its $270 million term loan on Aug. 10, citing its “steadily improving cash flows” in the quarter and greater confidence in its cash flow projections. It is also reinstating its dividend and will pay out 30 cents per share for this quarter’s results. The company has $655 million of cash on hand.
This is a breaking news story. Please check back for updates.
Rapper Travis Scott with his signature McDonald’s order
Source: Jerritt Clark, courtesy of McDonald’s
Just eight days after McDonald’s kicked off its collaboration with rapper Travis Scott, the fast-food giant is reporting some ingredient shortages tied to the promotion.
The meal comes with a Quarter Pounder burger with cheese, bacon and shredded lettuce, Sprite soda and fries dipped in BBQ sauce, for just $6. Travis Scott, who uses the nickname “Cactus Jack,” is also selling McDonald’s themed items, like a pillow shaped like a McNugget, on his website.
McDonald’s said that some of its restaurants have temporarily sold out of some of the ingredients in the meal. As a result, it’s temporarily controlling the supply of its Quarter Pounder beef, bacon, slivered onions and shredded lettuce to make sure restaurants nationwide can still serve the meal. Rather than locations placing orders with the supply chain based on demand, McDonald’s is sending those ingredients to restaurants based on internal calculations.
“We’re working closely with our suppliers, distributors and franchisees to resupply impacted restaurants as quickly as possible,” McDonald’s USA said in a statement to CNBC. “Stay tuned and don’t worry, we’ve got more surprises from Cactus Jack coming soon.”
Supply issues for McDonald’s are rare. Throughout the coronavirus pandemic, the company has said that it has not experienced a supply chain break in any of its markets. Wendy’s, on the other hand, briefly experienced shortages of its signature fresh beef this spring as national production of the meat fell due to closed meat processing plants. Since 2018, McDonald’s Quarter Pounders have also been made with fresh beef, a change that required it to overhaul its supply chain.
Kraft Heinz targets $2 billion in cost cuts over 5 years, sees long-term organic net sales growth of 1% to 2%
Characters at the Berkshire Hathaway company Kraft Heinz booth pose with a reporter at the shareholder shopping day as part of the Berkshire Hathaway annual meeting weekend in Omaha, Nebraska, May 5, 2017.
Rick Wilking | Reuters
Kraft Heinz on Tuesday told investors it would cut $2 billion in costs through 2024 as part of its turnaround plan.
The company is also expecting long-term organic sales growth of 1% to 2% and adjusted earnings per share growth of 4% to 6%. CEO Miguel Patricio said during investor presentations that the cost savings will fuel its investment back into Kraft Heinz. The Oscar Mayer owner said the targets reflect its confidence in its ongoing recovery.
Shares of Kraft Heinz rose 2% in premarket trading on the announcement.
“We are committed to returning Kraft Heinz to consistent growth on both the top and bottom lines,” CFO Paulo Basilio said in a statement.
In recent years, Kraft Heinz has struggled as consumers shopped more around the perimeter of the grocery store in search of fresh foods. The sales downturn led the food giant to report billions of dollars in write-downs on some of its brands, including Cool Whip, Oscar Mayer, Kraft and Maxwell House, and to reshuffle its leadership.
However, the coronavirus pandemic has lifted sales for the company, helping it during its comeback. Kraft Heinz updated its third-quarter outlook on Tuesday, saying it now expects organic sales growth in the mid-single digits.
The company will announce its quarterly results in October.
This is a breaking news story. Please check back for updates.
Two people with scooters wear masks walk down 46th Street which has been temporarily converted to “Restaurant Row” for outdoor dining during the fourth phase of the coronavirus pandemic reopening on September 06, 2020 in New York, New York.
Roy Rochlin | Getty Images
Dining out raises the risk of contracting Covid-19 more than other activities, such as shopping or going to a salon, according to a report published Thursday by the Centers for Disease Control and Prevention.
The findings come as many states consider the safest ways to reopen businesses, especially restaurants. On Wednesday, for example, New York Gov. Andrew Cuomo announced that limited indoor dining will be allowed in New York City starting Sept. 30.
The CDC report included 314 people who had Covid-19 symptoms and were subsequently tested for the virus; about half tested positive.
Researchers then asked all participants about their social activities during the two weeks prior to their Covid-19 test. The participants lived in states with varying levels of reopening guidelines: California, Colorado, Maryland, Massachusetts, Minnesota, North Carolina, Ohio, Tennessee, Utah and Washington.
Both groups generally reported similar activities, such as going to church, gyms and stores, with one exception: going out to eat or having drinks at a bar or coffee shop.
Those who tested positive for SARS-CoV-2, the virus that causes Covid-19, “were approximately twice as likely to have reported dining at a restaurant than were those with negative SARS-CoV-2 test results,” the study authors wrote. And those who were diagnosed without any known exposure to the virus were more likely to report having visited a bar or coffee shop in the previous two weeks.
The increased risk makes sense; it’s easy to wear a mask in stores or in places of worship, but it’s nearly impossible to do so whi