As if restaurant giant Darden needed any more popular eateries in its catalogue, the good folks at the world's largest full-service restaurant group have just agreed to purchase Yard House Restaurants, including four in the South Florida area for a steep $585 million. It adds the locations to a catalogue that already includes nearly 2,000 restaurants and $8 billion in sales.
"We have a lengthy track record of creating and growing enduring brands. As Fast Company pointed out in its July/August 2009 issue, we've truly become the full-service dining company that feeds America," said a statement on the company's website.
The purchase involves restaurants across the country. Locally, it includes locations at the Gardens in Palm Beach Gardens; Mizner Park in Boca
Raton; Hallandale Beach in Broward County; and Coral Gables in
Miami-Dade County.
The Yardhouse provides an opportunity for expansion. Darden
has done this well with its brands, Olive Garden, Red Lobster and LonghHorn Steakhouse. The aforementioned restaurant chains (except LongHorn), however, have not
been performing to expectations, each losing sales by several percent
over the last year compared to the prior fiscal year. Higher specialty
Darden names like Capital Grille and Bahama Breeze, however, have been steadily growing in sales.
"Yard House gives Darden greater exposure to both younger and
more-financially resilient customers," Darden chief cxecutive Clarence Otis
said during a conference call Thursday night, eluding to Red Lobsters and Olive Garden's recent struggles..
Yard House is known for its large selection of beers from around the world on tap, but also features a large 130-item menu centering around traditional American cuisine.
According to financial analysts, the purchase will likely be financed
with debt, and Yard House will only add marginal incremental profits; it could weaken Darden's credit ratios. Ratings on
Darden reflect the view of its business risk as "satisfactory" by
Standard & Poor. The firm has been hurt by its performance relative to industry
peers, but has boosted by its staring market share in a very fragmented
industry.
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