Darden stock jumps as Olive Garden parent cuts executive pay, to-go sales skyrocket

Darden Restaurants said Tuesday it is furloughing some restaurant support center employees and slashing executive pay as same-store sales plummet 39{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} so far in the fourth quarter.

Shares of the restaurant company rose 13{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in trading. The stock, which has a market value of $7.1 billion, has fallen 45{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} so far in 2020.

In the week ended Sunday, Darden’s same-store sales fell 71{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} across all of its chains, which include Olive Garden, LongHorn Steakhouse and Cheddar’s Scratch Kitchen.

Olive Garden’s same-store sales have fallen 34.5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} so far in the fourth quarter, as of Sunday. Same-store sales at LongHorn steakhouse have fallen 36.4{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the same time period. But both chains are seeing significant spikes in to-go sales per restaurant. Olive Garden’s off-premise sales have jumped 141.6{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, while LongHorn Steakhouse’s have more than tripled. 

Darden closed all of its dining rooms in mid-March in response to the coronavirus pandemic. Full-service restaurants have been hit the hardest by the virus, leading many to pivot to takeout or delivery to support their businesses. Darden CEO Gene Lee said 99{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of its restaurants are open for takeout business. 

As sales plunge, the company has been looking to cut costs wherever possible. Lee, who is foregoing his salary, said Tuesday that senior executives will see their pay slashed by 50{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. The company is also furloughing some employees at its restaurant support center and reducing pay for the remaining workers.

Darden has also fully drawn down on a new $270 million term loan. It previously drew down its $750 million revolver, but the company said it has not used any of that cash yet.