Darden FY 4Q17 Earnings Call Notes

Gene Lee – Chief Executive Officer

Simplification has helped improve execution

“Don’t underestimate how simplifying our business has helped us improve execution. When we look at both Olive Garden and LongHorn where they were three years ago operationally to where we are today, these businesses are much simpler on a trajectory to continue to get even more simple. And we believe that’s the key to our guest count growth is better execution through simplicity.”

There’s still pockets of strength and pockets of weakness

“I would say a couple of comments on the industry. I still say there is pockets that there’s some real strength, there is some pockets where there is some weakness. We’re still seeing an upscale where we used in. You’re seeing real weakness in New York City, which has had a little bit of impact on capital growth. But overall, I haven’t seen a whole lot of change in the competitive landscape. The consumer in our view is not as reactionary to short term incentives, they come in and eat. They’re looking for everyday value, and that’s something that we continue to promote.”

Continues to be labor inflation

“Labor, we continue to see some pretty good inflationary pressure. We’re thrilled that we’re able to think or actually improve our retention rates right now; our team members are staying with us; they’re engaged, but there is some inflation; there’s 3% to 4% wage inflation in our labor number, right now; we’re able to offset some of that with productivity enhancements. But labor continues to be something that we’re focused on.”

The only way Amazon is in our world is through prime delivery

“And lastly, the question on Amazon, the only way Amazon’s in our world right now is through Amazon Prime delivery; we have a test going with them; we’ll continue to partner with them and see if we can make that work; we constantly sit around here thinking about how does Amazon have an impact on our business. Our research tells us that guests still want to come to restaurants. Believe it or not, millennials still want to come to restaurants. I know you all don’t think millennials go to casual dining restaurants, but 30% of all of our guests are millennials versus the 24% — they’re 24% of the population, so we over index. ”

Rick Cardenas

Strategy is to grow price below inflation and take share

“One of the things is we are going to be pricing below our inflationary impacts. And so we’re doing this for the long run. As Gene mentioned, we’re going to leverage Darden’s advantages, leverage Darden’s scale the price below, inflation in our competition to grow market share overtime”