Is Darden Restaurants Losing Its Flavor?

The shares of Darden Restaurants DRI are down 9 percent of the session after the company announced a disappointing second quarter guidance. Darden Restaurants now sees Q2 EPS of $0.41 and 2012 revenue growth of 6.0-7.0%. "Our anticipated second quarter results reflect increased investment to rebuild guest counts at Olive Garden, as well as our decision to limit pricing across our portfolio of brands to levels that did not fully cover a meaningful increase in our year-over-year food costs," said Clarence Otis, Chairman and Chief Executive Officer of Darden. The company's problems may be partly caused by the consumers are scaling back and favoring cheaper options, such as, McDonald's MCD that is up nearly 25 percent year-to-date. Darden has lost 7 percent of its market value since the beginning of January 2011. Darden Restaurants is currently trading at $42.59, down $5.14 or 10.77%.