Darden's Comps Outperformance More Than A Flash In The Pan

Following meetings with Darden Restaurants, Inc. DRI's management, Credit Suisse’s Jason West believes the company “can sustain relevance in a crowded dining market with evolving consumer tastes.”

West maintains an Outperform rating on the company with a price target of $69.

No Flash In The Pan

After meetings with CEO Gene Lee, chief financial officer Rick Cardenas and head of international relations Kevin Kalicak, the analyst expressed increased confidence in Darden Restaurants being able to sustain its same store sales outperformance for its core brands.

This is especially true given the shift in the company’s focus to the guest experience and operations in recent years, with lower emphasis on marketing, promotions and pricing.

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“We believe this shift in culture, plus putting more control of the brands in the hands of the brand leaders instead of the corporate office, will continue to drive market share gains in the sluggish casual dining industry,” West mentioned.

Management noted that Olive Garden was over-indexing millennials, as compared to its peers, and the marketing message was being adapted to lay emphasis on emotional engagement.

Underappreciated Advantages

The analyst believes the market is underappreciating the scale advantages that the company has, as well as that share gains could potentially be “more the rule than the exception.”

“We also continue to see room for growth in To Go as Olive Garden pushes deeper into online ordering, catering and delivery,” West stated.

At last check, Darden was up 0.9 percent at $61.48.

Full ratings data available on Benzinga Pro.