LongHorn Opens in San Antonio - Analyst Blog
29 Giugno 2011 - 7:38PM
Zacks
LongHorn Steakhouse, operated by Darden Restaurants
Inc. (DRI), recently opened a 6,200-square foot
restaurant, in San Antonio, Texas. The restaurant accommodates 240
guests and is the fifth LongHorn in the region. Industry veteran
David Marchlewski will assume the role of managing partner in the
new restaurant.
The Florida-based company started the construction of the
restaurant in January this year and management initially expected
to launch it in April 2011. LongHorn, which debuted in San Antonio
in January 2010, is expanding its presence in the region as people
are fond of its quality of food and comfortable atmosphere.
Last month, LongHorn also opened one 5,600-square foot
restaurant in Bluffton, South Carolina and another 5,000-square
foot restaurant in Kingsland, Georgia. Both the restaurants have a
capacity of more than 200 guests.
LongHorn Steakhouse is a full service restaurant chain, which
Darden acquired in October 2007 as part of the RARE Hospitality
International acquisition.
The first LongHorn Steakhouse debuted in Atlanta 29 years ago
and the brand has been growing steadily since then. During the
recently concluded third quarter, LongHorn Steakhouse opened 21 new
restaurants.
Management expects to open 20–25 LongHorn Streakhouse units by
the end of this year. Including other brands, Darden is targeting
70–75 total unit openings for fiscal 2011. For 2012, Darden plans
to debut 30–35 LongHorn restaurants. Presently, the brand operates
350 restaurants in 33 states. Apart from opening new restaurants,
the brand also remodeled existing restaurants to drive traffic.
Compared to other core brands of Darden like Olive Garden and
Red Lobster, Longhorn Streakhouse is better positioned to sustain
the growth momentum.
LongHorn Steakhouse’s third quarter U.S. same-restaurant sales
increased 6.1% and we expect the brand to deliver strong results in
the upcoming quarters, based on improved promotions and increased
media support. In our opinion, Darden management remains keen on
boosting its better performing brands and expanding
aggressively.
We believe new restaurant openings are indicative of the
company’s efforts to gain market share in the gradually recovering
restaurant industry.
However, increased competition from other peers such as
Brinker International Inc (EAT) and
Red Robin Gourmet Burgers Inc
(RRGB), and spike in food costs still remain headwinds.
Darden currently retains a Zacks #3 Rank, implying a short-term
Hold rating. We also reiterate our long-term Neutral
recommendation. Darden is slated to release its fourth quarter 2011
earnings results on June 30. We expect the company to report fourth
quarter earnings in line with the Zacks Consensus Estimate of 99
cents.
DARDEN RESTRNT (DRI): Free Stock Analysis Report
BRINKER INTL (EAT): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
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