Darden Restaurants, the owner of Olive Garden, LongHorn Steakhouse and seven other brands, is interested in adding another concept to its portfolio.
“We’ll continue to look,” CEO Rick Cardenas said during the ICR investor conference Tuesday. “It just takes a willing seller to sell for the price we’re willing to pay.”
Darden’s last acquisition was Cheddar’s Scratch Kitchen in 2017. At the time, the company said it expected the value-focused sit-down concept to become its second-largest brand after Olive Garden. Five years later, it finally appears to be ramping up growth at the 179-unit chain.
Any new deal would follow a similar template. Darden is looking for a full-service concept with broad appeal and the ability to grow sales faster than the giant Olive Garden, Cardenas said. And it would have to “make a difference” for the company in five or so years.
Cuisine type doesn’t matter, added Cardenas, who said that some of Darden’s existing concepts already compete against one another.
Darden’s multibrand model is one of its biggest advantages. Its 1,887 restaurants provide scale while also insulating the company somewhat from macroeconomic trends. Cardenas pointed out, for instance, that having different concepts has allowed Darden to be more discrete with pricing, raising prices more at its upscale brands like LongHorn than at the more mid-market Olive Garden.
As for its most recent acquisition, Cardenas said he is just as confident in Cheddar’s, if not more, than when Darden bought it for $780 million. The company has worked to simplify and streamline Cheddar’s menu and build up a GM pipeline and is now picking up the development pace. Cheddar’s opened four new restaurants in the fiscal first quarter, its best period for openings under Darden.
Darden is targeting annual unit growth of less than 10% at Cheddar’s, a rate that Cardenas said will ensure restaurants have experienced managers in place.
“The world is littered with brands that grew too fast,” he said.
In addition to Cheddar’s, Darden’s owns Olive Garden (890 units), LongHorn (553), Yard House (85), The Capital Grille (51), Seasons 52 (45), Bahama Breeze (42), Eddie V’s (29) and The Capital Burger (three). It has owned and sold other chains over the years, including Red Lobster and Smokey Bones.
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