Something Big is Eating Your Old Favorite Restaurant Chains



If we’re in an economic recovery, good luck trying to convince the country’s largest casual dining chains — they’re sputtering.

Darden Restaurants (DRI) suffered a combined same-restaurant sales decline of 4.6 percent for Olive Garden, Red Lobster, and LongHorn Steakhouse in its latest quarter, and analysts predict a sharp drop in earnings for its fiscal year that ends this week.

DineEquity (DIN) also posted negative comps at Applebee’s and IHOP in its latest quarter. DineEquity is in the process of unloading company-owned Applebee’s to franchisees, so it’s not a surprise to see revenue falling sharply. But profitability is also sliding.

Ruby Tuesday (RT) checked in with a 2.8 percent drop in same-restaurant sales at its company-owned namesake eateries. Investors have been feeling the pain. The stock has been meandering about in the single digits for nearly two years.

And it’s not as if hungry customers are flocking to cheaper fast food.

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