NEW YORK (AP) — The struggling parent company of Olive Garden and Red Lobster reported a sharply lower quarterly profit Friday and said that its president and chief operating officer will retire.
Darden Restaurants Inc. said Drew Madsen, 57, will be succeeded by the president of its specialty restaurant group, Gene Lee. The appointment is effective immediately. The company's specialty restaurant group, which includes chains such as The Capital Grille and Bahama Breeze, has performed better than the company's flagship chains.
At Olive Garden, the company's biggest chain, sales fell 4 percent at restaurants open at least a year in the latest quarter. The figure fell 5.2 percent at Red Lobster. The declines came despite the company's ongoing efforts to revitalize menus and advertising to better reflect changing eating habits.
In the specialty restaurant group, sales edged up 0.5 percent at restaurants open at least a year. The metric is a key gauge because it strips out the impact of newly opened and closed locations.
To cut spending by about $50 million a year, the company is also reducing its workforce by between 80 to 85 positions, as well as making program cuts. A representative said the personnel cuts will not be at the restaurant level.
For the three months ended Aug. 25, the company said it earned $70.2 million, or 53 cents per share. That's compared with $110.8 million, or 85 cents per share, in the year-ago period. Analysts expected a profit of 70 cents per share.
Sales rose to $2.16 billion, helped by the opening of new locations. That was short of the $2.19 billion Wall Street expected, according to FactSet.
Darden, based in Orlando, Fla., said Madsen will work with Lee and Darden's other executives on the transition until he retires.
Madsen joined the company in 1998 as executive vice president of marketing for Olive Garden. He became COO in December 2004.
Lee joined Darden in 2007. Kim Lopdrup will take over leadership of the company's specialty restaurant group and continue to lead its new business development initiatives.
Darden's stock fell in premarket trading Friday.