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Olive Garden’s comeback has no end in sight

It appears the comeback for Olive Garden owner Darden Restaurants, much like its famous pasta specials, is never ending.

Darden reported earnings and revenue that topped forecasts Thursday, thanks to strong sales growth at Olive Garden, which accounts for more than half of the company’s overall sales.

The company also raised its sales and earnings outlook for the full year. Shares of Darden rose 4% on the news.

Darden has been one of the hottest stocks in the restaurant industry during the past few years. Analysts attribute much of the success to the turnaround at Olive Garden engineered by CEO Gene Lee, who took over the company in 2014 after activist investor Starboard pushed for big changes at the company.

“Our strong top-line results exceeded the industry this quarter resulting in significant market share gains,” Lee said in a press release. “This sales performance, coupled with strong operating profit growth, is a testament to our strategy and the outstanding focus and execution by our restaurant teams who create exceptional dining experiences for our guests every day.”

Under Lee, Olive Garden adopted a back to basics approach — emphasizing classic Italian dishes, adding pricier wine and alcoholic beverages and concentrating more on service.

The company also boosted prices on its never ending promotions in order to make them more profitable.

But many of Darden’s other chains are doing well too. The company posted strong sales gains for LongHorn Steakhouse, which generates about 20% of the company’s revenue. The Capital Grille and Eddie V’s also posted solid gains.

Cheddar’s Scratch Kitchen, which Darden acquired for nearly $800 million two years ago, continues to struggle though. Sales at locations open at least a year fell 2.7%.

Eat It, Virginia! with Scott and Robey is a podcast driven by food. We discuss Richmond restaurants and food events, answer your most pressing food-related questions, and share listener-submitted dining suggestions. Email the show here.

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