Olive Garden’s parent company Darden Restaurants Inc. DRI -4.96% said that Gene Lee, the chief executive who has led the company through the pandemic and oversaw strong sales growth during his tenure, plans to retire next year.
Mr. Lee, who has led Darden for about seven years, will step down at the end of May, the company said. Ricardo Cardenas, the company’s chief operating officer, will be Mr. Lee’s successor. Mr. Lee, 60 years old, plans to continue to serve on Darden’s board of directors in a nonexecutive capacity, Darden said.
Darden shares fell 5% to $139.83 on Friday. The stock is still up more than 17% since the start of 2021.
Since Mr. Lee took over as CEO in 2015, total returns for Darden’s stock have been about 1.5 times those of the broader S&P 500 index.
Mr. Lee has been with Darden since 2007, when the company acquired Rare Hospitality International, where Mr. Lee was serving as president.
Mr. Lee’s successor, Mr. Cardenas, is 53. He joined Darden as an hourly employee in 1984 before rising through the ranks of the company’s finance department. Mr. Cardenas became the company’s finance chief in 2016 and was promoted to president and chief operating officer earlier this year.
In the latest quarter, the second of Darden’s 2022 fiscal year, same-restaurant sales increased by 34% compared with a year ago, before vaccinations had arrived to stem the spread of Covid-19. But Darden’s updated profit forecast for the next six months was lower than Wall Street had been anticipating.
Darden said it expects adjusted per-share earnings of $7.35 to $7.60 on sales of $9.55 billion to $9.7 billion in fiscal 2022, which ends in May. Stock analysts had been forecasting adjusted earnings of $7.62 a share on sales of $9.54 billion, according to FactSet’s survey.
In the three months through November, Darden’s earnings were $193.2 million, or $1.48 a share, compared with earnings of 73 cents a share a year ago. Analysts had been forecasting earnings of $1.43 a share this quarter.
The company posted a loss in the quarter that ended in May 2020, but has otherwise remained profitable through the pandemic. Sales in the latest quarter, at $2.27 billion, were about 10% higher than in the same stretch of 2019, before the pandemic hit.
Navigating higher costs will be an important focus for Darden in the coming months amid economywide concerns about inflation. The company is aiming for its pricing to be about 3% higher overall in the 12 months through May. Executives said on a conference call Friday morning that Darden plans to take advantage of its scale to keep the pace of menu-price increases below the broader inflation rate.
Darden is also speeding up the pace of planned wage increases. Starting in January, hourly workers will earn a minimum of $12 an hour including tips, a level that Darden had previously planned to reach in January 2023. The higher minimum wage will mean that its restaurant workers will earn about $20 an hour on average, the company said.
Restaurants have faced broad labor shortages this year as some workers have moved on from pre-pandemic careers in the industry. Some stayed away because of Covid-19 related concerns, while others have taken the chance to seek higher wages and benefits found in other industries.
In addition to the Olive Garden chain, Darden owns the LongHorn Steakhouse, the Capital Grille, Yard House, Eddie V’s and other restaurant brands.
Write to Matt Grossman at [email protected]
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Appeared in the December 18, 2021, print edition as ‘CEO of Olive Garden Parent to Retire This Spring.’
