Business model of Darden Restaurants

Customer Segments

Darden Restaurants operates a portfolio of restaurant brands, serving an extensive consumer base across the US. The Company’s various brands appeal to a broad range of consumer demographics.

Darden Restaurants’s core restaurant brands, namely Olive Garden and LongHorn Steakhouse, tread a line between affordable and upmarket, providing good quality food at reasonable prices and attracting a middle-income, often middle aged customer base. These restaurants are typically popular with young families and are a popular venue for informal occasions and meetings. Darden Restaurants also operates several premium restaurant brands under its Fine Dining segment, which are targeted at more high-end consumers that are happy to pay extra for a more upmarket dining experience.

Darden Restaurants’s brands are marketed principally at the general consumer market. It does, however, tailor its advertising and marketing content to build awareness and strengthen our brands in certain demographics, notably developing Spanish language advertising to increase awareness and visits from Hispanic consumers in 2016.

Darden Restaurants principally serves customers across its domestic market of the US, as well as in Canada. The Company, however, also has a franchise presence in the Middle East, Central and Latin America, and Malaysia.

Value Propositions

Darden Provides value to its customers in the following ways:

• Its varied brand portfolio, with the Company operating a broad range of restaurant brands, including mid-range outlets and fine dining restaurants, and serving a variety of cuisines, such as American barbecue and Italian, to a broad consumer base;
• Its quality service, with the Company providing an enjoyable dining experience to its customers, offering high-quality food and drinks, a relaxed and comfortable atmosphere, and excellent customer service;
• Its reasonable pricing, with the Company providing its food and drinks at affordable prices that do not exclude lower income families and individuals;
• Its extensive franchise network, with the Company operating an extensive network of restaurants across the US and in Canada, as well as franchise operations spanning parts of the Middle East, Central and Latin America, and Malaysia; and
• Its industry standing and reputation, with the Company established as one of the largest restaurant operators in the US, with a track record for providing efficient and reliable service to its customers across its brand portfolio.

Channels

Darden Restaurants operates a website at www.darden.com, through which it provides information on its brands, its operating locations, and its other activities. The Company also operates separate websites for its various brands, including www.olivegarden.com, www.longhornsteakhouse.com, and www.thecapitalgrille.com. These websites also operate online channels that allow customers to purchase merchandise and gift cards, make reservations, and sign up for rewards and loyalty schemes.

Darden Restaurants principally serves its customers directly through its in-restaurant service and wait staff, who operate out of the Company’s extensive international network of restaurants and franchised restaurants. This network comprises 1,536 restaurants across the US and Canada, all but six of which are located in the US, including 837 domestic Olive Garden outlets and 481 domestic LongHorn Steakhouse outlets.

Darden Restaurants has 49 franchised Olive Garden and LongHorn Steakhouse restaurant outlets in the US – including Puerto Rico, Central and Latin America, the Middle East, and Malaysia. It also operates one franchised The Capital Grille outlet. These restaurants are operated by independent third parties under area development and franchise agreements.

Customer Relationships

Darden Restaurants provides a range of services to customers on a self-service basis through its various restaurant brand websites. These channels allow customers to purchase gift cards, make table reservations, and sign up for loyalty programs without interacting directly with members of the Company’s sales and service personnel.

Darden Restaurants principally serves customers directly through its extensive network of restaurants, where customer service and wait staff are able to respond immediately to questions, queries and complaints, and can provide assistance with the respective menus of each restaurant chain. The Company seeks to provide efficient and professional customer service that competes with high-end restaurants, with a view to encourage repeat visits.

In addition to its on-site staff, customers are able to make enquiries or lodge complaints with the Company’s various brands through the relevant websites. Customers are able to contact members of staff over the phone or online in order to receive personalised assistance. Additionally, Darden and its various brands operate social media accounts – including with Facebook, Twitter, Instagram, and YouTube – through which it can interact with clients and publish updates about its business.

Key Activities

Darden Restaurants is a full-service restaurant operator. The Company owns and operates an extensive network of restaurants, primarily in the US and Canada, where it directly operates more than 1,536 restaurant outlets. The Company also has 50 franchised restaurant outlets across the Americas, the Middle East, and Malaysia, which are operated by independent third parties.

Darden Restaurants aligns its operations into four reportable business segments, divided principally by brand: Olive Garden, which comprises the Company’s flagship Olive Garden brand; LongHorn Steakhouse, which concerns the Company’s LongHorn Steakhouse brand; Fine Dining, which operates the Company’s The Capital Grille, and Eddie V's Prime Seafood brands; and Other Business, which operates the Company’s Yard House, Seasons 52, Bahama Breeze brands. Darden Restaurants’s core brands provide mid-range dining experiences to the general consumer market.

Key Partners

Darden Restaurants works in conjunction with a network of partners companies across its brand portfolio in order to provided efficient and high-quality services. These partners can be categorised as:

• Supplier and Vendor Partners, including suppliers of produce, food and drink products, and equipment that are directly used in the operation of its restaurants, as well as providers of services that are utilised more broadly across the enterprise;
• Franchise and Channel Partners, comprising the Company’s network of independent franchise partners that operate the Company’s international outlets and assist in furthering the recognition of the Company’s brands;
• Technology Partners, including various software and hardware companies that help to develop and maintain the Company’s It and technology systems across its restaurant chains;
• Strategic and Alliance Partners, comprising market leading companies across multiple business sectors with which the Company collaborates on various joint projects, including in branding and marketing; and
• Community and Social Partners, including a number of non-profits and charitable organisations with which the Company cooperates on social and community projects, principally in the US.

Darden Restaurants has numerous partnerships in place. This includes a strategic technology partnership with Infosys, a community partnership with the American Red Cross, and a community partnership with East Texas Food Bank.

Key Resources

Darden Restaurants’s key resources are its brands and intellectual properties, its supply chain, its online portals, its IT and communications infrastructure, its network of owned and operated restaurants, its franchise network, its partnerships, its personnel.

Darden Restaurants owns a number of trademarks and properties that it considers to be key to its operations, notably including its Darden, Darden Restaurants, Olive Garden, LongHorn Steakhouse, The Capital Grille, Yard House, Bahama Breeze, Seasons 52, Eddie V's Prime Seafood,  and Wildfish Seafood Grill service marks. Searches of records published by the US Patent and Trademark Office identified number of patent applications filed in the name of Darden Restaurants, including applications entitled ‘System and method for tracking the secondary gift card marketplace’, ‘System and method for purchasing a prepaid bebit account’ and ‘System and method for processing gift card offer contingent upon an event’.

Darden Restaurants additionally owns and or leases a number of properties in the US and abroad that comprise its network of restaurants.

Cost Structure

Darden Restaurants incurs costs in relation to the procurement of supplies and services, the development of its online presence, the maintenance of its IT and communications infrastructure, the management of its franchise network, the operation of its restaurants, the implementation of marketing and advertising campaigns, the retention of its personnel, and the management of its partnerships,

In 2015 Darden Restaurants recorded total operating costs and expenses in the amount of $6.31 billion. This included food and beverage costs totalling $2.04 billion, restaurant labour costs totalling $2.19 billion, restaurant expenses totalling $1.16 billion, and marketing costs, totalling $238 million.

Revenue Streams

Darden Restaurants generates revenue through the operation of a broad network of restaurants, under several high-profile brands. The Company’s revenue is derived principally in the form of sales of food and beverages.

In 2016 Darden Restaurants recorded total sales in the amount of $6.93 billion, up slightly on the $6.76 billion recorded by the Company in 2015. The majority of the Company\s revenue was generated by its Olive Garden brand, which alone recorded sales for the year of $3.84 billion. This was followed by the LongHorn Steakhouse brand, which generated $1.59 billion.