Sales at Darden grew to $8.76 billion in fiscal 2014, which ended May 25, 2014, up 2.4 percent from 2013. While LongHorn Steakhouse, Yard House, and the Specialty Restaurants group posted sales gains, cornerstone brand Olive Garden saw a 3.4 percent sales decline from 2013, while recently-cut Red Lobster saw a 6 percent sales slide. Darden's Specialty Restaurant Group, which includes The Capital Grille and Yard House, posted strong gains.
For fiscal year 2014, total sales from continuing and discontinued operations were $8.76 billion, a 2.4 percent increase from $8.55 billion last year. As a result of the pending sale of Red Lobster, operating results for Red Lobster are included in discontinued operations for all periods presented.
Total sales for fiscal 2014 include sales of $6.29 billion from continuing operations and sales of $2.47 billion from discontinued operations, which includes Red Lobster. Total sales for fiscal 2013 include sales of $5.92 billion from continuing operations and sales of $2.63 billion from discontinued operations.
The increase reflects 5.6 percent of growth in sales for the year due to new restaurants (including incremental operating weeks this year compared to last year, as a result of the acquisition of 40 Yard House restaurants in Q2 2013), same-restaurant sales growth of 2.7 percent for LongHorn Steakhouse, and 1.6 percent for Darden's Specialty Restaurants, offset partially by same-restaurant sales declines of 3.4 percent for Olive Garden and 6 percent for Red Lobster.
For the full fiscal year, total sales were $3.64 billion, a 1.1 percent decline from last year; average annual sales per restaurant were $4.4 million; and U.S. same-restaurant sales declined 3.4 percent.
The fourth quarter sales of $926 million were 2.7 percent lower than the prior year due to its U.S. same-restaurant sales decline of 3.5 percent, partially offset by revenue from nine net new restaurants. For the quarter, on a percentage of sales basis, food and beverage expenses and restaurant labor expenses were higher. This resulted in a decline for the quarter in both operating profit and operating profit as a percentage of sales.
For the full fiscal year, total sales were $2.46 billion, a 6.2 percent decrease compared to last year, average annual sales per restaurant were $3.5 million and U.S. same-restaurant sales decreased 6 percent. Red Lobster's fourth quarter sales of $664 million were 5.6 percent lower than the prior year, which reflected its U.S. same-restaurant sales decline of 5.6 percent.
For the quarter, on a percentage of sales basis, food and beverage expenses, restaurant expenses, and depreciation and amortization expenses were higher compared to the fourth quarter of last year, while selling, general, and administrative expenses were lower. The net result is that operating profit and operating profit as a percentage of sales were below last year.
Darden expects to receive net cash proceeds from the sale of Red Lobster, after tax and transaction costs, of approximately $1.6 billion, of which approximately $1 billion will be used to retire outstanding debt. The remaining net proceeds of approximately $500 million to $600 million will be deployed in fiscal 2015 for a new share repurchase program of up to $700 million. The transaction is expected to close in Darden's first quarter of fiscal 2015.