Darden Falls as CEO to Retire, Wages to Go Up

Darden Restaurants on Friday reported quarterly earnings and revenue that topped analysts expectations, leading the company to raise its sales and earnings forecast for the rest of fiscal 2022.

The Olive Garden parent also announced that CEO Gene Lee will retire May 29. The board elected Chief Operating Officer Rick Cardenas as its next chief executive. Cardenas, who previously served as chief financial officer, will join the board on May 30. Lee will stick around as executive chairman until the next shareholder vote, when he is expected to be reelected as non-executive chairman. The Darden stock (NYSE:DRI) was down 5% Friday after the company said its Chief Executive Gene Lee will retire in May.

Gene will give way to current President and Chief Operating Officer Ricardo Cardenas while staying on as chairman. He was CEO for last seven years.

Also weighing on the stock was the restaurant chain accelerating its previous decision to hike wages. In January, minimum hourly earnings for Dardens staff will be $12, gratuities included. Lee said the hike will translate into average hourly earnings of $20.

The commutative sales at the company rose 37% from last year to $2.27 billion, driven by a blended same-restaurant sales increase of over 34% and the addition of 34 restaurants on net basis. The restaurants benefited from vaccinations encouraging people out of their homes for dining and shopping.

Modified profit per share doubled to $1.48, and like sales, beat estimates. That also gave the company the confidence to boost its guidance again. It now expects annual revenue to come in between $9.55 billion and $9.70 billion, up from the September guidance of $9.4 billion-$9.6 billion.

Shares of the company fell more than 3% in morning trading. Same-restaurant sales are seen growing by 30% at center of its guidance range. It expects to open between 35 and 40 restaurants in the financial year that ends on May 30.

Lee has served as CEO since February 2015. He joined Darden in 2007 as part of the companys acquisition of Rare Hospitality International. Cardenas has worked for Darden even longer, starting in 1984 as an hourly worker before becoming an auditor for the company and working his way up.