Darden CEO Suggests Restaurant Industry Needs To Thin The Herd

Darden Restaurants Inc DRI Q1 earnings call provided some extra color on the declining state of the restaurant industry.

CEO Gene Lee said some changes need to be in order for the industry to become healthy again. Traffic for restaurants is falling due to the relative cost of buying groceries and tastes shifting to smaller local restaurants.

Lee believes the industry will stay in the current state it is in and is preparing accordingly.

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"I think there is some real uncertainty in the near-term here, but that's going to pass, and from a consumer standpoint," said Lee. "I think we're focused on the long-term."

Despite the negative outlook, Darden beat on both the top and bottom line and raised guidance for the rest of the year.

Lee believes that some closures of some restaurants would help improve the outlook of the industry as a whole.

"We've seen some big announcements of closures lately and I also think that if you drive down the road you're starting to see more restaurants closed. You also see more restaurants opened, but we could use some inventory to come out. That would be helpful," Lee added.