Darden Restaurants, Inc. (NYSE:DRI) Q4 2023 Earnings Call Transcript

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And even in restaurants to capital, even in markets that Capital Grille has restaurants in, they’re not necessarily close to each other in a lot of those markets. So there isn’t as much overlap as you would expect. And that’s a good thing for us, good thing for Ruth Chris, and it’s a good thing for Capital Grille. And – but then I would add that if you think about ADBs and Capital Grille, we’ve had this kind of scenario for many years. Where ADBs guests may go to Capital Grille, but they go for different occasions. And we want to learn a little bit about that at routes on the occasion differences. And then finally, I think Capital Grille is a little bit more, going back to geography, a little bit more mix in urban than Roots, an urban core versus Ruth Chris, where Ruth Chris, for example, if you have a restaurant in Birmingham, we don’t have – or in Destin, Florida.

There’s the Ruth Chris. We don’t have Capital Grille there. So there’s reasons that there isn’t as much overlap as you would have thought.

Brian Vaccaro: All right. That’s great. I’ll pass it along. Thank you.

Operator: Thank you. Our next questions come from the line of Jake Bartlett with Truist Securities. Please proceed with your questions.

Jake Bartlett: Great. Thanks for taking the question. Mine was on labor productivity. You mentioned that you expect some labor productivity improvements in ’24, but not a whole lot. I guess my question is around turnover. I would have thought that just the improving labor environment, staffing is kind of, I think, back to pre-COVID levels, but turnover going down, so productivity should be going way up. In terms of — at your brands, have you already benefited? I mean, I guess, maybe was your turnover not so bad before that’s why you’re not going to get much of an incremental benefit. If you could just talk about how the labor dynamics and what that could or couldn’t do to labor productivity.

Rick Cardenas: Yeah, Jake. Yes, you would expect that as turnover goes down, productivity gets better, and we’ve started to see that already this year. So our turnover is improving and our productivity is getting better. So it’s not like we’re going from the highest turnover we’ve ever had to the lower turnover next year. We’ve actually started gradually moving to it. And one of the places that gets you the biggest productivity loss is the turnover in the first 90 days. And that’s had a very big improvement for us. So you don’t — you have less productivity loss if you have less 90-day turnover. And so we’ve seen an improvement in turnover. We’re still above pre-COVID levels, but we’re a lot closer to our pre-COVID levels than we were just last month and the last month before that, the month before that.

And we’ll continue to improve I don’t know if we’ll ever get back to pre-COVID level turnovers. But if we do, then that should give us even more productivity enhancements.

Jake Bartlett: Great. And then I have a follow-up on unit growth and you gave guidance for 2024. A couple of years ago, you had mentioned your expectations kind of moved towards the higher end of the range. So closer to 3% from the 2% to 3% range. Is that still valid kind of going forward, and it’s going to be lower in ’24, but longer term, should we think of the higher end of the range is the right point or are we kind of getting back into maybe the middle of the range longer term?

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