The Rising Influence of Rising Affluence

[DewDiligence]

DRI was down 12% today:

http://online.wsj.com/article/SB10001424052970204903804577082050942977244.html

The casual-dining chain operator, which also owns Red Lobster and LongHorn Steakhouse, has struggled to garner momentum for Olive Garden, its largest chain with about 750 restaurants. Over the past year, Darden has emphasized Olive Garden's food quality in its advertising, then switched back to the chain's low prices. Neither strategy has worked for the chain, which has reported disappointing sales results for five straight quarters.

The casual dining arena has some appeal as a demographics play, but Olive Garden has the worst food of any Italian restaurant I’ve ever been to, and that’s a pretty good reason for avoiding the stock. Moreover, 98% of DRI’s restaurants are in the US, so it’s certainly not a play on emerging markets. (The other 2% of the restaurants are in Canada.)