When You Cross Olive Garden and Red Lobster You Get …

by Angela Nazworth | July 3, 2012 11:10 am

Fast-food combo joints — think Yum Brands‘ (NYSE:YUM[1]) all-in-one Taco Bell and KFC stores — have popped up across the country, but there aren’t many casual restaurant chains going the hybrid route. That could soon change.

Darden Restaurants (NYSE:DRI[2]), owner of Olive Garden, Red Lobster and several other popular casual dining establishments is working on a few initiatives[3] to breathe new life into its restaurants[4].

One strategy? Combining a small Olive Garden with a small Red Lobster to make one full-sized restaurant.

The company has already opened three Olive Garden-Red Lobster restaurants in smaller U.S. cities, Bloomberg[5] reports, and more might be on the way.

Opening the combo restaurants in smaller cities makes a lot of sense. It’s simply not always cost-effective to open both a full-sized Olive Garden and Red Lobster in an area populated by about 20,000 people. However, combining two smaller versions of each chain into a single restaurant is a nice fit.

The concept isn’t as odd as it appears at first glance. Unlike fast-food combo stores that are popular among travelers, the Olive Garden-Red Lobster stores have separate dining rooms and entrances. They do, however, share a bar, kitchen and restrooms for patrons.

Source URL: http://investorplace.com/2012/07/when-you-cross-olive-garden-and-red-lobster-you-get/
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