Shop Talk

Check Out Line: Have a helping of earnings

Check out the latest raft of earnings and outlooks kicking off the holiday-shortened week in the consumer world.

Kraft Foods, which makes Oreo cookies and Velveeta cheese, posted quarterly revenue that fell short of expectations, but said its recent acquisition of British chocolatier Cadbury would accelerate long-term growth.

Abercrombie & Fitch posted a lower profit as the retailer of casual yet trendy clothes for teens and college-age youth grappled with a prolonged U.S. sales slump.

Fossil, which sells watches, jewelry, leather goods, sunglasses and apparel, posted a better-than-expected profit and offered a full-year outlook above analysts’ expectations.

Darden Restaurants, owner of the Red Lobster and Olive Garden chains, raised its profit outlook for the year, citing improving consumer traffic.

“The signs of sales and traffic improvement we began to see late in the second quarter and discussed during our December conference call with investors continued into January and February,” Chief Executive Officer Clarence Otis said in a statement.

Also in the basket:

Shift FROM thrift? Are diners trading up?

After a much heralded “shift to thrift” during what has become the longest and deepest recession since the Great Depression, diners are now saying they plan to spend less money at cheap fast-food chains and more at some pricier eateries like Darden‘s Red Lobster and Olive Garden chains, Chipotle and Maggiano’s Little Italy from Brinker. 

“Trading up is supported by fewer customers saying they’re ordering less expensive items, skipping beverages and choosing less expensive restaurants,” RBC Capital Markets analyst Larry Miller wrote in a client note. Miller regularly polls diners about their spending plans. 

“Confidence in the economy is improving and those planning to spend more at restaurants cited better job security and less need to save money,” said Miller, who added that consumer spending plans at Starbucks were also ”less bad.”

Are you trading up on food — or anything else — after trading down?

Disappearing restaurant deals?

Whether it is “value menus,”  Applebee’s two dinners for $20 deal or Ruth’s Chris Steak House’s “Summer Classic” three-course meal for $39.95, restaurant operators long have been depending on specials to woo customers during a long recession that has driven unemployment to a 26-year high.

Now, one high-profile restaurant executive says he has seen some rivals’ deep discounts disappear over the last few weeks.

“We see a little bit of pull back from some of the more significant offers,” said Clarence Otis, chief executive of Olive Garden and Red Lobster parent Darden International Inc.

Darden has specials of its own. For example, the company’s Red Lobster chain plans to repeat its “Lobsterfest” promotion during the the pre-Easter season of Lent,  when many Catholics eat fish on Fridays. Still, Otis said his company is careful to make sure its discounts reap financial rewards.

“We don’t know that a lot of folks who did discounting got much for it,” in terms of driving diners into restaurants, he said.

Have you seen your favorite discount disappear?

(Photo\Reuters)

Less fried frozen fish, more endless shrimp

Frozen seafood is never as tasty as fresh, a problem Red Lobster, whose menu hosts various fried frozen fish dishes, is trying to overcome.

Following a quarter of disappointing sales at its Red Lobster restaurant chain, Darden is trying to change the ”perception that the menu at Red Lobster is primarily comprised of frozen seafood prepared in a fried manner and not having a lot of interesting innovation, flavor profiles, culinary expertise,” said Darden’s CEO Clarence Otis on a call with analysts.

In other words, fried frozen fish lacks the flavor of fresh produce.

To change that, “the menu that’s coming out late in the second quarter is really designed to maintain or increase appeal of current users, which is important, but also address those concerns about, this is frozen, fried seafood without any interesting flavor profiles,” Otis said.

Darden also offers fresh lobsters, which customers can pluck from a tank in some of its restaurants,  but people ate less lobster over the summer as high per-pound prices turned off consumers already pressured by skyrocketing gas and grocery prices. 

Now that per-pound lobster prices have eased, Red Lobster plans to lower prices on some of its lobster dishes. To entice customers who might enjoy Olive Garden’s “endless pasta bowl,” Red Lobster also began three weeks ago to offer ”endless shrimp,” which hopefully has an interesting flavor profile. Darden didn’t mention whether the endless shrimp will be fresh or frozen.

(Photo/Reuters)