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Olive Garden Offers Free Babysitting to Increase Sales

Stocks in this article: DRI

NEW YORK (TheStreet) -- Olive Garden, one of several restaurant chains owned by Darden Restaurants (DRI), continues to see sales decline at locations across the U.S. The "Italian dining experience" inspired restaurant chain has worked on revamping its menu, but on Friday is offering something not many other dining establishments offer: free babysitting.

On Feb. 7, Olive Garden will host "Parents' Night Out." With partner My Gym, Olive Garden will allow parents a night out to enjoy dining without their children. My Gym has hundreds of locations around the country and in international markets. In this case, Olive Garden will partner with 145 locations around the country. The chain has more than 800 locations.

Olive Garden is heavily promoting its two for $25 offer during the "Parent's Night Out" event. Parents will pay a deposit at My Gym locations, but will receive that full amount back when they bring their Olive Garden receipt to pick up their children. 

This event won't move the needle for Darden Restaurants, but it could help fight a growing trend of negative same-store sales for Olive Garden. In the first quarter, same-store sales were down 4.0% at Olive Garden locations. In the second quarter, same-store sales declined 0.6%. A weak September hurt Olive Garden, while October and November actually saw improved same-store sales.

On top of the weakness of same-store sales, Olive Garden has seen rising food and beverage costs and labor costs. This has hurt profit and earnings for shareholders. Darden continues to see strength in its specialty restaurant business, which is the focus of several activist investors. In the second quarter, same store sales increased 4.1% at specialty locations.

Darden Restaurants is in the midst of several activist battles that could change its restaurant ownership. The company currently owns Olive Garden, Red Lobster, Longhorn Steakhouse, The Capital Grille, Bahama Breeze, Eddie V's Seasons 52 and Yard House. The company plans on spinning off or selling Red Lobster.

Shares of Darden Restaurants are down about 7% in 2014. In 2013, shares increased 20%. With activist interest and a healthy 4% dividend yield, Darden shares look like a nice portfolio addition.

At the time of publication the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Chris Katje has been fascinated with the stock market since a young age. That passion turned into a freelance writing career that began in 2008. Mr. Katje has seen his work appear on Seeking Alpha, the Motley Fool, The Street, and Variety. Chris's annual top ten stock picks list continues to beat the market and grow in popularity. You can follow Chris on Twitter (@chriskatje).

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