Monday, April 21, 2014

Has Marion's Garden Been Pruned?

While I'm not usually one for the tabloid headline, this one was too good to pass up.

For years now going on a quarter century Darden Restaurants, parent company of Red Lobster, Olive Gardens and LongHorn Steakhouse, has been looking at Marion for the site of a new Olive Gardens. They've never confirmed it, but city officials have, as have managers of some of the other chain restaurants in town who have taken note whenever reps of their future competition appear in town

A few years ago Marion Mayor Robert L. Butler hinted their renewed interest without mentioning them by name.

As a Realtor with Paul Wilson Realty LLC working on commercial prospects I've come across references of even which lots have even been under consideration at different times - the outlot next to the Holiday Inn Express up on The Hill, the empty lot on the corner of Halfway Road across from MidCountry Bank, the current location of what's left of America's Best Inn back when Panera's was being built.

The latest rumors had them locating on the new access road on the south side of Route 13 west of Sam's Club. When the city council last year named that new stretch as Garden Way, I viewed it as all but confirmation and even predicted if a new crossroad was built the city might consider Olive Alley for the new name.

However close though that deal came, it's apparently now fallen through. The mayor indicated last week that a decision had been made to curb the chain's expansion plans, a decision that had nothing to do with Marion in particular, but larger issues affecting the company.

A check this morning of the company's 2013 Annual Report backs that up. Because of weak sales at their three major chains in 2012 and early 2013 the company began to restructure both its marketing efforts as well as core menu items. Sales began to turn around by the end of the year, but that's still impacting their plans for expansion.

... we are significantly reducing new restaurant expansion at Olive Garden, going from the 35 to 40 net new openings we have had each year for the past few years to approximately 15. With this change, we believe the brand can better focus on regaining same-restaurant traffic momentum and on making the guest experience changes required for sustained success.

So what does that mean? At one point city officials understood Marion to not only be part of the next 30 restaurants set for construction, but one of the next five locations to be sited. Then, Darden decided to stop all expansions, so Marion was out. Now, the annual report suggests that 15 will be built. So is Marion back in?

Right now Darden operates 828 Olive Garden restaurants which sold $3.7 billion worth of pasta and assorted delicious calories last year. That's $4.6 million in sales for each restaurant. Assuming Marion would be average, that's $161,000 a year in local sales taxes to the city, county and schools funds, hence one of the key reasons why officials have been keen to land one of these.

For comparison purposes, the average Red Lobster has sales of $3.7 million and an average LongHorn Steakhouse, $3 million.

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