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Takeaway: We are growing more certain that DRI's next earnings release will disappoint shareholders.

Conclusion: It seems likely that Darden is lagging the industry given Knapp trending at -1.8% (on average) for first two weeks of October and Blackbox coming in flat for the month.  Assuming Knapp Track in Oct comes in roughly on trend with the first two weeks, the 180bps spread is far greater than it has been (it was 0 bps in September) and is possibly a poor sign for Darden.  We will be waiting for Knapp’s monthly data to confirm.

Blackbox Intelligence released casual dining same-restaurant sales growth data for October at 0% with traffic at -2.1%. 

Last month, we learned that Knapp Track casual dining comps were down -1.5% and -2.1% for the first and second week of the month, respectively. 

There are many differences between the two metrics, but one significant one is that Darden (the largest system in the business) is not counted in the Blackbox data.  If we assume that Knapp’s October data will come in on trend with the first two weeks, this could be negative for Darden. 

If a significant portion of the spread between Knapp and Blackbox is driven by Darden not being accounted for in the Blackbox data, which is likely to be at least partly true given Darden’s size, we would infer that Darden underperformed the industry in October. 

Howard Penney

Managing Director

Rory Green

Analyst