Darden Restaurants has found its next big thing in LongHorn Steakhouse.
After a couple of years of slow growth during the economic downturn and adjustment to a new corporate owner, the Western-themed chain is taking off, with annual sales expected to hit $1 billion for the first time this year.
Orlando-based Darden, which also owns Olive Garden and Red Lobster, bought LongHorn and Capital Grille for $1.4 billion in 2007.
Darden this year is accelerating the pace of expansion with plans to dot the country with LongHorns, eventually reaching 600 to 800.
With 356 restaurants so far, "LongHorn still has this long runway of growth available to it," said Dave George, president of the chain. There are locations in Wisconsin and Iowa, but not Minnesota.
There's still some room for new restaurants in older markets. Yet, much of LongHorn's emphasis is on the new frontier and introducing a more sophisticated look and brand.
As it grows, LongHorn will have to wrangle with some tough competition. Unlike Olive Garden and Red Lobster, the country's biggest Italian and seafood chains, LongHorn is No. 3 in steak. It generated about 7 percent of U.S. steak sales last year, behind Outback Steakhouse and Texas Roadhouse, according to research firm Technomic.
LongHorn also will face heavy competition as it moves into Western states, where "there's a lot of steak," said Steve West, an analyst with financial services firm Stifel Nicolaus.
George said LongHorn can compete with its new, more contemporary atmosphere and its food.
Though it turns 30 years old this month, LongHorn is still new to much of the country, and that novelty will generate excitement, restaurant analysts said. And the chain doesn't have to worry about remaking its image in emerging markets, George said, because "they don't know the old LongHorn."
That old LongHorn was a honky-tonk kind of place with road signs, stuffed animal heads and wagon wheels on the walls. Decor in newer and recently remodeled restaurants features stone and wood interiors, bronze sculptures and oil paintings.
Well-known for market research, Darden has helped LongHorn tweak little things that make a difference, George said. Instead of artwork of cowboys working with cattle, for example, LongHorn chose paintings of them relaxing -- something consumers said created a calmer feeling.
Darden's experience also will help the company pick the best places to grow, said Darren Tristano, executive vice president of Technomic.
"Most markets they are going into, they exist there [already]," Tristano said. "They understand the market. It's not new to them. It's just new to the brand."
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