Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Investor Day (February 2013)
153 slides from Darden Restaurants's investor day presentation, Feb 25, 2013
Slide 1: Operating Successfully in a New Era
Operating Successfully in a New Era DARDEN SECURIT Y ANALYST S MEETING | FEBRUARY 2013
Slide 2: Agenda
Agenda Monday, February 25 2:00 p.m. Matthew Stroud VP, Investor Relations, Darden Restaurants 2:05 p.m. Clarence Otis, Jr. Chairman & CEO, Darden Restaurants 2:35 p.m. Drew Madsen President & COO, Darden Restaurants 3:35 p.m. Break 4:00 p.m. Chris Chang SVP, Technology Strategy, Darden Restaurants
Slide 3: Agenda
Agenda Monday, February 25 4:20 p.m. Brad Richmond CFO, Darden Restaurants 5:05 p.m. Q&A 5:50 p.m. Adjourn 6:15 p.m. Buses Depart for dinner at Red Lobster – Lake Buena Vista 8:15 p.m. Buses return to Hotel
Slide 4: Forward-Looking Statement
Forward-Looking Statement During the course of this presentation, Darden Restaurants’ officers and employees may make forward- looking statements concerning the Company’s expectations, goals or objectives. Forward-looking statements regarding our expected earnings per share and U.S. same-restaurant
Slide 5: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles ("GAAP"), this presentation contains non-GAAP financial measures. The non-GAAP financial measures should not be considered a substitut
Slide 6: Operating Successfully in a New Era – Clarence Otis
Operating Successfully in a New Era DARDEN SECURIT Y ANALYST S MEETING | FEBRUARY 2013 Clarence Otis Chairman & CEO
Slide 7: Our Strategic Direction
Our Strategic Direction INDUSTRY LEADERSHIP Competitively Superior Value Going Forward IMPORTANT CHANGES FOR A NEW ERA 7
Slide 8: Our Strategic History: Hard Earned Industry Leadership
Our Strategic History: HARD EARNED INDUSTRY LEADERSHIP 8
Slide 9: Pioneered National Casual Dining
Pioneered National Casual Dining Strong Restaurant-Level Operations • Grounded in talented and engaged restaurant and … eventually … multi-restaurant leaders … • Increasingly robust people management systems and techniques … • And increasingly effective guest count forecasting and cost management to
Slide 10: Pioneered National Casual Dining
Pioneered National Casual Dining Strong Brand Management • Rooted in a commitment from the start to rigorous consumer insight … • Which drove consistently in-synch evolution of key consumer touch points … • Including menus, advertising, service style and restaurant look and feel … • And combining th
Slide 11: Pioneered National Casual Dining
Pioneered National Casual Dining Effective and Efficient Support • Reflects a commitment from the start to ongoing investment in creating a robust Supply Chain … • A highly functional Information Technology infrastructure … • And strong financial management and reporting systems 11
Slide 12: Pioneered Multi-Brand Casual Dining
Pioneered Multi-Brand Casual Dining Enabled Significant Value Creating Growth • Well beyond what was possible with a single brand … since there are relatively few units before a full service dining brand reaches full national penetration • A critical success factor was establishing appropriate leade
Slide 13: Pioneered Multi-Brand Casual Dining
Pioneered Multi-Brand Casual Dining Enabled Significant Value Creating Growth • With two national brands and a growing portfolio … • Achieved new levels of financial and operating scale compared to single brand operators … • Which has been an important driver of competitively superior long-term shar
Slide 14: Track Record of Decisive Action
Track Record of Decisive Action A Key to Sustained Long-Term Momentum • In the 1970’s and 1980’s … helped pioneer shrimp and fish aquaculture … preserving Red Lobster’s ability to offer everyday price accessibility over the long-term • In the 1980’s … disposed of several brands to focus on Olive Gar
Slide 15: Track Record of Decisive Action
Track Record of Decisive Action A Key to Sustained Long-Term Momentum • In the 1990’s … aggressively closed restaurants to address overbuilding at Red Lobster and in the industry • In 2007 … disposed of Smokey Bones and acquired LongHorn Steakhouse and Capital Grille … to create a brand portfolio wi
Slide 16: Consistently Willing and Able to Invest for the Future
Consistently Willing and Able to Invest for the Future Foundation for All Other Leadership Attributes • General Mills funded our investment for the future initially … but for decades now we have relied on our own considerable cash flow • We’ve invested through capital spending and … when necessary …
Slide 17: Our Strategic Direction: Blending Continuity and Change
Our Strategic Direction: BLENDING CONTINUITY AND CHANGE TO MAINTAIN LEADERSHIP 17
Slide 18: Committed to a Multi-Brand Future
Committed to a Multi-Brand Future Our Path for Sustained Long-Term Value Creation • Our current portfolio supports continued market share growth for the next decade … without additional brands … • As well as competitively superior returns … • Provided we make the changes that are needed to manage th
Slide 19: The New Era
The New Era Key Consumer and Competitive Dynamics • Many guests are more financially stretched than ever … and more focused than ever on affordability • Many other guests remain financially comfortable … and are demanding better quality offerings • The financially comfortable are affecting the taste
Slide 20: The New Era
The New Era Key Consumer and Competitive Dynamics • There are more millennial and multicultural guests than ever … and they are having a significant affect on the tastes and preferences of all guests • Competition within Full-Service has increased … as eroding traffic fuels a more intense market sha
Slide 21: The New Era
The New Era Key Consumer and Competitive Dynamics • Competition with other restaurant segments has also increased … driven by innovation within traditional quick service … • As well as the continued emergence of segments like quick service retail and fast casual 21
Slide 22: Operating Successfully in the New Era
Operating Successfully in the New Era We’re Making Needed Changes • Our Specialty Restaurant Group brands provide Darden with a broader overall guest and occasion base • To more effectively support our three large brands, we have established separate, dedicated teams that each focus more singularly
Slide 23: Operating Successfully in the New Era
Operating Successfully in the New Era We’re Making Needed Changes • To more consistently win in the marketplace today… new, dedicated teams are focused on … • More competitive promotional affordability … • Better in-restaurant delivery of our current guest experiences … • And richer, more targeted a
Slide 24: Operating Successfully in the New Era
Operating Successfully in the New Era We’re Making Needed Changes • To redefine the guest experiences we offer … new, dedicated teams are focused on … • Big multi-year efforts that strengthen … in step change ways … the loyalty and visit frequency of current guests … or add new guests… • By meaningf
Slide 25: Operating Successfully in the New Era
Operating Successfully in the New Era We’re Making Needed Changes • We are tempering check average growth noticeably going forward … to support traffic growth • We are significantly reducing new restaurant expansion at Olive Garden … – So the brand can better focus on regaining same-restaurant momen
Slide 26: Operating Successfully in the New Era
Operating Successfully in the New Era We’re Making Needed Changes • We are also investing in … – A select few multi-year initiatives to ensure sustained success … – Transitioning to the new healthcare landscape in a way that maintains strong employee engagement … – Lobster aquaculture … which will p
Slide 27: We Are Well-Resourced for the Needed Changes
We Are Well-Resourced for the Needed Changes Sustained Industry Leadership & Superior Value Creation Strong Collective Experience and Expertise A Cost-Effective Support Platform Significant and Durable Operating Cash Generation 27
Slide 28: Darden's Winning Culture Will Not Change
As We Make the Needed Changes … Darden’s Winning Culture Will Not Change Grounded in Shared Purpose Identity and Values Nourish and Delight Everyone We Serve The best, now and for generations…and a place where people can achieve their dreams Integrity & Fairness | Respect & Caring | Diversity | Team
Slide 29: Important Confirmation that Ours is a Winning Culture
Important Confirmation that Ours is a Winning Culture In service industries, employees’ “actions with consumers transform a company’s brand aspirations…into a customer-experienced brand.” Professor Leonard L. Berry 2011 | 2012 | 2013 29
Slide 30: Operating Successfully in a New Era – Drew Madsen
Operating Successfully in a New Era DARDEN SECURIT Y ANALYST S MEETING | FEBRUARY 2013 Drew Madsen President & COO
Slide 31: The New Era
The New Era Key Dynamics – Industry, Consumer, Competitive Implications for Darden – Compete more effectively within the current Casual Dining market share contest today – While also working aggressively to ensure our brands win the contest for relevance tomorrow that goes beyond Casual Dining
Slide 32: Key Dynamics
DARDEN Key Dynamics
Slide 33: Total Restaurant Industry Traffic Declining
Total Restaurant Industry Traffic Declining Shifts from Full Service to Fast Casual and QSR Retail 2008 2012 62.3 Billion Visits 60.5 Billion Visits 7.8 2.0 7.1 8.0 2.4 6.2 7.0 6.4 0.4 0.4 38.0 37.1 QSR Less Retail & Fast Casual QSR Retail Fast Casual Midscale Casual Dining Fine Dining / Upscale Hot
Slide 34: Casual Dining Traffic Still Contracting
Casual Dining Traffic Still Contracting Total Casual Dining Traffic 7.2 Avg Growth = +1.6% Avg Growth = -2.1% 7.0 7.0 RISING TIDES 6.9 6.9 6.9 SHARE BATTLE 6.8 6.7 6.7 6.6 6.6 6.6 Billions 6.4 6.4 6.4 +1.9% 6.4 +0.4% -2.1% 6.2 -2.8% 6.2 6.2 +2.5% -1.6% +1.5% -2.0% 6.0 +2.3% +0.5% +2.9% 5.8 +1.1% 5.6
Slide 35: Casual Dining Penetration and Frequency are Both Opportunities
Casual Dining Penetration and Frequency are Both Opportunities Casual Dining Penetration Casual Dining Visit Frequency (Last Four Weeks) (Last Four Weeks) 9.2 77% 8.2 8.7 8.7 7.5 75% 69% 73% 66% FY08 FY09 FY10 FY11 FY12 FY08 FY09 FY10 FY11 FY12 Source: Darden i-Tracker 6
Slide 36: Casual Dining Less Affordable for Many
Casual Dining Less Affordable for Many Share of Traffic by Income < $60,000 $60,000-$100,000 >$100,000 2007 2012 2007 2012 2007 2012 U.S. Population 55% 58% 23% 22% 22% 20% C.D. Total 38% 33% 29% 28% 32% 39% Source: NPD CREST & US Census Bureau, Population Division Note: 12 Months ending Sep’07 and
Slide 37: Reduction in Segment Affordability Affected Our Brands More
The Reduction in Segment Affordability has Affected Our Brands More Because of Their Broader Reach Though Broader Reach is a Key Driver of Superior Revenues Per Restaurant Share of Traffic by Income < $60,000 $60,000-$100,000 >$100,000 2007 2012 2007 2012 2007 2012 U.S. Population 55% 58% 23% 22% 22
Slide 38: Casual Dining Not Capturing Millennial Opportunity
Casual Dining Not Capturing Millennial Opportunity Share of Traffic by Age Millennials Gen X Boomers Matures 2007 2012 2007 2012 2007 2012 2007 2012 U.S. Population 31% 33% 22% 23% 30% 30% 17% 14% C.D. Total 25% 24% 24% 24% 31% 35% 20% 17% Source: NPD CREST & US Census Bureau, Population Division No
Slide 39: Casual Dining Not Fully Capturing Hispanic Opportunity
Casual Dining Not Fully Capturing Hispanic Opportunity Share of Traffic by Ethnicity Caucasians African American Hispanics Others 2007 2012 2007 2012 2007 2012 2007 2012 U.S. Population 67% 65% 12% 12% 15% 17% 6% 6% C.D. Total 75% 75% 8% 7% 12% 13% 5% 5% Source: NPD CREST & US Census Bureau, Populat
Slide 40: Major Casual Dining Chains are Growing
However… Major Casual Dining Chains are Growing… Total Traffic % + / - LY Total Casual Dining Major Chains 4.0% 1.9% 1.4% 0.3% -1.6% -2.1% -2.0% -2.4% -2.7% -2.8% FY08 FY09 FY10 FY11 FY12 FY08 FY09 FY10 FY11 FY12 Source: NPD CREST 11
Slide 41: And Taking Market Share
… And Taking Market Share Share of Total Traffic 2008 2012 52% 51% 15% 14% 33% 35% Independents (<3 units) Small Chains (3-200 units) Major Chains (200+ units) Source: NPD CREST 12
Slide 42: Our Large Brands Have Been Growing Faster Than Major Chains
Our Large Brands Have Been Growing Faster Than Major Chains Cumulative Total Traffic %+/- 12% Cum. Percent Change vs. Year Ago Darden Blended Major Chains 10.1% 10% 8% 6% 5.6% 4.0% 4% 2% 0.6% 0% -2% FY08 FY09 FY10 FY11 FY12 Source: NPD Crest Darden Blended Average (RL, OG, LH) 13
Slide 43: We Also Have Higher Average Unit Volumes
We Also Have Higher Average Unit Volumes… AUV $Millions $4.7 $3.8 $3.0 Primary Major $3.9 (Dinner Only) Chain Competitors (Sales of $1Billion plus 250 units) $3.2 $3.0 $3.0 $2.8 $2.4 $1.8 Source: Competitors: Form 10-K Filings, 2012 Nation’s Restaurant News Top 100 Report Darden: Fiscal 2012 14
Slide 44: Higher Restaurant Level Returns
Higher Restaurant Level Returns… Restaurant-Level Returns (%)* 18.5% Primary Major 17.9% (Partly Franchised) Chain Competitors (Sales of $1Billion plus 250 units) 17.6% (Partly Franchised) 15.5% 10.3% NA Source: Competitors: Form 10-K Filings; Darden: Fiscal 2012 Dine Equity not included - not compa
Slide 45: And Darden Has Higher Operating Profit Margins
And Darden Has Higher Operating Profit Margins… Enterprise EBIT (%)* 9.2% Primary Major 8.5% (Partly Franchised) Chain Competitors (Sales of $1Billion plus 250 units) 8.4% (Partly Franchised) 4.5% 0.4% NA Source: Competitors: Form 10-K Filings; Darden: Fiscal 2012 * Enterprise EBIT (%) = (Net Income
Slide 46: Which Reflects Significant Productivity Gains
Which Reflects Significant Productivity Gains Cumulative Savings FY09-FY13 ($ millions) Supply Chain Automation $41 - $44 Facilities Centralization $9 - $10 Sustainable Operating Practices $24 - $26 Labor Optimization $46 - $50 Total $120 - $130 17
Slide 47: Same-Restaurant Traffic Has Been a Challenge
But... Same-Restaurant Traffic Has Been a Challenge Cumulative Same-Restaurant Traffic % +/- 20% 0% -7.7% Darden Blended -18.2% Major Chains ‐20% FY08 FY09 FY10 FY11 FY12 Darden Blended Average (RL, OG, LH) 18
Slide 48: We Have Lagged the Industry Recently
And We Have Lagged the Industry Recently Quarterly Same-Restaurant Traffic % +/- Prior Year -0.8% -1.4% -2.2% -2.6% -4.5% -4.5% Q4 FY12 Q1 FY13 Q2 FY13 Darden Blended Average (RL, OG, LH) Knapp Track (Ex. DRI) 19
Slide 49: Implications for Darden
DARDEN Implications for Darden
Slide 50: Winning the Market Share Contest Today
Winning the Market Share Contest Today While Redefining Our Guest Experiences for Tomorrow Winning Today – Address the more intense market share contest within Casual Dining … • Further strengthen in-restaurant delivery of our guest experiences • And respond more aggressively to the elevated guest
Slide 51: Major Chain Share Gain Reflects Aggressive Price Incentives
Major Chain Share Gain Within Casual Dining Reflects Aggressive Increase in Price Incentives Major CD Chains Small and Independent CD Chains 900 30% 900 30% 800 25% 800 25% 25% 700 700 600 20% 600 18% 18% 20% 500 500 13% 15% 15% 400 400 300 10% 300 10% 200 200 5% 5% 100 100 277.4 307.4 360.1 469.1 5
Slide 52: Casual Dining Guest Experience is Not Improving Fast Enough
But Casual Dining Guest Experience is Not Improving Fast Enough Making Price Premium to Other Segments… Even After Discounting… Tougher to Justify % Excellent – Overall Experience Average Eater Check Total Occasions 45 45 45 45 46 45 45 45 44 43 43 $27.41 Fine Dining 43 42 41 41 41 41 41 41 41 40 40
Slide 53: Guest Experience Levers to Sustain Great Brands
Guest Experience Levers to Sustain Great Brands Our View Business Performance Overall Brand Strength Future Visit Intent Value Food Value for the Money Taste of Food Affordability Menu Variety Atmosphere Atmosphere I Like Service Up-to-date Attentive Service Cleanliness Execution Advertising Brand A
Slide 54: Sustaining Great Brands
Sustaining Great Brands Shifts in Guest Perception and Competitive Brand Rank FY08-FY12 Overall Brand Strength Rating (Future Visit Intent) – Red Lobster, LongHorn and Olive Garden have all moved up Individual Attribute Ratings – Red Lobster is generally up in competitive ranking – LongHorn is g
Slide 55: Taste of Food
Taste of Food FY08 FY12 FY12 vs. FY08 Competitive Ranking CD Polished 1 CD Polished 1 CD Destination 2 CD Destination 2 CD Destination 1 CD Destination 1 CD Destination 3 (“BIG DISCOUNTS”) One CD Destination 3 (“BIG DISCOUNTS”) One B&G1 B&G1 B&G2 B&G2 B&G3 B&G3 B&G4 B&G4 Source: Darden i-Tracker
Slide 56: Distinctive Menu Items
Distinctive Menu Items FY08 FY12 FY12 vs. FY08 Competitive Ranking CD Polished 1 CD Polished 1 CD Destination 2 CD Destination 2 One One CD Destination 3 (“BIG DISCOUNTS”) CD Destination 1 One CD Destination 1 CD Destination 3 (“BIG DISCOUNTS”) One B&G1 B&G3 One B&G3 B&G1 One B&G2 B&G2 B
Slide 57: Consistently Good Experience
Consistently Good Experience FY08 FY12 FY12 vs. FY08 Competitive Ranking CD Polished 1 CD Polished 1 CD Destination 2 CD Destination 2 CD Destination 1 One CD Destination 1 One CD Destination 3 (“BIG DISCOUNTS”) One CD Destination 3 (“BIG DISCOUNTS”) One B&G1 B&G1 B&G2 B&G2 B&G3 B&G3 B&G4 B&
Slide 58: Attentive Service
Attentive Service FY08 FY12 FY12 vs. FY08 Competitive Ranking CD Polished 1 CD Polished 1 CD Destination 2 CD Destination 2 CD Destination 1 One CD Destination 1 One CD Destination 3 (“BIG DISCOUNTS”) Two CD Destination 3 (“BIG DISCOUNTS”) Two B&G2 B&G2 B&G1 B&G4 Two B&G3 B&G3 B&G4 B&G1
Slide 59: Atmosphere I Like
Atmosphere I Like FY08 FY12 FY12 vs. FY08 Competitive Ranking CD Polished 1 CD Polished 1 CD Destination 2 CD Destination 2 CD Destination 1 CD Destination 1 CD Destination 3 (“BIG DISCOUNTS”) Two CD Destination 3 (“BIG DISCOUNTS”) Two B&G1 B&G3 One B&G3 B&G1 One B&G2 B&G2 B&G4 B&G4 Source:
Slide 60: Value for Money
Value for Money FY12 vs. FY08 FY08 FY12 Competitive Ranking CD Destination1 One CD Destination 1 One CD Destination 2 CD Destination 2 CD Polished 1 B&G2 Five CD Destination 3 (“BIG DISCOUNTS”) B&G1 Three B&G3 Four CD Polished 1 Three B&G1 Two B&G2 CD Destination 3 (“BIG DISCOUNTS”)
Slide 61: Future Visit Intent
Future Visit Intent FY12 vs. FY08 FY08 FY12 Competitive Ranking CD Polished 1 Two CD Destination 2 Two Three CD Polished 1 Three CD Destination 1 CD Destination 2 Three CD Destination 1 One CD Destination 3 CD Destination 3 (“BIG DISCOUNTS”) (“BIG DISCOUNTS”) B&G2 B&G1 One B&G1 B&G2
Slide 62: Sustaining Great Brands
Sustaining Great Brands Guest Experience Levers We have made significant progress strengthening overall brand perception over the last several years at all three large brands – Although we have seen some erosion from a high level on a few individual attributes at Olive Garden However… our most f
Slide 63: Our Response
Our Response 34
Slide 64: Further Strengthened Our Brand Portfolio
Further Strengthened Our Brand Portfolio Broaden exposure to financially secure guests plus Millennial and Gen X guests Add important capabilities related to music, on-trend food development and running a great bar Contemporize overall portfolio 35
Slide 65: Specialty Restaurant Group
Specialty Restaurant Group Now an Even Stronger Growth Profile Projected sales of $1.0 Billion in FY13 Growing 17% to 19% annually Funding its own growth 36
Slide 66: Further Strengthening Our Organization
Further Strengthening Our Organization Key Objectives Winning Today – New structure … and new teams … to ensure we maintain a strong foundation at each brand … execute with excellence against our current strategies and standards … and make important changes in our go-to-market approach Winning T
Slide 67: Further Strengthen Our Organization
Further Strengthen Our Organization Large Brand Leadership Structure (RL, OG, LH) President EVP EVP SVP SVP VP Operations Marketing Finance HR Development 38
Slide 68: Further Strengthen Our Organization
Further Strengthen Our Organization Field Operations Organization (RL, OG, LH) Old Structure New Structure EVP Operations EVP Operations (RL & OG – 7 SVPs) (RL & OG – 4 SVPs) (LH – 4 SVPs) (LH – 2 SVPs) SVP Operations SVP Operations (Up to 13 Directors) (Winning Today and Tomorrow) (3 to 5 MDs) Dire
Slide 69: Further Strengthen Our Organization
Further Strengthen Our Organization In-Restaurant Operations Organization (RL, OG, LH) Old Structure New Structure General Manager General Manager Culinary Culinary Manager Manager Service Service Manager Manager Staffing/Training Sales/Hospitality Manager Manager (Winning Today) Full Time Hourly Sh
Slide 70: Further Strengthen Our Organization
Further Strengthen Our Organization Marketing Organization (RL, OG, LH) Old Structure New Structure EVP Marketing EVP Marketing VP Consumer VP Consumer Insights Insights SVP Brand SVP Brand Foundation Marketing (Winning Today) SVP Culinary SVP Brand Beverage Development (Winning Tomorrow) Corporate
Slide 71: Further Strengthen Our Organization
Further Strengthen Our Organization Enterprise Marketing Organization (All Brands) New Structure CMO _________________________ ____ EVP’s SVP SVP VP Brand Business Brand Interactive Marketing Insights Innovation Ecosystem 42
Slide 72: Adding Capability for the New Era
Adding Capability for the New Era Will Setliff Brian Foye Harald Herrmann Chief Marketing Officer President, President, Seasons 52 Yard House Craig Carlyle Carlito Jocson Jose Duenas EVP Operations, Executive Chef, SVP, Brand Foundation Yard House Yard House Olive Garden Jim Taylor Jim Nuetzi John C
Slide 73: Adding Capability for the New Era
Adding Capability for the New Era 20 years of Marketing experience with a retail focus Joined Darden as EVP, Marketing for Specialty Restaurant Group Previously SVP Marketing, Target – Brand, Category and Storewide Marketing – Enterprise Strategy and Insights – Enterprise Innovation and Digita
Slide 74: Adding Capability for the New Era
Adding Capability for the New Era 26 years of restaurant industry experience Previously CEO, Yard House before joining Darden Worked in various capacities in a range of dining venues prior to helping launch the flagship Yard House in Long Beach, CA in 1996 Harald Herrmann President, Yard House
Slide 75: Adding Capability for the New Era
Adding Capability for the New Era 19 Years of IT & Strategy experience Joined Darden as SVP, Technology Strategy and Innovation Previously VP, Innovation & IT Strategy for Caesars Entertainment – Founded and led the innovation team focused on developing new technologies Chris Chang across 50 c
Slide 76: Making Near Term Changes to Regain Momentum
Making Near Term Changes to Regain Momentum Further Strengthen Guest Experience 47
Slide 77: Making Near Term Changes to Regain Momentum
Making Near Term Changes to Regain Momentum Elevate Emphasis on Affordability in Promotions Three Course Italian Dinner - $12.95 48
Slide 78: Making Near Term Changes to Regain Momentum
Making Near Term Changes to Regain Momentum More Effective Advertising 49
Slide 79: Making Near Term Changes to Regain Momentum
Making Near Term Changes to Regain Momentum More Aggressive Use of Digital and Social Media Olive Garden Lighter Fare Bahama Breeze Late Night Happy Hour Launch Red Lobster Black Friday Event 50
Slide 80: More Fundamentally Evolve Our Guest Experiences
More Fundamentally Evolve Our Guest Experiences Redefine Our Food and Beverage Experience Identify and more quickly take advantage of key culinary trends as appropriate by brand Prioritize culinary development against “platforms” that support multiple dishes and have the potential to drive step-
Slide 81: Culinary Trends
Culinary Trends* Regional Sourcing Organic/Sustainable Asian Inspiration Fresh Ingredients Share-ability / Tasting Low Alc Cocktails Latin Inspiration Wellness CustomizableRight Price Sushi Barbecue Vegetable Main Dishes High/Low Value Cupcakes Brandy Buffet EMERGING PEAK DECLINE Healthful Kids’ Mea
Slide 82: Culinary Trends
Culinary Trends* Regional Sourcing Organic/Sustainable Asian Inspiration Fresh Ingredients Share-ability / Tasting Low Alc Cocktails Latin Inspiration Wellness CustomizableRight Price Sushi Barbecue Vegetable Main Dishes High/Low Value Cupcakes Brandy Buffet EMERGING PEAK DECLINE Healthful Kids’ Mea
Slide 83: Trend-Inspired Culinary Innovation
Trend-Inspired Culinary Innovation Seasons 52 – Latin/Fresh/Handheld Longhorn Steakhouse – Price/Value Bahama Breeze – Latin/Shareable/Value The Capital Grille – Customization /Value Red Lobster – Fresh Olive Garden – Wellness 54
Slide 84: Leveraging Scale and Expertise Across the Portfolio
Leveraging Scale and Expertise Across the Portfolio Grilled Pork Veneto at Olive Garden was developed in a cross-concept culinary “charette” When one chef has an applicable concept, they share their learning to inspire others – Tacos began in Seasons 52 and Bahama Breeze, then moved to Red Lobst
Slide 85: More Fundamentally Evolve Our Guest Experiences
More Fundamentally Evolve Our Guest Experiences Redefine Our Service Experience Act More Like Restaurateurs – Less about systems and processes – More about passionate guest engagement – Leading to increased guest loyalty 56
Slide 86: Digital Guest Engagement
More Fundamentally Evolve Our Guest Experiences Digital Guest Engagement Web Ahead Seating Targeting Marketing Tableside Ordering and Settlement 57
Slide 87: Guest Convenience and Guest Segmentation
More Fundamentally Evolve Our Guest Experiences Guest Convenience Guest Segmentation 58
Slide 88: Remodels
More Fundamentally Evolve Our Guest Experiences Remodels 59
Slide 89: Global Demand for Lobster Projected to Exceed Supply
More Fundamental Steps to Support Our Guest Experiences Global Demand for Lobster Projected to Exceed Supply 500 10,000,000 450 9,000,000 400 8,000,000 Live Weight (Millions of Lbs) 350 7,000,000 300 6,000,000 Population 250 5,000,000 200 4,000,000 150 3,000,000 100 2,000,000 50 1,000,000 0 0 2000 2
Slide 90: Lobster Aquaculture
More Fundamental Steps to Support Our Guest Experiences Lobster Aquaculture Create the world’s first integrated lobster aquaculture park Working in close partnership with the Malaysian government Preserve the ability of Red Lobster to offer everyday price accessibility on a brand-defining prod
Slide 91: We Are Investing in Needed Change
We Are Investing in Needed Change 100 90 80 $70-75 70 $ in Millions 60 50 40 $30-35 30 20 $15-20 $8-12 10 0 FY10 FY11 FY12 FY13 Direct Investment Tempered Check Growth Direct P&L Investments IT Platform, Organization Structure, Growth Initiatives, Lobster Aquaculture Will be another $25-30 million o
Slide 92: Making the Changes Required to Win in a New Era
Making the Changes Required to Win in a New Era Taking decisive action to regain momentum and position Darden to deliver competitively superior value creation going forward Focused on important changes in several key areas including: – Organization capability – Guest experience affordability – G
Slide 93: Darden's Technology Strategy
Darden’s Technology Strategy Our Technology Journey DARDEN SECURIT Y ANALYST S MEETING | FEBRUARY 2013 Chris Chang SVP | Technology Strategy
Slide 94: Discussion Topics
Discussion Topics • A Rapidly Changing Technology Environment • Our Response and Vision • Current Status of Our Technology Strategy Program • Our Roadmap 2
Slide 95: A Rapidly Changing Technology Environment
A Rapidly Changing Technology Environment Technology is rapidly changing & evolving… 3 YEARS AGO, NONE OF THESE EXISTED 3
Slide 96: A Rapidly Changing Technology Environment
A Rapidly Changing Technology Environment …the vendor landscape is becoming increasingly complicated (and below is just the social media space)… SOURCE: Luma Partners 4
Slide 97: A Rapidly Changing Technology Environment
A Rapidly Changing Technology Environment …and consumers are becoming more & more digitally reliant. FEBRUARY 2010 FEBRUARY 2013 350,000,000 Facebook Users 1,000,000,000 50,000,000 Tweets Per Day 500,000,000+ 5.1 billion US Text Messages Per Day 6.0 billion 250 billion Emails Sent Per Day 325 billio
Slide 98: A Rapidly Changing Technology Environment
A Rapidly Changing Technology Environment As consumers & technologies evolve, we have both an obligation and an enormous opportunity to change how consumers interact with our brands: Mobile Payments SMS Wait List Tableside Ordering Targeted eCommerce Websites Vary Prices, Deals Based on Users' Infor
Slide 99: Technology Vision & Strategy
Technology Vision & Strategy Our vision is focused on building relationships & engaging with consumers & employees digitally… Build relationships and loyalty by digitally MARKET engaging with guests and employees on SHARE their terms and leveraging insights to drive business performance • Connecting
Slide 100: Our Response to a Rapidly Changing Technology Environment
Our Response to a Rapidly Changing Technology Environment Given that it is impossible to predict how technology will evolve… Source: SteamFan 8
Slide 101: Our Response to a Rapidly Changing Technology Environment
Our Response to a Rapidly Changing Technology Environment …our strategy is to build a robust platform that allows us to respond to changes now & in the future From This… …To This Websites To Go Web Ahead Digital Menus Loyalty Next App Here 9
Slide 102: Our Response to a Rapidly Changing Technology Environment
Our Response to a Rapidly Changing Technology Environment We’ve made a few key strategic choices that inform our approach: Guest Data We will own & manage guest data as a strategic asset Scalable Platform We will build a scalable platform that can support & scale across our portfolio of brands Integ
Slide 103: Current Status of Technology Strategy Program
Current Status of Technology Strategy Program This journey that we’re on is similar to that of building a house Define the Vision Get Some Help Define Wants Create Blueprint Write down your dream Find experts that can Write down on paper Draft & architect the house wish list & rough help you bring y
Slide 104: Current Status of Technology Strategy Program
Current Status of Technology Strategy Program We our moving into the design phase of our program Define the Vision Get Some Help Define Wants Create Blueprint STRATEGY & VISION FIND PARTNERS REQUIREMENTS PHASE DESIGN PHASE FY13 Cost it Out Build the House Inspect the House Move into the House IMPL P
Slide 105: Technology Strategy Program: Phases
Technology Strategy Program: 3 Phases Below are our phases of our program PHASE 1 PHASE 2 PHASE 3 Building Our Selectively Creating Sustainable Foundation & Getting Innovating & Leading Competitive in the Game Advantage 13
Slide 106: Technology Strategy Program Journey
Technology Strategy Program Journey We will evolve in key areas such as the ones below: FROM TO Insight into guest Cross-brand Analytics Enhanced & enriched behavior on a insight into guests Superior Guest Data & views of guest activity in visit-by-visit, across entire Analytics Insight our restaura
Slide 107: What Does Success Look Like?
What Does Success Look Like? We believe this journey will allow us to achieve the following: • Rich digital experiences anytime, For Our anywhere, on any device Guests • Access to new experiences & opportunities with our brands • Tools, data, and insight we need to better anticipate guest needs acro
Slide 108: Financial Implications of Our Strategic Choices
Financial Implications of Our Strategic Choices DARDEN SECURIT Y ANALYST S MEETING | FEBRUARY 2013 Brad Richmond CFO
Slide 109: Agenda
Agenda • Where Our Business is Today FY13 • Our Near-Term Business Model Horizon • Preliminary Fiscal 2014 Variances FY14 to the Near-Term Model 1
Slide 110: Agenda
Agenda • Where Our Business is Today FY13 • Our Near-Term Business Model Horizon • Preliminary Fiscal 2014 Variances FY14 to the Near-Term Model 2
Slide 111: What Fiscal 2013 Looks Like
What Fiscal 2013 Looks Like... FY13 Total Annual Sales ≈ $8.5 billion Operating Cash Flow ≈ $950 million EBIT Margin ≈ 7.8%* Fully Diluted EPS $3.06 to $3.22* Yard House Acquisition Cost and Purchase Accounting Impacts: • Reduce EBIT Margin by approximately (30) bps • Reduce EPS by approximately ($0
Slide 112: Unit Growth is Driving Sales Growth
Unit Growth is Driving Sales Growth FY13 New Units % Growth Projected Projected Large Brands 85 4.5% Specialty Restaurant Group* 15 13.6% Total* 100 5.0% * Excludes Yard House 4
Slide 113: Same-Restaurant Results are Soft
While Same-Restaurant Results are Soft... FY13 Two Year Results are Solid Except at Olive Garden Same-Restaurant Sales Projected Two-Year Current Year Cumulative Olive Garden -2% to -3% -3% to -4% Red Lobster -2% to -3% +1.5% to +2.5% LongHorn ≈ +1% ≈ +6% Blended Large Brands -1.5% to -2.5% Flat Spe
Slide 114: Total Sales Growth Supported by Eddie V's and Yard House Acquisitions
Total Sales Growth is Also Supported FY13 by the Eddie V’s and Yard House Acquisitions 1st Half Q3 Q4 Full Year Actual Projected Projected Same-Restaurant Sales Darden Blended -1.4% ≈ -4.5%* -0.5% to +1.5% -1.5% to -2.5% Olive Garden -1.4% ≈ -4.0% Red Lobster -2.6% ≈ -7.0% LongHorn +1.5% ≈ -1.5% Uni
Slide 115: We Have a Strong, Balanced Portfolio
We Have a Strong, Balanced Portfolio FY13 Total Sales % Growth ($B) Projected Projected Olive Garden $3.7 2% Red Lobster 2.6 -2% LongHorn 1.2 10% Specialty Restaurant Group 1.0 60%* Darden $8.5 6% to 7%* * Includes Yard House; excluding the Yard House acquisition, projected growth is 18% for the Spe
Slide 116: Sales and Return Levels of Our Brands Remain Industry Leading
Despite Recent Challenges... Sales and Return FY13 Levels of Our Brands Remain Industry Leading... Trailing Four Quarters Ending Q2 FY13 Brand Average Restaurant Return Sales per Unit on Sales %* ($ Millions) Olive Garden 17+% $4.6 Red Lobster 14 - 17% $3.8 LongHorn 14 - 17% $3.0 The Capital Grille
Slide 117: Roadmap From EBIT to Restaurant Earnings
Roadmap From Earnings Before Interest FY13 and Taxes (EBIT) to Restaurant Earnings Trailing Four Quarters Ending Q2 FY13 Darden EBIT 8.8% General & Administrative Expenses* 5.5% Implied Lease Interest & Rent Averaging 1.7% New Unit Direct Opening Expense 0.4% Restaurant Earnings 16.4% *Selling Expen
Slide 118: Portfolio Generates Substantial and Growing Operating Cash Flow
Our Portfolio Generates Substantial FY13 and Growing Operating Cash Flow Equates to Pre-Tax Cash Flow of ≈$535,000 per restaurant $ Billion $1.00 $0.75 $0.50 $0.25 $0.00 03 04 05 06 07 08 09 10 11 12 13 Proj Continuing Operations 10
Slide 119: Portfolio Generates Substantial and Growing Operating Cash Flow
Our Portfolio Generates Substantial FY13 and Growing Operating Cash Flow Adjusting for Significant Variances $ Billion $1.00 $0.75 $0.50 $0.25 $0.00 03 04 05 06 07 08 09 10 11 12 13 Proj Continuing Operations Fiscal 2011 through Fiscal 2013 Operating Cash Flows reduced by Working Capital Usage relat
Slide 120: Composition and Use of Operating Cash Flow
Composition and Use of Operating Cash Flow FY13 ($ in Millions) FY11 FY12 FY13 Projected Earnings $479 $477 $402 to $425 Depreciation and Amortization 317 349 400 Working Capital 12 (191) 90 Other Cash Items 87 128 50 Operating Cash Flow $895 $762 $945 to $965 Capital Expenditures (548) (639) ($700
Slide 121: We Deploy Our Capital to Protect AND Grow Operating Cash Flow
We Deploy Our Capital to Protect AND Grow FY13 Operating Cash Flow... ($ in Millions) FY11 FY12 FY13 Projected Capital Expenditures $548 $639 $700 to $725 New Restaurants 274 341 395 Maintenance Capital 135 146 148 Remodeling 97 94 120 Relocations / Rebuilds 14 20 15 Technology 13 11 20 All Other 15
Slide 122: Committed to Returning Capital to Shareholders
... And Are Clearly Committed to Returning Capital to Shareholders $’s in Pre-Acquisition RARE YH Millions Recession Recovery Acquisition Acquisition $1,000 Acquisition Debt Reduction $750 $500 $250 $0 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Proj Dividends Share Repurchase Operating C
Slide 123: Committed to Returning Capital to Shareholders
... And Are Clearly Committed to Returning Capital to Shareholders $’s in Pre-Acquisition RARE YH Millions Recession Recovery Acquisition Acquisition $1,000 Acquisition Debt Reduction $750 $3.9 Billion Returned to Shareholders over 10 years $500 $250 $0 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 F
Slide 124: New Unit Growth Remains Value Creating
Even With Current Sales Challenges... FY13 New Unit Growth Remains Value Creating Average New Earnings as % of Hurdle # New Units Unit Sales Prior Year Current Year 79 Olive Garden $4.2 150%+ 140% 66 LongHorn $3.1 150% 110% 12 Seasons 52 $6.3 150%+ 145% 7 Capital Grille $6.8 100% 115% 5 Bahama Breez
Slide 125: Experiencing Some EBIT Margin Contraction
Experiencing Some EBIT Margin Contraction... FY13 Due to Sales De-Leveraging and Acquisition Costs FY12 EBIT (Q1/Q2) 7.1% Sales De-Leveraging -50 bps Yard House Acquisition Costs & Lower % Margins -40 bps Change in Fair Value of Benefit Programs -30 bps (Fully offset in lower income tax rate for the
Slide 126: Current Fiscal 2013 Earnings Outlook
Current Fiscal 2013 Earnings Outlook FY13 ($ and Shares in Millions, Except EPS) 1st Half Q3 Q4 Full Year Actual Projected Projected Earnings After Tax $145 $132 to $135 $125 to $144 $402 to $425 +/- Last Year -10% -20% to -18% -17% to -5% -16% to -11% EPS (Diluted net) $1.11 $1.00 to $1.02 $0.95 to
Slide 127: Current Performance is Affecting Key Debt Metrics
Current Performance is Affecting Key Debt Metrics FY13 FY13 FY11 FY12 Projected Total Adjusted Capital ($ Billions) $4.38 $4.83 $5.87 Funded Debt ($ Billions) $1.65 $2.13 $2.80 Lease Debt ($ Billions) $0.79 $0.85 $1.03 Adjusted Debt to Adj Capital* 56% 62% ≈65% Target 55% to 65% Adjusted Debt to EBI
Slide 128: Capital Deployment Priorities
Capital Deployment Priorities FY13 Ensure Base Business Vitality – Ongoing facilities maintenance – Remodeling – Other initiatives to drive same-restaurant traffic growth Protect Our Financial Flexibility – Maintain an investment grade credit profile to ensure efficient access to capital Maint
Slide 129: Agenda
Agenda • Where Our Business is Today FY13 • Our Near-Term Business Model Horizon • Preliminary Fiscal 2014 Variances FY14 to the Near-Term Model 21
Slide 130: Near-Term Large Brand Sales Growth
Near-Term Large Brand Sales Growth Reflects Current Trends and Our Strategic Choices Horizon Olive Garden, Red Lobster, LongHorn Same Restaurant Sales +1% to +2% annually – +1% Check growth as modest pricing partially offsets downward pressure from menu mix due to core menu, merchandising and prom
Slide 131: Near-Term Specialty Restaurant Group Sales Growth is More Robust
Near-Term Specialty Restaurant Group Sales Growth is More Robust Horizon Capital Grille, Yard House, Seasons 52, Bahama Breeze, Eddie V’s Same Restaurant Sales +2% to +4% annually Unit Growth +15% annually (25 to 30 units) – Seasons 52 7-10 – Yard House 7-10 – Capital Grille 3-6 – Bahama Breeze
Slide 132: Near-Term Overall Sales Growth Expected to be 5% to 6%
Near-Term Overall Sales Growth is Expected to be 5% to 6% Horizon Large Brands +3.5% to +4.5% (60% to 65% of Total Growth) SRG Brands +17% to +19% (35% to 40% of Total Growth) Combined Growth +5% to +6% 24
Slide 133: Specialty Restaurant Group's Contribution to Sales Growth
Specialty Restaurant Group’s Contribution to Darden’s Overall Sales Growth is Increasingly Significant Horizon In two years, SRG brands will deliver 40% of total Darden sales growth and represent ≈ 15% of total Darden sales Two years ago, SRG brands delivered 21% of total Darden sales growth and
Slide 134: Yard House Integration is On Track
Yard House Integration is On Track Horizon Tracking to annual run rate cost synergies of $12 to $15 million... which is 3% to 4% of sales on 40 restaurants – Expect to achieve 60% to 70% of run rate cost synergies by end of Fiscal 2014 – Supply Chain & Support Services account for more than 60% of
Slide 135: Near-Term Capital Spending Expected to be Appreciably Lower
Near-Term Capital Spending is Expected to be Appreciably Lower Horizon ($ in Millions) FY13 FY14 Projected Outlook Capital Expenditures $700 to $725 $600 to $650 New Restaurants 395 340 to 360 Maintenance Capital 148 140 to 150 Remodeling 120 90 to 95 Relocation / Rebuild 15 15 to 20 Technology 20 1
Slide 136: Near-Term Continues to Include Transformational Cost Savings
Near-Term Continues to Include Some Transformational Cost Savings Horizon ($ in Millions) Total Annual Savings $170 to $195 $120 to $130 $113 $51 FY11 FY12 FY13 Ultimate Run Rate Supply Chain Automation $21 $36 $41 to $44 $60 to $65 Facilities Centralization $4 $8 $9 to $10 $15 to $20 Sustainable Op
Slide 137: Near-Term Includes Expanding International Franchising
Near-Term Includes Expanding International Franchising Horizon Started in Middle East and Latin America based on the success of other American full-service brands in those regions Four agreements with... – Americana Group to develop 60 restaurants in the Middle East • 5 units open, 3 more to ope
Slide 138: Near-Term Includes Expanding Consumer Products Business
Near-Term Includes Expanding Consumer Products Business Horizon Five products at Sam’s Clubs: – Olive Garden: Italian Salad Dressing, Seasoned Croutons, Extra-Virgin Olive Oil, Four Italian Cheese Blend – Red Lobster: Cheddar Bay Biscuit Mix Annualized gross retail sales are above $40 million an
Slide 139: Near-Term Includes Synergy Restaurants
Near-Term Includes Synergy Restaurants Horizon Synergy Restaurants have separate Olive Garden and Red Lobster dining rooms but shared kitchens, restrooms and management teams Five open, with another planned for the 4th quarter Exceeding sales hurdle and achieving earnings hurdle Decision whe
Slide 140: More Modest EBIT Margin Expansion Near-Term
More Modest EBIT Margin Expansion Near-Term Given Our Strategic Choices Horizon EBIT Margin expands +10 to +30 bps a year, driven by... New Unit Growth Leverage +15 to +20 bps Effect of Same-Restaurant Sales Growth that Reflects Traffic Growth but Tempered Check Growth -20 to -30 bps Transformationa
Slide 141: Sales Growth and Margin Expansion Support Strong Operating Cash Flow
Combination of 5% to 6% Sales Growth and Modest EBIT Margin Expansion Supports Strong Operating Cash Flow Horizon Annual Operating Cash Flow expands +$40 to +$60 million a year, driven by... New Unit Growth of 4% +$40 to +$50 million Effect of Same-Restaurant Sales Growth that Reflects Traffic Growt
Slide 142: Our Near-Term Model
Our Near-Term Model Horizon Total sales growth of +5% to +6%... – +1% to +2% same-restaurant sales growth – +4% new unit sales growth – With increasing contribution from the Specialty Restaurant Group Driving +10 to +30 bps of EBIT margin expansion... And diluted net EPS growth of +5% to +10%.
Slide 143: Our Near-Term Model
Our Near-Term Model Horizon Total sales growth of +5% to +6%... – +1% to +2% same-restaurant sales growth – +4% new unit sales growth – With increasing contribution from the Specialty Restaurant Group Driving +10 to +30 bps of EBIT margin expansion... And diluted net EPS growth of +5% to +10%.
Slide 144: Agenda
Agenda • Where Our Business is Today FY13 • Our Near-Term Business Model Horizon • Preliminary Fiscal 2014 Variances FY14 to the Near-Term Model 36
Slide 145: Sales Growth Somewhat Higher Than Near-Term Model
Sales Growth is Somewhat Higher Than Our Near-Term Model... Due Largely to FY14 Yard House Acquisition Full Year Projected Same-Restaurant Sales +1.5% to +2.5% Blended Large Brands +1.0% to +2.0% Blended SRG +2.5% to +3.5% Unit/Operating Weeks Growth +3.5% to +4.0% Total Sales Growth (Business Model
Slide 146: Expect Normalized Cost Pressure and Modest Pricing / Check Growth
Expect Normalized Cost Pressure and Modest Pricing / Check Growth FY14 ($ in Millions) FY13 FY14 FY10 FY11 FY12 Projected Outlook $ % $ % $ % $ % % Overall Inflation ($4) 0.1% ($123) 1.9% ($243) 3.6% ($126) 1.8% 2.0% - 2.5% Food & Beverage $71 -3.3% ($42) 1.9% ($142) 6.1% ($15) 0.6% 1.5% - 2.5% Util
Slide 147: Investments for Future Success at Levels in Near-Term Model
Investments for Future Success are at Levels Anticipated in Our Near-Term Model FY14 ($ in Millions) FY10 FY11 FY12 FY13 FY14 P&L Expense Operations Organization Structure 4 Other Growth Initiatives 5 5 IT Platform 2 7 13 Lobster Aquaculture 2 3 3 9 10 Total $2 $3 $5 $25 $28 Other Cash Outflows IT P
Slide 148: EBIT Margin Dynamics for Fiscal 2014
EBIT Margin Dynamics for Fiscal 2014 Before Important Variances FY14 +15 to +20 -50 to -60 bps bps EBIT Margin Growth +30 to +40 bps +25 to +30 -10 to -15 bps bps +5 to +10 bps +10 bps to +30 bps 0% Same-Rest New Rest Cost Cost Growth Int’l Near-Term Guest Count Growth Inflation Net Savings Investme
Slide 149: Fiscal 2014 Variances to Our Near-Term Business Model
Fiscal 2014 Variances to Our Near-Term Business Model FY14 Effect on Earnings Per Share Resetting Incentives to Target ($0.30) to ($0.34) Healthcare Transition Costs ($0.05) to ($0.06) (January through May) Lower Yard House Acquisition Costs +$0.08 ($0.09 in FY13 vs $0.01 in FY14) 41
Slide 150: EBIT Margin Dynamics Including the Variances
EBIT Margin Dynamics Including the Variances for Fiscal 2014 FY14 +15 to +25 -75 to -85 bps bps +10 bps to +30 bps 0% EBIT Margin Growth -5 to -15 bps -40 bps to -60 bps Near-Term Lower Resetting Healthcare FY14 Model Yard Incentives Transition Expected EBIT House Acq to Target Costs EBIT Margin Mar
Slide 151: EPS Dynamics for Fiscal 2014 Before the Variances
EPS Dynamics for Fiscal 2014 Before the Variances FY14 +6% to +7% -7% to -8% Earnings Per Share Growth +1% to +5% +2% to +3% -1% to -2% +1.5% to +5% to +6% +10% 0% Same-Rest New Rest Cost Cost Growth Int’l Near-Term Guest Count Growth Inflation Net Savings Investments Franchising Model Growth of Pri
Slide 152: EPS Dynamics for Fiscal 2014 Including the Variances
EPS Dynamics for Fiscal 2014 Including the Variances FY14 Earnings Per Share Growth +2.5% -9.5% to -10.5% +5% to +10% -1% to -2% +3% 0% to -3% Near-Term Lower Resetting Healthcare FY14 Model Yard Incentives to Transition Expected EPS House Acq Target Costs EPS Growth Costs Growth 44
Slide 153: In Summary
In Summary... While Sales Pressure Persists... Especially at Large Nationally Advertised Brands... Margins and Cash Flows Are Resilient Tempering Average Check and New Unit Growth... And Investing Behind Other Strategic Choices... Still Leaves Us with a Solid Near-Term Business Model Even with