Darden Restaurants may sell what's left of its Bahama Breeze Island Grille chain as consumers tighten their wallets on discretionary spending.
The Orlando, Florida-based company — parent of Olive Garden, LongHorn Steakhouse, Ruth's Chris Steak House, The Capital Grille, Chuy's and Yard House — said it's weighing options for its Bahama Breeze brand specializing in Caribbean-inspired food and tropical drinks.
In reporting fiscal fourth-quarter earnings, Darden CEO Rick Cardenas said the company had previously shuttered 15 underperforming Bahama Breeze restaurants, leaving 28. The chain no longer fits Darden's portfolio, Cardenas said.
The move comes as traditional retailers and restaurant chains alike, facing a challenging economy, have been more carefully scrutinizing their physical footprints to weed out weak locations or even convert them to different banners.
Cardenas told Wall Street analysts that "this brand and these restaurants have the potential to benefit from a new owner," adding that, along with a potential sale, it is considering "converting restaurants to other Darden brands."
Bahama Breeze posted $229 million in annual sales in fiscal 2025, with average yearly sales for its restaurants at $6.2 million, excluding locations that closed during fiscal 2025, according to Darden.
As some eateries close, Darden plans more openings
In the past year or so, a number of restaurant chains have filed for Chapter 11, including TGI Fridays, with some chains liquidating. This past February, Red Robin said it expected to shut roughly 70 underperforming restaurants. And just this week, home decor chain Kirkland's said it's closing about 20 locations and also converting dozens of its namesake stores to Bed Bath & Beyond and Overstock.
By contrast, Darden said it plans to open 60 to 65 new restaurants this year, according to Chief Financial Officer Raj Vennam. There will likely be 40 to 45 new Olive Garden and LongHorn Steakhouse locations, "mid-single digits" new sites for Yard House with "all the other brands contributing probably another 15 or so," he said.
Agrees to franchise deal to expand in Canada
Darden also signed a definitive agreement to sell the eight current Olive Garden locations in Canada to Recipe Unlimited, the largest full-service restaurant operator in Canada, and is on track to close that deal soon, Cardenas said.
"These eight restaurants will become franchised, and upon close, [Olive] Garden and Recipe Unlimited will enter into an area development agreement to open 30 more Olive Gardens over the next 10 years," he said. "Their expertise in the Canadian market will help Olive Garden better operate locally and accelerate the brand’s ability to grow throughout the country."
In the fourth quarter, Darden's total sales rose 10.6% to $3.3 billion. Consolidated same-restaurant sales for all of Darden increased 4.6%, and were up 6.9% for Olive Garden and 6.7% for LongHorn Steakhouse.