A very large brand often has trouble developing new concepts because a growth path that has a meaningful impact on the bottom line seems impossible.
For example, McDonald’s held a stake in Chipotle but sold it in 2006.
“By 2005, McDonald’s decided to refocus on its core brands. Company leadership wanted to streamline operations and reinvest all resources into strengthening McDonald’s image. Owning other brands, including Chipotle, Boston Market and Donatos Pizza, was seen as a distraction,” Flavor 365 said.
Exiting two of the three brands turned out to be a smart move, but selling Chipotle (a decision confirmed in a 2006 McDonald’s press release) was a major strategic misstep.
Large restaurant companies often struggle to scale smaller concepts in a way that has a meaningful impact on overall revenue. A similar dynamic is now playing out at Darden Restaurants, which has decided to shutter its Bahamas Breeze brand, calling it a smaller concept in the company’s portfolio, according to a Darden press release.
Earlier this year, Darden said in a press release that “the Bahamas Breeze brand and its 28 locations are no longer a strategic focus and will consider strategic alternatives, including the possible sale of the brand or the conversion of restaurants to other Darden brands.”
Now, the restaurant operator that owns Olive Garden (with more than 900 restaurants) and Longhorn Steakhouse (with 591 restaurants) has decided to close 14 restaurants and convert the remaining 14 restaurants to another Darden brand, ending the Bahama Breeze brand.
“The company does not expect these actions to have a material impact on its financial results,” it shared.
Victor Fernandez, vice president of insights and knowledge at Black Box, sees chains with declining sales as a challenge.
“Cumulative inflation has caused costs to rise by nearly a third since 2019, making it virtually impossible for a unit to remain viable in such an environment after losing 30% or more of peak sales,” he said in a statement to Nation’s Restaraunt News.
Darden’s decision fits an ongoing trend among large restaurant operators.
Simply Wall St. reported: “Closing the Bahama Breeze restaurant and repurposing half the restaurants looks like Darden is doubling down on brands it believes will earn clearer returns at each restaurant, similar to peers like Brinker International and Bloomin’ Brands focusing capital on core brands like Chili’s and Outback.”
One of the last restaurants to close will be Bahama Breeze in Kissimmee, Florida, where I have eaten occasionally over the years. On a visit earlier this year, the restaurant was busy and there was a wait of about 20 minutes, which was common on my previous trips to that location.
