The multi-concept, full-service restaurant operator
Darden Restaurants Inc.
) expanded its partnership agreement with Restaurant Operators to
open its Red Lobster brand of restaurants in Puerto Rico.
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Last year, Restaurant Operators inked a deal with Darden to
develop and operate eight Olive Garden restaurants and a minimum
of three additional LongHorn restaurants in Puerto Rico over the
next seven years.
In fact, Restaurant Operators' association with LongHorn
Steakhouse dates back to the days before Darden acquired
LongHorn's parent company Rare Hospitality in August 2007.
Restaurant Operators presently operates five LongHorn units in
Per the recently adjusted Area Development Agreement, Restaurant
Operators will set up a minimum of eight Olive Garden, three Red
Lobster and three additional LongHorn Steakhouse restaurants in
Puerto Rico by 2017.
We believe the latest alliance reflects the restaurateur's intent
to make Puerto Rico one of the prime markets for Caribbean
expansion, considering the under-penetration of quick-service
restaurants in the region in comparison to North America.
Moreover, the region is also gaining popularity as a tourist
With its easy accessibility and focus on eco-tourism, Puerto Rico
enjoys competitive advantage over any other Caribbean island. As
a result, Puerto Rico witnesses a substantial increase in overall
tourist traffic and the region's food and beverage market remains
Last year, Darden joined forces with Mexican casual dining
company, CMR to enter the Mexican market last year. We believe
that the company is trying to spread its presence beyond U.S.
more aggressively following cut-throat competition in the rather
saturated domestic casual dining market.
Darden currently retains a Zacks Rank #5 (Strong Sell). Instead,
restaurant companies that warrant a look include
Krispy Kreme Doughnuts Inc.
) carrying a Zacks Rank #1 (Strong Buy) and
AFC Enterprises Inc.
Bob Evans Farms Inc.
) both carrying Zacks Rank #2 (Buy).