Multi-concept, full-service restaurant operator
Darden Restaurants Inc.
) recently announced that it has inked a development agreement
with renowned restaurant operator, International Meal Company
(IMC) to enter four Latin American countries − Brazil, Colombia,
the Dominican Republic and Panama.
IMC will develop and operate 57 restaurants under three of
Darden's brands -- Red Lobster, Olive Garden and LongHorn
Steakhouse -- in these countries. The terms of the deal were not
IMC is a Brazil-based renowned multi-brand restaurant operator
with more than 350 company-owned units in South and Central
America and the Caribbean. It manages the operations of the
Frango Assado and Viena flagship brands, which when put together
have been around for almost 100 years and are recognized by their
patrons for their quality of food and services.
Given its familiarity with local food habits a strong presence
in the same industry, we believe, IMC remains a strategic fit for
Darden's expansion plan.
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Last month, Darden expanded its partnership agreement with
Restaurant Operators to open its Red Lobster brand of restaurants
in Puerto Rico. Darden presently has its LongHorn brand in Puerto
Rico and is also in agreement to launch the Olive Garden brand in
Notably, last year, Darden joined forces with a Mexican casual
dining company, CMR, to enter the Mexican market. The above
mentioned deals affirm management's intent to make Latin America
one of the prime markets for Darden's international expansion.
Darden sees tremendous growth potential in this market where it
finds takers for American dining brands.
Further, the region's middle-income population is also rising,
which could materially benefit the country's food and beverage
market. The company seeks to capitalize on this opportunity. We
believe that the company is trying to spread its presence beyond
the U.S. more aggressively following cut-throat competition in
the rather saturated domestic casual dining market.
Darden currently retains a Zacks Rank #3 (Hold). Restaurant
companies that appear to be better positioned at current levels
Red Robin Gourmet Burgers Inc.
) with a Zacks Rank #1 (Strong Buy) and
AFC Enterprises Inc.
Burger King Worldwide Inc.
) with a Zacks Rank #2 (Buy).