Darden cuts ties with Bahama Breeze brand
Darden Restaurants has decided to cease support for its Caribbean-themed brand, Bahama Breeze after reviewing strategic priorities. CEO Ricardo Cardenas confirmed the company closed 15 Bahama Breeze restaurants in May. The decision leaves Darden with 28 locations still in operation under the Bahama Breeze banner.
Cardenas said the company no longer sees the brand as a strategic priority. He told investors during the fourth-quarter earnings call that Darden believes the restaurants may benefit under a different owner. The company will consider selling the brand or converting restaurants into other Darden concepts.
Figure 1: Darden decides to cut loose from Bahama Breeze
Darden evaluates strategic alternatives
Darden said it is currently reviewing strategic alternatives for the brand. These include a possible sale or site conversions. Cardenas said the company does not expect the alternatives to impact financials, excluding any unknown one-time costs.
Cardenas added that Darden uses a strict set of criteria to assess its portfolio. Bahama Breeze no longer meets those requirements. The decision aligns with the company’s strategy to support brands with stronger growth prospects.
Figure 2: Darden Restaurants
CEO outlines decision-making process
Cardenas said the brand did not justify further investment by Darden. He added the company will not direct more resources towards Bahama Breeze.
He said, “We were not going to be putting a lot of investment into Bahama Breeze. And so to give those team members and those managers growth opportunities, it’s better for them to be under a different ownership.”
Cardenas said Darden believes another owner could unlock more potential from the chain. He added the chain no longer fits the company’s long-term growth plans.
Darden built Bahama Breeze in the 1990s
Darden created Bahama Breeze during the 1990s to offer Caribbean-inspired meals and tropical beverages. The chain remains a relatively small player within Darden’s broad restaurant portfolio.
The Florida-based company owns several larger and better-performing brands. These include Olive Garden, LongHorn Steakhouse, Yard House, Cheddar’s Scratch Kitchen and The Capital Grille.
Other brands under Darden include Ruth’s Chris Steak House, Chuy’s, Seasons 52 and Eddie V’s. These chains account for a larger portion of the company’s revenues and expansion plans.
Figure 3: Bahama Breeze will either be sold or closed down
Darden expands Olive Garden globally
While reducing its footprint with Bahama Breeze, Darden continues growing Olive Garden globally. The company recently agreed to sell eight Olive Garden locations in Canada. Recipe Unlimited, Canada’s largest full-service operator, will take over those restaurants as a franchisee.
Cardenas said the deal also includes plans for 30 new Olive Garden locations in Canada over the next decade. Darden is also expanding Olive Garden into new international markets. It signed agreements for 40 restaurants each in India and Spain.
Darden also finalised an agreement with an Asian franchise partner for Ruth’s Chris. This agreement includes six new Capital Grille locations across Asia.
Figure 4: Darden expands Olive Garden globally
Strong earnings support brand shift
Darden reported $3.27 billion in revenue for the final quarter of fiscal 2025. This represents a 10.6% increase from the same period last year. Net earnings reached $303.8 million, reflecting steady performance across the larger brands.
Cardenas said, “Our adherence to our winning strategy, anchored in our four competitive advantages and being brilliant with the basics, led to a successful year.” He added, “Our strategy remains the right one for the company, and we will continue to execute it to drive growth and long-term shareholder value.”
Forecast shows confidence in core brands
For fiscal 2026, Darden expects sales growth between 7% and 8%. The company’s market capitalisation sat at $26.06 billion on Friday afternoon.
Cardenas made it clear that investment will continue in brands that align with growth objectives. Bahama Breeze did not meet that benchmark.
Smaller brands face challenges in large portfolios
It’s decision follows a broader trend across large restaurant groups. Major companies often struggle to grow smaller niche brands that do not scale easily.
Other restaurant giants, including McDonald’s, have taken similar steps. McDonald’s exited its investment in Chipotle before its major expansion. It also shut down its CosMc’s beverage concept to focus on core menu integration.
These decisions reflect a common strategy in the industry. Large operators allocate resources toward brands that deliver significant impact on financials. Smaller chains often receive less investment and may be sold or phased out.
Conclusion
It’s decision to divest Bahama Breeze shows its focus on scaling proven brands. Olive Garden’s global expansion and solid earnings underline this strategy. The company aims to continue growth through disciplined portfolio management and international development.
