Darden Restaurants Stock Down 35 Percent

Sales continue to fall at the company's top restaurants, Red Lobster and Olive Garden.
3:30 | 06/20/14

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Transcript for Darden Restaurants Stock Down 35 Percent
CN company -- -- -- today for this Friday June 20 this. Stock today's Wall -- increasing reservations. Over the Darden restaurant -- among the -- -- operates. Olive garden and -- soon to be sold red lobster. No matter what the -- folks seem to be losing their appetite for what Darden asked offers -- ready to dig in for the details my dad's foot finance joining us on this -- that might a lot of it might not know Darden Restaurants the company. Obviously very and they with red lobster the olive garden so what is happening to -- Dart has been struggling both I'll both olive garden and red lobster are very mature change they're not really growing anymore. They're kind of saturated the on the landscape out there and they've had -- a hard time getting customers to not only come in. But also pay -- had to rely analog discounting and it's been one of the weaker restaurant stocks in the market because of that so basically all these headwinds. I have been facing a make you -- some other -- capital grill the high end. So -- steakhouse chain as well as longhorn steakhouse and some others but it really is olive garden and red -- shouldn't drive the business and both of them have been struggling. All right take look at the company's -- -- stock -- just to see how investors have been reacting to those. I mean a precipitous drop right there all because of those earnings reports coming out there so what exactly does -- -- to do -- to kind of regain the confidence of those investors. It's been actually very complicated story because Darden management has sort of lost a lot of it's from the legitimacy with. People on Wall Street because they've been very slow to respond -- even admit that there is a fundamental problem with their chains. They really spend a lot more on corporate overhead and other chains -- -- profit margins are not what Walsh who would like to see them. And they've been under assault for a lot of these reasons from an activist investors who basically said some of them have said break up the company's among them have said cut caused some of them said. You know. Even spin off the real estate of the restaurants and you know to a separate companies -- -- all these ideas. -- can create value and they've been. Pretty much resisting all of them and so right now it's a matter of can they turn. Olive garden around in terms of the fundamental performance. Well you know when I ask you about that went the other we -- -- briefly about red lobster Reid's oldest old and gay affirm what two point one billion dollars. Let's deal with us on the line as -- side. -- that deal is still supposed to happen and olive garden is desperate to get that deal done and here's why. Because it was in response to those activist investors. That olive gardens and OK what can we do to try to seem like where we have a sense of urgency here so instead of breaking up the company in two. And basically me either red lobster verses olive garden or just those two change and then spin off the smaller faster growing chains. They said we'll just sell red lobster get a bunch of cash for it. And then -- use the cash to buybacks of stock and fund the other businesses so they are supposed to still close that deal perhaps next month. Iowa -- -- that -- planet as well. Obviously speaking of that might what is apparently they -- the ballot they seafood lovers -- you guys doing this weekend. You know what -- I think of that -- choices here redeem more red lobster people when you have a name like -- toll not supposed to go to olive garden. This is literature. Yeah I think I think you're not invited back to Italy and there's definitely affect my -- talking not about a spike -- have a great week answer and I think you can you go watching story stocks with abcnews.com for latest headlines Dan Butler.

This transcript has been automatically generated and may not be 100% accurate.

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