Stocks: Who's Ramping Up Revenues in a Recession?

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Satisfying Diner and Investor Appetites

Then there are the rare companies that are able to boost sales despite being in the center of industries hit hard by the recession. Casual-dining restaurants have had a rough time as U.S. consumers cut spending on such luxuries as eating out.

Darden Restaurants (DRI), however, reported on June 23 that its fiscal fourth-quarter sales were up 8.2%, to $1.98 billion. The company's two main brands are Red Lobster and Olive Garden.

Darden did see same-restaurant sales at Olive Garden and Red Lobster slide 0.6% last quarter, and traffic dipped as well. But, according to the Knapp-Track measure, which monitors restaurant sales and traffic trends nationwide, U.S. same-restaurant sales for other similar chains fell 6.7% in the same time period.

"They've held up a lot better than casual-dining competitors," says Morningstar (MORN) analyst R.J. Hottovy.

Also, thanks to the opening of new restaurants, Olive Garden boosted total sales 11%, while Red Lobster saw total sales rise 6.8%.

Chris Armbruster, a senior research analyst at Al Frank Asset Management, attributes Darden's success to good management that has changed its menu with the times, while keeping up advertising. Darden's chains have pulled customers from more expensive rivals, while holding on to the company's "core customers," says Armburster, whose firm owns shares.

As the operator of almost 1,800 restaurants, Darden's size gives it advantages, Hottovy says. In advertising, "they really have the resources to keep their brands out there and extremely relevant," he says, while the company's bargaining power allows it to get raw materials at lower cost.

Firms that boost revenues in a recession don't always make great investments. Often, their reputation as sales growers is already built into their share price. Still, the very ability to report rising revenues makes them stand out in a bleak economic landscape.

Steverman is a reporter for BusinessWeek's Investing channel.

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