US restaurant chain Darden Restaurants warned that its stores sales are likely to drop in its third financial quarter due to difficult macro-economic conditions.
The group, which owns the Red Lobster restaurants, named higher payroll taxes and gasoline prices as negative factors for its results.
Higher taxes has led to lower purchasing power, it said.
“While it’s hard to quantify, we think that some of our guests may have visited our restaurants much less in January and February as they saw a lower amount of take home pay. There are now more than 50% of American families with average income below $60K… the highest percentage ever,” the group said in a statement.
“With the costs of essential expenses going up, these guests are likely to visit restaurants less frequently, so we need to compete even more aggressively for their business.”
Weather has also taken its toll, said the company, as have strong price promotions from competitors.
Third-quarter earnings from continuing operations are projected in the range of $1.00 to $1.02 per share, said RTT News. Analysts expect the company to earn $1.14 for the quarter.