Simply, Darden Restaurants Inc. (NYSE: DRI) will be a restaurant sector survivor, following the sector's restructuring amid the 'frugal consumer' trend, and that's why I'm Reiterating my Buy rating for DRI, first recommended on June 25, 2009 at a price of $32.78.

Darden's stock has meandered since the June, and its slight downtrend, combined with difficultly remaining above the key 50-day moving average, in normal times would have prompted a re-evaluation of the June Buy rating.

The U.S. restaurant sector certainly has taken it on the chin as a result of the recession, which has shifted Americans into "frugal consumer" mode.

In general, analysts are understandably bearish on the sector, and so am I, but there are exceptions, and Darden Restaurants (NYSE: DRI) is one. Darden's shares have pulled-back $10 recently to roughly $33 and that sets up a decent entry point. Here's why:

Restaurateur, Darden Restaurants (NYSE: DRI) announced that fourth-quarter net income checked in at 87 cents per share, up from 71 cents per share a year ago. The company also reported that sales increased to $1.97 billion from $1.82 billion. The eatery operator's sales were boosted by an extra week of business in the most recent quarter.

In a statement, the company's CEO Clarence Otis noted that the company is hoping for an improvement in overall restaurant industry conditions and sales trends, but the current challenging environment is likely to continue through all of fiscal 2010. Otis stated that "there are reasons to believe there might be some favorable changes. However, given the current level of uncertainty, we think it's prudent to be cautious in developing our plans for the year."

On Tuesday, both Kroger Co. (NYSE: KR), the nation's largest traditional grocer, and casual dining chain operator Darden Restaurants Inc. (NYSE: DRI) reported better-than-expected profit increases.

Cincinnati-based Kroger Co. said first-quarter profits rose 15% from the year-ago quarter to $386 million, or 58 cents per share, due in part to discounts on food, gas, and drugs that drew in budget-strapped consumers. For the quarter ended May 24, revenue climbed 12% to $23.11 billion.

Analysts polled by Thomson Financial had expected a earnings of 55 cents a share on revenue of $22.32 billion.

Kroger also reported that same-store sales rose 5.8%, excluding fuel, and 9.2% including fuel sales.

The company offered fiscal-year earnings guidance of $1.85 to $1.90 per share, compared to the analysts' forecast of $1.90 per share.

Kroger shares rose $1.82 Tuesday to $27.82, then fell in after-hours trading. The shares have risen 10.2% in the past three months.

The past six weeks of volatility and downward pressure on stocks has created many excellent buying opportunities. Darden Restaurants, Inc. (NYSE: DRI) has seen its share price drop and, having followed the company's performance for years, I can say that it is unwarranted.

I love its chains, Red Lobster and Olive Garden, both of which have shown consistent, long-term growth. I respect General Mills Inc. (NYSE: GIS) which gave birth to Darden and which eventually spun-off the company. I worked for General Mills from 1990 to 1992 and recall the careful strategic development and planning process that went into its positioning and expanding the family-style casual dining restaurant concept.

I also recall the emphasis and cultural imperative within General Mills --- fresh food and quality always.

Darden Restaurants Inc (NYSE: DRI), the casual dining restaurant chain that owns and operates the Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones Barbeque & Grill, and Seasons 52 restaurant concepts, reported disappointing earnings last night after market close -- missing the consensus on both EPS and revenues.

As analysts expected the company to trade mostly in-line with their expectations, the terrible earnings report came as a negative surprise coming from the stock that had been upgraded nine times over the course of the past year. The company traded down 3.39% in pre-market trading, after trading near lifetime highs prior to the release.

Several analysts feel that Darden's reported $55.1 million loss for Q4 is reflective of a charge-off for selling 65 Smokey Bones restaurants over the past quarter; the company put another 73 Smokey Bones' restaurants up for sale in the quarter.

Following the decision to sell many of the Smokey Bones restaurants, CEO Clarence Otis said that the company would remain optimistic about making a "major acquisition." Let's face it, with their earnings, right now they need it.

Darden Restaurants (NYSE: DRI), owners of Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones, posted 3Q 2006 earnings recently. In its press release, Darden Restaurants management claims record diluted net earnings of 0.72 per share, a 7% increase over 3Q 2005. Net sales increased 4.7% to $1.54 billion.

Sounds good so far. But Darden bought back 4.3 million of its own shares this quarter. This dilutes the number of shares outstanding so the 7% increase in earnings per share is actually closer to 1.5%. Total earnings per share budged up a little bit to $106.4 million for the quarter.

Darden's press release trumpets the fact that Olive Garden recorded its 50th consecutive quarter of same-restaurant sales growth. This quarter sales were up 1%, just barely enough to keep the streak alive. 3Q revenues were up to $722.4 million, in part due to a net increase of 28 new Olive Garden locations.

Same-restaurant 3Q sales were up 4.6% at Red Lobster, with overall sales up to $684.2 million. 3Q sales were down less than 1% at Bahama Breeze, to $38 million. Likewise, 3Q sales were down 1.5% to $87.2 million at Smokey Bones.

Darden management forecasts very modest sales growth of 2-3% for FY 2007, while opening 35-40 new locations throughout the year.