Olive Garden Italian Restaurant sign showing the company logo, Spokane Valley, Washington, owned by Darden Restaurants Incorporated, Florida.
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Darden Restaurants on Thursday, mixed reports were reported quarterly results as Olive Garden’s same-store sales declined for the second quarter in a row.
The company faced a “continuously weaker consumer environment” as well as increased markdowns and marketing pressure from competitors, CEO Rick Cardenas said during the company’s conference call.
For fiscal year 2025, Darden projects same-store sales to grow just 1% to 2%.
The company’s shares increased by less than 1% in the morning trading.
Here’s the company’s report compared to Wall Street expectations for the quarter ended May 26, based on a survey of analysts conducted by LSEG:
- Earnings per share: Adjusted $2.65 vs. $2.61 expected
- Revenue: $2.96 billion vs. $2.97 billion expected
Darden’s overall same-store sales were flat in the quarter, helped by weaker-than-expected sales at Olive Garden and its gourmet restaurants. Despite this, executives emphasized that their chains were doing better than the broader casual-dining segment.
“We will not do anything to buy sales, even with the increased discounts applied by our competitors… We are focused on profitable sales growth,” Cardenas said.
He added that consumers are concerned about inflation and are increasingly concerned about the situation on the labor market. Still, guests at Olive Garden and LongHorn Steakhouse restaurants are more willing to spend on steep entrees and alcoholic beverages than they have been in recent quarters, executives say.
Olive Garden’s same-store sales fell 1.5%, despite a 1% enhance in menu prices compared to the year-ago period. Analysts expected the Italian-inspired chain to see consistent same-store sales growth, according to StreetAccount estimates. Olive Garden’s same-store sales fell 1.8% last quarter as low-income customers dropped out.
For Darden’s fine dining restaurants, which include The Capital Grille and Eddie V’s, same-store sales declined 2.6% in the quarter. The division now includes Chris Ruth, but same-store performance will not be included in the category total until the second quarter of fiscal 2025.
LongHorn Steakhouse, which overtook Olive Garden as the gem in Darden’s portfolio, was the only segment to see same-store sales growth. The chain’s same-store sales increased 4% in the quarter.
Darden reported fiscal fourth-quarter net income of $308.1 million, or $2.57 per share, compared with $315.1 million, or $2.58 per share, a year earlier.
Excluding costs related to the Ruth’s Chris Steak House acquisition and other items, the company earned $2.65 per share.
Net sales increased 6.8% to $2.96 billion, driven by the purchase of Ruth’s Chris and 37 other net recent locations.
For fiscal year 2025, Darden forecast earnings per share from continuing operations of $9.40 to $9.60, in line with Wall Street expectations of $9.55 per share. The company also expects net sales of $11.8 billion to $11.9 billion, which is at the lower end of analysts’ expectations of $11.94 billion.
For fiscal year 2025, Darden projects overall inflation to be 3% and same-store sales to grow 1% to 2%. Chief Financial Officer Raj Vennam said the company expects traffic to improve as the year progresses. According to Vennam, Darden expects price increases of about 2% to 3%, reflecting overall inflation.
“We believe we have done a lot of work to keep prices low, and we intend to continue to do so,” he said.
The company plans to spend between $550 million and $600 million on investments.
