Darden Restaurants reported mixed quarterly results on Thursday, with Olive Garden’s same-store sales declining for the second consecutive quarter. CEO Rick Cardenas attributed the challenges to a “consistently weaker consumer environment” and increased discounting and marketing efforts by competitors.
For fiscal 2025, Darden forecasts same-store sales growth of just 1% to 2%. Despite these challenges, the company’s shares rose slightly in morning trading.
For the quarter ending May 26, Darden’s earnings per share were $2.65 adjusted, slightly above Wall Street’s expectation of $2.61. Revenue was $2.96 billion, just shy of the expected $2.97 billion. Overall same-store sales were flat, impacted by weaker-than-expected sales at Olive Garden and the company’s fine-dining restaurants. Nevertheless, executives highlighted that their chains are outperforming the broader casual-dining segment.
Cardenas stated that the company prioritizes profitable sales growth over aggressive discounting. He noted that consumers are increasingly concerned about inflation and the job market, though diners at Olive Garden and LongHorn Steakhouse have been more willing to spend on higher-priced entrees and alcoholic beverages.
Olive Garden’s same-store sales fell 1.5%, despite a 1% increase in menu prices compared to the previous year. Analysts had expected flat same-store sales growth. This follows a 1.8% decline in same-store sales last quarter, primarily due to reduced spending by low-income consumers.
Darden’s fine-dining segment, which includes The Capital Grille and Eddie V’s, saw a 2.6% decline in same-store sales for the quarter. The segment now includes Ruth’s Chris, but its same-store results will be reported starting in the second quarter of fiscal 2025.
LongHorn Steakhouse was the only segment to report growth in same-store sales, which rose by 4% during the quarter.
Darden reported fiscal fourth-quarter net income of $308.1 million, or $2.57 per share, down from $315.1 million, or $2.58 per share, the previous year. Excluding costs related to the acquisition of Ruth’s Chris Steak House and other items, adjusted earnings were $2.65 per share. Net sales increased by 6.8% to $2.96 billion, driven by the acquisition of Ruth’s Chris and 37 other net new locations.
For fiscal 2025, Darden anticipates earnings per share from continuing operations to be between $9.40 and $9.60, aligning with Wall Street’s expectation of $9.55 per share. The company forecasts net sales of $11.8 billion to $11.9 billion, slightly below analysts’ expectations of $11.94 billion. Darden projects total inflation of 3% and same-store sales growth of 1% to 2%. CFO Raj Vennam expects traffic to improve as the year progresses and plans to increase prices by approximately 2% to 3%, matching overall inflation.
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