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An Olive Garden restaurant in Fremont, California, on Sept. 14, 2023.
Bloomberg | Getty Images
Darden Restaurants on Friday reported quarterly earnings that beat expectations and raised its annual guidance, helped by sales growth at chains such as Olive Garden and LongHorn Steakhouse.
Here’s what the company reported for its fiscal second quarter ending Nov. 26, compared to what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: $1.84, adjusted vs. $1.74 expected
- Revenue: $2.73 billion vs. $2.74 billion expected
Sales rose 9.7% from the year-ago period, which the company said was driven by the inclusion of Ruth’s Chris Steak House locations and a same-restaurant sales increase of 2.8%
Olive Garden same-restaurant sales were up 4.1%, while LongHorn Steakhouse saw a 4.9% jump for the quarter. Fine dining lagged, as sales fell 1.7% for the quarter.
“The consumer appears to be resilient, but more selective,” said CEO Rick Cardenas in the company’s earnings call Friday.
People with household incomes above $200,000 dined out at a higher rate than last year, but still less than pre-Covid levels, said Cardenas. Households making below $75,000 dined out less this year, but were eating out more than before the pandemic, he added.
Chief Financial Officer Raj Vennam also noted during the call that Darden expects the inflation environment to improve halfway through the fiscal year. But he said restaurant foot traffic is projected to be down for the full year.
Darden shares remained flat, closing down less than 1% Friday.
Darden completed its acquisition of Ruth’s Hospitality Group, owner of chain restaurant Ruth’s Chris Steak House, in June. The company will not include same-store sales from Ruth’s Chris Steak House until Darden has owned and operated the restaurant for a 16-month period.
“We continued to profitably grow market share again this quarter as we outperformed industry same-restaurant sales and traffic,” said Cardenas in a statement.
The restaurant group also updated its fiscal 2024 outlook, forecasting adjusted earnings per share of $8.75 to $8.90, up from the company’s previous estimate of $8.55 to $8.85, excluding Ruth’s Chris transactions and integration costs. The LongHorn Steakhouse owner also projects $11.5 billion in sales for the fiscal year, as well as 50 to 55 new restaurant openings.
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