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Olive Garden Italian restaurant sign showing company logo, Spokane Valley, Washington, owned by Darden Restaurants Incorporated headquartered in Florida.
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Darden Restaurants on Thursday reported mixed quarterly results as Olive Garden’s same-store sales fell for the second consecutive quarter.
The company has faced a “consistently weaker consumer environment,” as well as increased discounting and marketing pressure from its rivals, CEO Rick Cardenas said on the company’s conference call.
For fiscal 2025, Darden is forecasting that its same-store sales will grow just 1% to 2%.
Shares of the company rose less than 1% in morning trading.
Here’s what the company reported compared with what Wall Street was expecting for the quarter ended May 26, based on a survey of analysts by LSEG:
- Earnings per share: $2.65 adjusted vs. $2.61 expected
- Revenue: $2.96 billion vs. $2.97 billion expected
Darden’s overall same-store sales were flat for the quarter, dragged down by weaker-than-expected sales at Olive Garden and its fine-dining restaurants. Still, executives emphasized that their chains are outperforming the broader casual-dining segment.
“We’re not going to do things to buy sales, even with the increased discounting our competitors are doing. … Our focus is on profitable sales growth,” Cardenas said.
He added that consumers are concerned about inflation — and growing more anxious about the job market. Still, Olive Garden and LongHorn Steakhouse diners are more willing to spend on pricey entrees and alcoholic drinks than they had been over recent quarters, executives said.
Olive Garden’s same-store sales fell 1.5%, despite a 1% rise in its menu prices compared with the year-ago period. Analysts were expecting the Italian-inspired chain to report flat same-store sales growth, according to StreetAccount estimates. Last quarter, Olive Garden’s same-store sales fell 1.8%, driven by a pullback from low-income consumers.
Darden’s fine-dining restaurants, which include The Capital Grille and Eddie V’s, saw their same-store sales shrink 2.6% in the quarter. That division now includes Ruth’s Chris, but those same-store results won’t be included in the category total until the second quarter of fiscal 2025.
LongHorn Steakhouse, which is overtaking Olive Garden as the gem of Darden’s portfolio, was the only segment to report same-store sales growth. The chain’s same-store sales rose 4% in 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, a year earlier.
Excluding costs related to the company’s Ruth’s Chris Steak House acquisition and other items, the company earned $2.65 per share.
Net sales rose 6.8% to $2.96 billion, fueled by its purchase of Ruth’s Chris and 37 other net new locations.
Looking to fiscal 2025, Darden is forecasting earnings per share from continuing operations of $9.40 to $9.60, in line with Wall Street’s expectations of $9.55 per share. The company is also anticipating net sales of $11.8 billion to $11.9 billion, on the low end of analysts’ expectations of $11.94 billion.
Darden is projecting total inflation of 3% and same-store sales growth of 1% to 2% in fiscal 2025. CFO Raj Vennam said the company expects that traffic will improve as the year progresses. Darden expects to raise prices about 2% to 3%, mirroring overall inflation, according to Vennam.
“We feel like we’ve done a lot of work to keep prices low, and we’re going to continue to do that,” he said.
The company plans to spend $550 million to $600 million on capital expenditures.
