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 corporate has faced a “consistently weaker consumer environment,” in addition to increased discounting and marketing pressure from its rivals, CEO Rick Cardenas said on the corporate’s conference call.
For fiscal 2025, Darden is forecasting that its same-store sales will grow just 1% to 2%.
Shares of the corporate rose lower than 1% in morning trading.
Here’s what the corporate 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 purchase sales, even with the increased discounting our competitors are doing … Our focus is on profitable sales growth,” Cardenas said.
He added that customers are concerned about inflation — and growing more anxious concerning the job market. Still, Olive Garden’s and LongHorn Steakhouse’s diners are more willing to spend on pricey entrees and alcoholic drinks than that 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, in line with 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% within the quarter. That division now includes Ruth’s Chris, but those same-store results won’t be included within the category total until the second quarter of fiscal 2025.
LongHorn Steakhouse, which is overtaking Olive Garden because the gem of Darden’s portfolio, was the one segment to report same-store sales growth. The chain’s same-store sales rose 4% within 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 12 months earlier.
Excluding costs related to the corporate’s Ruth’s Chris Steak House acquisition and other items, the corporate 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 latest locations.
Seeking to fiscal 2025, Darden is forecasting earnings per share from continuing operations of $9.40 to $9.60, in keeping with Wall Street’s expectations of $9.55 per share. The corporate can also be 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 three% and same-store sales growth of 1% to 2% in fiscal 2025. CFO Raj Vennam said the corporate expects that traffic will improve because the 12 months progresses. Darden expects to lift prices about 2% to three%, mirroring overall inflation, in line with Vennam.
“We feel like we have done lots of work to maintain prices low, and we’ll proceed to do this,” he said.
The corporate plans to spend $550 million to $600 million on capital expenditures.