Darden Restaurants recently reported their quarterly results, which painted a mixed picture. One of the major concerns was Olive Garden’s same-store sales falling for the second consecutive quarter. This decline was reflected in the overall flat same-store sales for Darden, as well as the negative growth in fine-dining restaurants under the company’s umbrella.
In terms of financial performance, Darden fell slightly short of Wall Street’s expectations. While earnings per share were slightly higher than anticipated at $2.65 adjusted compared to $2.61 expected, revenue came in below expectations at $2.96 billion versus $2.97 billion. This shortfall can be attributed to costs related to the Ruth’s Chris acquisition and other items, impacting the company’s bottom line.
Olive Garden, one of Darden’s key brands, faced challenges with a 1.5% decline in same-store sales. This decline was a continuation of the previous quarter’s negative growth trend and was driven by a pullback from low-income consumers. These struggles at Olive Garden have been a cause for concern for the company, as it has traditionally been a flagship brand for Darden.
Amidst the disappointing results, LongHorn Steakhouse stood out as a bright spot for Darden. The chain reported a 4% increase in same-store sales, overtaking Olive Garden as the top performer in Darden’s portfolio. This positive performance at LongHorn Steakhouse was a much-needed win for the company amidst the challenges faced by other brands.
Looking ahead to fiscal 2025, Darden is forecasting modest growth in same-store sales of 1% to 2%. The company also anticipates earnings per share of $9.40 to $9.60, in line with Wall Street’s expectations. However, the company’s projection for net sales of $11.8 billion to $11.9 billion falls on the lower end of analyst expectations. Additionally, Darden plans to invest $550 million to $600 million in capital expenditures, indicating a continued focus on growth and expansion.
Overall, Darden Restaurants’ quarterly results reflect a mixed bag of performance. While there are some bright spots, such as LongHorn Steakhouse’s strong performance, the challenges faced at Olive Garden and other fine-dining brands are areas of concern. Moving forward, it will be crucial for Darden to address these issues and capitalize on opportunities for growth to drive future success.