Darden Restaurants Stock Earnings Reports

Darden reported a strong fiscal Q1 with same-restaurant sales and earnings above expectations. Total sales were $3.0 billion, up 10% YoY (driven by 4.7% same-restaurant sales, the Chuy's acquisition and net new restaurants). Olive Garden comped +5.9% (driven by new menu items, first-party delivery growth and tests of lighter portions), LongHorn comped +5.5% (food quality and operational consistency), Other Business comped +3.3% (led by Cheddar's, Yard House and Yard House menu and bar initiatives), and Fine Dining was slightly negative but saw positive LTOs at Ruth’s Chris. First-party delivery (Uber Direct) is an important growth channel — Olive Garden delivery represented ~5% of sales in Q1 and exited the promotion at ~4%, ~40% above pre-promo volume; roughly half of delivery sales are incremental. Darden returned $358 million to shareholders in the quarter (dividends and buybacks). They closed sale of 8 Olive Garden Canada locations (entered area development agreement for 30 more) and now have 163 franchise locations globally. Operating performance: restaurant-level EBITDA was 18.9% (down 10 bps YoY); adjusted diluted EPS from continuing operations was $1.97 (+12.6% YoY). Commodity inflation pressures, especially beef and shrimp (tariffs), are evolving: management has limited hedges (about 25% coverage in beef for the next 6 months) and expects Q2 to see the lowest EPS growth vs. prior year due to a beef cost step-up and constrained pricing. Guidance was updated and tightened: total sales growth raised to 7.5%–8.5% (FY), same-restaurant sales guidance narrowed to 2.5%–3.5%, ~65 new openings, total inflation 3.0%–3.5% (commodities 3%–4%), and adjusted diluted EPS reiterated at $10.50–$10.70. Management emphasized continued reinvestment behind affordability, culinary innovation, marketing and first-party delivery while remaining disciplined on pricing (pricing expected below total inflation for the year). Key investor takeaways: solid top-line momentum and unit development, effective use of first-party delivery to capture younger/higher-check guests, margin resilience though near-term commodity risk (beef) could pressure Q2 results, continued capital returns and a reiteration of full-year EPS guide.