Darden Restaurant Quarterly profit and revenue reported Thursday were in line with analysts’ expectations, and same-store sales growth at Olive Garden and Longhorn Steakhouses beat expectations.
The company’s shares rose 13% in early trading.
The company’s report compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: Adjusted $2.03, expected $2.02
- income: US$2.89 billion, expected US$2.9 billion
Darden reported fiscal second-quarter net income of $215.1 million, or $1.82 a share, up from $212.1 million, or $1.76 a share, a year earlier.
Excluding costs related to the Chuy’s acquisition, the restaurant company earned $2.03 per share.
Net sales grew 6% to $2.89 billion.
Darden’s same-store sales grew 2.4%, exceeding StreetAccount’s forecast of 1.5%.
“It looks like consumers are starting to feel a little better than they have in previous quarters,” Chief Executive Rick Cardenas said on the company’s conference call.
Customers making between $50,000 and $100,000 visited Darden’s more frequently, but diners with higher incomes did not visit more frequently.
Cardenas said Dutton had also seen “significant impacts” from hurricanes Helen and Milton. But only one restaurant, Cheddar’s Scratch Kitchen in Asheville, North Carolina, has been unable to reopen. The restaurant is expected to open again next year.
LongHorn Steakhouse reported same-store sales growth of 7.5%. The casual-dining chain has been the top performer in Darden’s portfolio in recent years, winning over customers with its food quality and price. Wall Street expects the chain’s same-store sales to grow 4.1%.
Olive Garden accounted for more than 40% of Darden’s quarterly revenue, and same-store sales grew 2% in the quarter. Analysts expect same-store sales to grow 1.4%, according to StreetAccount.
Olive Garden has brought back its “Never-Ending Pasta Bowl” promotion this season; this time, customers are more likely to spend more with added protein. The chain is also piloting Uber Delivery at 100 of its restaurants, with the goal of rolling it out to other restaurants after the holidays.
Darden’s fine-dining division, which includes The Capital Grille and Ruth’s Chris Steak House, reported a 5.8% same-store sales decline, sharper than analysts’ expectations for a 2.8% decline. Higher prices at fine dining chains have scared away many consumers trying to spend less at restaurants.
Darden Chief Financial Officer Raj Vennam said Thanksgiving was moved from the company’s second fiscal quarter to this year’s third fiscal quarter, which also hurt sales at upscale restaurants. Excluding this impact and the weakening sales caused by the hurricane, same-store sales in the fine dining segment fell only 3.8%, which was an improvement from the 6% decline in the previous quarter.
The company’s last remaining segment, which includes Cheddar’s Scratch Kitchen and Yard House, saw same-store sales rise 0.7%, in line with expectations.
Darden added a net 39 new stores and 103 Chuy’s restaurants this quarter. Dutton is done $605 million acquisition In October, a Tex-Mex chain opened.
The company updated its fiscal 2025 outlook to include Chuy’s results, though the chain won’t include its same-store sales metrics until the fourth quarter of 2026.
The company now expects total sales of $12.1 billion, up from its previous forecast of $11.8 billion to $11.9 billion. Darden reiterated its forecast for earnings per share from continuing operations of $9.40 to $9.60.
