A sign hangs in front of the Olive Garden restaurant on June 22, 2023 in Chicago, Illinois.
Scott Olson | Getty Images
Darden Restaurant Quarterly earnings and revenue reported Thursday fell short of expectations as sales at Olive Garden and its fine-dining restaurants were weak.
“While our first-quarter results fell short of expectations, I firmly believe in the strength of our business,” Chief Executive Rick Cardenas said in a statement. “I am grateful for the actions all of our brand teams are taking to meet our guests’ needs.” We are confident that our actions will not compromise the long-term health of our business for short-term gain.”
Despite the poor results, the company’s shares rose about 10% in premarket trading. Excluding Thursday’s gains, the stock has fallen 3% this year as investor concerns about consumer health weigh on the restaurant industry as a whole.
Here’s how the company’s quarterly report for the quarter ended Aug. 25 compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: Adjusted $1.75, $1.83 expected
- Revenue: $2.76 billion, $2.8 billion expected
Darden reported fiscal first-quarter net income of $207.2 million, or $1.74 a share, up from $194.5 million, or $1.59 a share, a year earlier.
Excludes costs associated with it Acquisition of Tex-Mex chain store Chuy’s Restaurants earned $1.75 per share.
net sales Growth was 1% to $2.76 billion, but the company’s same-store sales fell 1.1% in the quarter. Chief Financial Officer Raj Vennam said restaurant traffic dropped significantly in July but has since improved. Executives at other restaurant companies also said customer traffic will be difficult this summer due to increased travel or diners becoming more cautious.
Olive Garden’s same-store sales fell 2.9% in the quarter. The chain will bring back its never-ending pasta bowls later this month in hopes of attracting customers again.
Darden’s fine dining division, which includes Eddie V’s and The Capital Grille, reported a 6% same-store sales decline.
LongHorn Steakhouse was the company’s only division to report same-store sales growth. The chain has been the best-performing chain in Darden’s portfolio since the outbreak began, with same-store sales rising 3.7%.
Darden acquired Chuy’s Holdings in July for about $605 million, its second acquisition in two years. The company expects the Chuy’s deal to close in the fiscal second quarter, when Ruth’s Chris Steak House results will also show up in its same-store sales numbers. Dutton bought Ruth’s Chris just over a year ago.
Despite the poor quarterly results, Darden reiterated its full-year outlook. Darden expects fiscal 2025 earnings from continuing operations of $9.40 to $9.60 per share and net sales of $11.8 billion to $11.9 billion.
