A sign for Olive Garden Italian Restaurant shows the company logo, Spokane Valley, Washington, owned by Darden Restaurants, based in Florida.
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Darden Restaurants On Thursday, it reported mixed quarterly results as Olive Garden store sales declined for the second straight quarter.
CEO Rick Cardenas said on a company conference call that the company faced a “continuously weaker consumer environment,” as well as increased discounts and marketing pressure from its competitors.
For fiscal 2025, Darden expects same-store sales to grow just 1% to 2%.
The company's shares rose less than 1% in morning trading.
Here's what the company reported compared to what Wall Street was expecting for the quarter ending May 26, based on a survey of analysts conducted by LSEG:
Earnings per share: $2.65 adjusted vs. $2.61 expected Revenue: $2.96 billion vs. $2.97 billion expected
Darden's overall store sales were flat during the quarter, dragged down by weaker-than-expected sales at Olive Garden and its upscale restaurants. However, executives emphasized that their chains are outperforming the broader casual dining sector.
“We will not do things to buy up sales, even with the increasing discounts made by our competitors,” Cardenas said. “Our focus is on growing profitable sales.”
He added that consumers are concerned about inflation, and are increasingly concerned about the labor market. However, diners at Olive Garden and LongHorn Steakhouse are more willing to spend on pricey entrees and alcoholic beverages than they were in recent quarters, executives said.
Olive Garden's same-store sales fell 1.5%, although its menu prices rose 1% compared to the same period last year. Analysts had expected the Italian-inspired chain to report flat same-store sales growth, according to StreetAccount estimates. Last quarter, Olive Garden's same-store sales fell 1.8%, driven by declines from lower-income consumers.
Darden's upscale restaurants, which include The Capital Grille and Eddie V's, saw their same-store sales shrink 2.6% in the quarter. This division now includes Ruth's Chris, but same-store results will not be included in the category total until the second quarter of fiscal 2025.
LongHorn Steakhouse, which overtakes Olive Garden as the jewel of Darden's portfolio, was the only segment to record same-store sales growth. Same-store sales rose 4% during 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 year earlier.
Excluding costs related to the acquisition of Ruth's Chris Steak House and other items, the company had earnings of $2.65 per share.
Net sales rose 6.8% to $2.96 billion, helped by the purchase of Ruth's Chris and 37 other net new locations.
Looking to fiscal 2025, Darden expects earnings per share from continuing operations to be $9.40 to $9.60, in line with Wall Street expectations of $9.55 per share. The company also expects net sales to range from $11.8 billion to $11.9 billion, which is the lower end of analysts' expectations of $11.94 billion.
Darden expects overall inflation to be 3% and same-store sales growth of 1% to 2% in fiscal 2025. Chief Financial Officer Raj Venam said the company expects traffic to improve as the year progresses. Darden expects prices to rise about 2% to 3%, which reflects overall inflation, according to Venam.
“We feel we have done a lot of work to keep prices low, and we will continue to do so,” he added.
The company plans to spend between $550 million to $600 million on capital expenditures.
