Darden Restaurants reported fiscal first-quarter results that fell slightly short of Wall Street estimates, prompting an initial 5% decline in the company’s stock price during premarket trading. While losses were pared back following management’s remarks on the earnings call, shares closed down approximately 2% in morning trading. The company attributed weaker performance to temporary headwinds including consumer concerns about cyclospora outbreaks and the World Cup tournament’s impact on dining patterns.
The company posted net income of $233.4 million, or $2.04 per share, compared with $257.8 million, or $2.19 per share, in the prior-year quarter. Net sales increased 5.1% to $3.20 billion. Overall same-store sales grew 3.1% across all business units, though the World Cup tournament reduced sales by approximately 80 basis points during the period. CEO Rick Cardenas noted that performance improved in September and projected that commodity cost pressures, particularly beef prices, would ease later in the fiscal year.
Olive Garden, the company’s largest chain by location count and revenue, reported same-store sales growth of just 1.1%, marking a significant slowdown. The brand had to shift marketing strategy away from its signature unlimited soup, salad, and breadsticks promotion due to industry concerns about lettuce-related cyclospora cases. In response, management plans to focus on weekday lunch occasions and value-driven offerings to drive traffic. Meanwhile, LongHorn Steakhouse emerged as the top performer with same-store sales growth of 6.2%, surpassing Olive Garden as the company’s fastest-growing chain, though it generates less total revenue.
Darden’s fine-dining segment, which includes The Capital Grille and Ruth’s Chris, posted same-store sales growth of 1.6%, with management noting that traffic remained below pre-pandemic levels despite some improvement in private dining. Yard House, the company’s beer-focused chain, saw sales climb 10% buoyed by World Cup-related demand and recently achieved billion-dollar brand status. The company plans to open 13 new Yard House restaurants in fiscal 2027, including five conversions from the shuttered Bahama Breeze brand. Darden reiterated its fiscal 2027 guidance, projecting total sales between $13.60 billion and $13.75 billion and net earnings per share between $11.10 and $11.35.
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