Darden Restaurants reported fiscal first-quarter results that narrowly missed Wall Street expectations, prompting a decline in the company’s share price. The stock fell as much as 5% in premarket trading following the announcement but recovered somewhat during the trading session, closing down approximately 2% as company executives provided commentary intended to reassure investors on the earnings call.
The company reported fiscal first-quarter 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 period. Net sales increased 5.1% to $3.20 billion. Same-store sales grew 3.1% across the company’s restaurant portfolio during the quarter, though various factors impacted the results. Executives attributed some of the softness to consumer concerns about cyclospora linked to fresh produce and the World Cup tournament, which suppressed demand early in the quarter and reduced same-store sales by approximately 0.8 percentage points.
Performance varied significantly across Darden’s brands. LongHorn Steakhouse emerged as the top performer with same-store sales growth of 6.2%, surpassing Olive Garden as the company’s strongest-performing chain despite generating a smaller share of overall revenue. Olive Garden, which remains the largest chain by location count and sales volume, reported same-store sales growth of only 1.1%, reflecting consumer caution about discretionary spending. Executives noted that Olive Garden had adjusted marketing plans in response to broader industry concerns about lettuce-related contamination, postponing a promotional campaign centered on unlimited soup, salad, and breadsticks to the current quarter. The company indicated plans to focus on weekday lunch occasions and value offerings to drive additional traffic.
The fine-dining segment, which includes The Capital Grille and Ruth’s Chris, reported same-store sales growth of 1.6%. Traffic to these establishments remains below pre-pandemic levels, though executives noted improving trends and indicated growing activity in private dining despite continued weakness in overall business spending. Yard House, a beer-centric casual-dining chain within the company’s “other business” division, posted same-store sales growth of 10%, benefiting from World Cup interest and becoming Darden’s third billion-dollar brand as of last week. The company plans to open 13 new Yard House restaurants in the following fiscal year, including five conversions from the shuttered Bahama Breeze chain.
Darden maintained its fiscal 2027 guidance, projecting total sales between $13.60 billion and $13.75 billion and net earnings per share from continuing operations in the range of $11.10 to $11.35. CEO Rick Cardenas indicated that restaurant performance showed signs of improvement in September and noted that commodity costs for key items like beef were expected to decline later in the fiscal year.
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