Darden Restaurants recently reported their quarterly results which showed mixed outcomes for the company. One concerning aspect was the decrease in same-store sales at Olive Garden for the second consecutive quarter. This decline led to a flat overall same-store sales figure for Darden as a whole. The company’s earnings per share and revenue also fell slightly short of Wall Street expectations.
Despite the challenges faced by Olive Garden, Darden reported a 6.8% increase in net sales, driven by acquisitions such as Ruth’s Chris Steak House and the addition of 37 new locations. The company’s adjusted earnings per share came in at $2.65, slightly higher than the expected $2.61. However, the net income for the quarter dipped to $308.1 million from $315.1 million the previous year.
The performance of different segments within Darden’s portfolio varied significantly. While Olive Garden’s same-store sales declined by 1.5%, the fine-dining restaurants, including The Capital Grille and Eddie V’s, saw a sharper decrease of 2.6%. In contrast, LongHorn Steakhouse emerged as a standout performer with a 4% increase in same-store sales, surpassing Olive Garden in terms of growth.
Looking ahead to fiscal 2025, Darden anticipates earnings per share in the range of $9.40 to $9.60, in line with Wall Street estimates. The company projects total net sales of $11.8 billion to $11.9 billion, falling slightly below analyst expectations. Darden also anticipates inflation rates of 3% and modest same-store sales growth of 1% to 2% for the upcoming fiscal year.
To address the challenges faced by Olive Garden and other underperforming segments, Darden plans to invest heavily in capital expenditures, allocating $550 million to $600 million towards strategic initiatives. The company also aims to incorporate Ruth’s Chris into its same-store sales calculations in the following quarters, potentially boosting overall performance metrics.
While Darden Restaurants faced some setbacks in the latest quarterly results, the company has outlined a clear strategy to drive growth and improve performance moving forward. By focusing on key segments, addressing declining same-store sales, and making significant investments, Darden aims to position itself for success in the competitive restaurant industry.