Darden Restaurants surpasses earnings forecasts. Darden Restaurants, the company that owns Olive Garden, made more money than Wall Street experts thought it would. On Friday, June 20, it shared its earnings report.
Here is the company’s earnings compared to what Wall Street experts predicted:
Based on the LSEG analyst survey, Darden Restaurants earned $2.98 per share, which is just a little more than the $2.97 Wall Street experts expected. It earned $3.27 billion in total sales, which is also slightly more than the $3.26 billion that it was expected to make.
In short, the company did a bit better than expected, and it thinks next year will be strong too.
Darden Restaurants Earnings
Darden Restaurants, the parent company of Olive Garden and LongHorn Steakhouse, made about $303.8 million in profit over the last three months of its business year. This amount is slightly less than the $308.1 million it generated during the same period last year. Each share of the company’s stock earned $2.58, just like last year.
If we exclude the additional money the company spent on acquiring another restaurant chain, called Chuy’s Tex Mex, the profit share would have been higher. It would’ve been about $2.98.
Darden’s total sales increased by 10.6%, reaching $3.3 billion. One major reason for this growth is that they acquired 103 Chuy’s restaurants and opened 25 new restaurants of their own. Sales at existing restaurants also went up by 4.6%, which was better than what experts predicted. Wall Street experts had predicted that it should be around 3.5%.
Looking ahead to the next business year, that is, fiscal year 2026, the Florida-based company expects its total sales to grow between 7% and 8%. About 2% of this growth comes from the fact that next year will have one extra week of business. They think each share will earn between $10.50 and $10.70 in adjusted profit. It will also include 20 cents from the extra week.
Even though some people are spending less overall, Darden’s CEO, Rick Cardenas, said customers are still choosing to go out to eat at restaurants like theirs. He also said he believes people are spending less at fast-food restaurants and more at the type of restaurants that they own.
Olive Garden and LongHorn SteakHouse Lead Darden’s Sales
Darden owns several popular restaurant chains. Two of the best-performing ones right now are Olive Garden and LongHorn Steakhouse. Both of these restaurants performed better than Wall Street experts expected.
Olive Garden makes up about 40% of Darden’s total sales for the quarter. Its sales at locations that have been open for at least a year went up by 6.9%. This was higher than the 4.6% that experts predicted.
LongHorn Steakhouse also performed well. Its sales increased by 6.7%, which again beat the predicted 5.3%.
The CEO of Darden Restaurants, Rick Cardenas, stated that one reason Olive Garden performed so well was that they reintroduced a popular deal. They brought back the “Buy One, Take One” deal after a five-year hiatus. This deal gives customers a second meal to take home for free when they dine in.
However, not all the restaurants had positive yields. Darden’s fancy restaurant brands, like Ruth’s Chris SteakHouse and The Capital Grille, did not do so well. Their sales reduced by 3.3%, which was worse than the 0.2% experts predicted.
The company’s finance chief, Raj Vennam, explained that expensive restaurants are still struggling. However, they have noticed that more customers from households that make over $150,000 per year are starting to come back.
Another part of the business, including Cheddar’s Scratch Kitchen and Yard House, saw a slight increase in sales. They saw a 1.2% increase, which is slightly above the 1.1% that was expected. Also, Cheddar’s started offering delivery through a partnership with Uber Direct, which is almost like Uber Eats. They tested it out, and now almost all Cheddar’s restaurants offer delivery. According to Cardenas, only eight locations do not offer this delivery service.
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Darden Shifts Strategy on Bahama Breeze
Darden closed 15 of its Bahama Breeze restaurants in the past few months. The CEO, Rick Cardenas, talked about the plans they have for the restaurants. He said they are thinking about what to do with the entire Bahamas Breeze brand. They might sell it or turn the restaurants into one of their other brands. The CEO also explained that Bahama Breeze is not a big focus for the company anymore. He said it might do better if someone else owns it.
Darden also shared that its board of directors has approved a plan to buy back up to $1 billion worth of its own stock. There is no deadline for this plan, and it replaces the previously existing share repurchase authorization. After these announcements, Darden’s stock increased by more than 1% on Friday. So far this year, the stock has significantly increased by about 19%.