Signage for Olive Garden, an Italian restaurant in Spokane Valley, Washington, owned by Florida-based Darden Restaurants Incorporated, features the company logo.
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Darden Restaurant Olive Garden reported mixed quarterly earnings Thursday as same-store sales declined for the second consecutive quarter.
Chief Executive Officer Rick Cardenas said on a conference call that the company faces a “consistently weakening consumer environment” as well as increasing price cuts and marketing pressures from competitors.
Darden expects same-store sales to grow just 1% to 2% in fiscal 2025.
The company’s shares were up less than 1% in morning trading.
Here’s how the company’s report for the quarter ending May 26 compared with Wall Street expectations, based on LSEG’s analyst survey.
- Adjusted earnings per share: $2.65 (expected: $2.61)
- Revenue: $2.96 billion (predicted: $2.97 billion)
Darden’s same-store sales were flat for the quarter as sales at Olive Garden and fine-dining restaurants fell short of expectations, but executives emphasized that the company’s chains performed better than the overall casual-dining division.
“Even if our competitors are increasing their discounts, we’re not going to do anything to make more sales. … We’re focused on growing profitable sales,” Cardenas said.
He added that consumers are worried about inflation and have growing anxiety about the job market. Still, Olive Garden and LongHorn Steakhouse customers are more willing to spend on pricier entrées and alcoholic drinks than in recent quarters, executives said.
Olive Garden’s same-store sales fell 1.5% even as menu prices rose 1% from a year ago. Analysts had expected same-store sales at the Italian-inspired chain to be flat, according to Street Accounts estimates. Last quarter, Olive Garden’s same-store sales fell 1.8% due to a decline in lower-income consumers.
Same-store sales at Darden’s fine dining restaurants, which include Capital Grille and Eddie Vie’s, fell 2.6% in the quarter. The division now also includes Ruth’s Chris, whose same-store sales won’t be included in the division totals until the second quarter of fiscal 2025.
LongHorn Steakhouse, which has overtaken Olive Garden as the jewel in Darden’s portfolio, was the only division to report a same-store sales increase. The chain’s same-store sales rose 4% for the quarter.
Darden said its fourth-quarter net income was $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 company’s acquisition of Ruth’s Chris Steak House and other items, earnings were $2.65 per share.
Net sales increased 6.8 percent to $2.96 billion, driven by the acquisition of Ruth’s Chris and 37 other new stores.
Darden now expects earnings per share from continuing operations of $9.40 to $9.60 for fiscal 2025, in line with Wall Street’s expectations of $9.55 per share. The company also expects net sales of $11.8 billion to $11.9 billion, at the low end of analysts’ estimates of $11.94 billion.
Darden is forecasting inflation of 3% and same-store sales growth of 1% to 2% for fiscal 2025. Chief Financial Officer Raj Venham said he expects foot traffic to increase as the year progresses. Darden plans to raise prices by about 2% to 3% to reflect overall inflation, Venham said.
“We feel like we’ve put a lot of effort into keeping prices low and we’ll continue to do that,” he said.
The company plans to spend $550 million to $600 million on capital expenditures.
