Darden Restaurants’ Earnings Call Highlights Growth and Expansion

Darden Restaurants, Inc. ((DRI)) has held its Q4 earnings call. Read on for the main highlights of the call.Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Darden Restaurants, Inc. recently held its earnings call, revealing a strong performance with significant sales growth and strategic expansions. The sentiment throughout the call was positive, highlighting impressive results from Olive Garden and LongHorn Steakhouse, despite some challenges in the Fine Dining segment. The company is focused on growth and enhancing shareholder returns through strategic decisions, including closures and potential sales. Strong Fiscal Year-End Performance Darden Restaurants reported a robust 10.6% increase in total sales, reaching $3.3 billion for the fourth quarter. This growth was driven by a 4.6% rise in same-restaurant sales and the acquisition of 103 Chuy’s restaurants, showcasing the company’s successful expansion strategy. Olive Garden’s Impressive Growth Olive Garden stood out with a remarkable 6.9% growth in same-restaurant sales, outperforming the industry benchmark by 390 basis points. The brand achieved record guest satisfaction scores and a 20% increase in takeout sales, reflecting its strong market position and effective marketing strategies. LongHorn Steakhouse Milestone LongHorn Steakhouse celebrated a significant milestone by surpassing $3 billion in total sales for the first time, with a 5.1% increase in same-restaurant sales for the fiscal year. This achievement highlights the brand’s consistent performance and appeal to customers. Positive Financial Metrics Darden’s financial health was evident with a 12.5% increase in adjusted diluted net earnings per share to $2.98, and adjusted EBITDA reaching $582 million. The company also returned $215 million to shareholders through dividends and share repurchases, underscoring its commitment to shareholder value. Expansion and New Developments Looking ahead, Darden announced plans to open 60 to 65 new restaurants in fiscal 2026. Significant contributions are expected from Olive Garden and LongHorn, indicating continued growth and expansion in the coming years. Fine Dining Segment Challenges The Fine Dining segment faced challenges with negative same-restaurant sales, particularly in urban markets and among households earning below $150,000. This segment remains an area of concern for the company. Closure and Sale of Bahama Breeze Darden has decided to close 15 Bahama Breeze locations and is exploring strategic alternatives for the remaining 28 restaurants, including a potential sale. This move is part of the company’s efforts to streamline its portfolio. Impact of Uber Direct on Profit Margins While Uber Direct has boosted sales, it has also introduced cost pressures, with restaurant expenses increasing by 20 basis points due to fees passed on to Uber. This highlights the balancing act between leveraging partnerships and managing costs. Forward-Looking Guidance Darden Restaurants provided optimistic guidance for fiscal 2026, projecting a 7% to 8% increase in total sales and a 2% to 3.5% rise in same-restaurant sales. The company plans to open 60 to 65 new restaurants and aims to deliver a 10% to 15% total shareholder return by focusing on sales growth, margin expansion, and shareholder payouts. In conclusion, Darden Restaurants’ earnings call reflected a positive outlook, driven by strong performances from Olive Garden and LongHorn Steakhouse. Despite challenges in the Fine Dining segment, the company is strategically positioned for growth and committed to enhancing shareholder returns. The forward-looking guidance suggests continued expansion and financial health, making Darden an attractive prospect for investors. Trending Articles:“Roadblock”: Paramount Stock (NASDAQ:PARA) Surges as the Trump Settlement Sputters “Sour Grapes”: Ford Stock (NYSE:F) Notches Up as Marshall Pushes Back on Battery Plant ‘Here it Comes,’ Says Top Investor About BigBear.ai StockDisclaimer & DisclosureLooking for a trading platform? Check out TipRanks' Best Online Brokers guide, and find the ideal broker for your trades.Report an Issue