Olive Garden sales fall short, but parent company Darden sticks to outlook

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An order of breadsticks from a Darden Restaurants Inc. Olive Garden

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Darden Restaurants reported mixed quarterly results on Thursday, but still reiterated its outlook for fiscal 2023.

The parent company of Olive Garden and LongHorn Steakhouse said net sales for the quarter rose 6.1% to $2.45 billion, which fell short of Wall Street’s expectations. CEO Rick Cardenas has previously said the company plans to price below rivals and limit how much of the higher costs it passes on to diners.

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During the quarter, the company’s costs for food, beverages and labor rose, depressing operating profit.

The company’s shares fell 2% in premarket trading.

Here’s what the company reported for the quarter ended Aug. 28 compared to what Wall Street expected, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.56, meet estimates
  • Revenue: $2.45 Billion vs. $2.47 Billion Expected

In a statement, Darden said it was seeing seasonal changes to bring demand back to the company. The company’s same-store sales grew 4.2% in the quarter, boosted by the performance of its fine dining restaurants. The segment, which also includes The Capital Grille, reported same-store revenue growth of 7.6%. But the company’s two largest chains saw weaker demand this quarter.

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Olive Garden reported 2.3% same-store sales growth, which was below StreetAccount’s estimates of 5.4%. The chain accounted for 46% of Darden’s sales during the quarter.

Demand for LongHorn Steakhouse also fell short of Wall Street expectations. The chain reported same-store sales growth of 4.2%, excluding estimates of 5.1%.

Net income for the period was $193 million, or $1.56 per share, down from $230.9 million or $1.75 per share a year earlier.

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For fiscal 2023, Darden expects earnings per share from continuing operations of $7.40 to $8. The company expects inflation to rise 6% in the fiscal year. It assumes revenues of $10.2 billion to $10.4 billion.

Darden also forecasts same-store sales growth of 4% to 6% and 55 to 60 new restaurant openings in fiscal 2023.

This is a news item. Come back for updates.

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