Darden Restaurants, Inc.

Darden said first-quarter total sales were $3.2 billion, up 5.1% year over year, driven by positive same-restaurant sales and 53 net new restaurants. On a comparable calendar basis, same-restaurant sales rose 3.2%. Diluted net earnings per share from continuing operations were $2.05, up 4.1% versus last year’s adjusted EPS. EBITDA was $464 million, restaurant-level EBITDA margin was 18.8%, and earnings from continuing operations were $234 million, or 7.3% of sales. The company returned $406 million to shareholders, including $184 million in dividends and $222 million in share repurchases. For segment performance, Olive Garden total sales rose 2.2% with 1% comp sales and 20 net new restaurants, LongHorn total sales rose 10.9% with 6.8% comp sales and 29 net new restaurants, Fine Dining total sales rose 6.2% with 1% comp sales and 6 net new restaurants, and Other Business sales rose 3.6% with 4.5% comp sales and 16 net new restaurants. The company reaffirmed fiscal 2027 guidance and kept full-year diluted EPS at $11.10 to $11.35. Management also said second-quarter sales should face about a 1% headwind from the Thanksgiving calendar shift, offset in the third quarter.

Rick Cardenas characterized the quarter as a solid start to fiscal 2027 and said results were in line with expectations. His tone was constructive and confident, emphasizing that teams focused on controllable factors, guest satisfaction remains near record highs, and the portfolio is built on distinctive brands with clear strategies. He highlighted Olive Garden’s value and innovation, LongHorn’s disciplined execution, and Yard House’s growth potential, while also stressing Darden’s long-term focus on guest loyalty, people, and capital deployment.

Raj Vennam said the quarter met expectations despite external headwinds, including the World Cup and consumer concern about lettuce, which together created an estimated net 80 basis point drag to Darden same-restaurant sales. He walked through margins in detail: food and beverage expense was 30 basis points higher, labor was 30 basis points lower, restaurant expenses and marketing were flat, and restaurant-level EBITDA margin held at 18.8%. He also said pricing was 3.7% in the first quarter, should moderate to the low-to-mid-2s by Q4, and that full-year commodity inflation is still expected at 3%, with second-quarter commodities expected at 2.5% to 3%. On capital allocation, he noted $406 million returned to shareholders in the quarter. He also quantified potential fuel surcharge risk as roughly tens of basis points of commodity inflation, or about 10 to 15 basis points of sales in a very elevated diesel scenario.

Analysts focused heavily on Olive Garden pricing, lunch traffic, and the early response to Never-Ending Pasta Bowl. Management said the higher Pasta Bowl price reflected a more robust offer, not just a stronger consumer backdrop, pointing to added menu items and unchanged $4.99 unlimited protein buy-ups; they also said the launch has started well, with 10,000 Pasta Passes sold out immediately and buy-ups running above expectations. On Olive Garden lunch, management said weekday lunch has been weaker than other dayparts since COVID and is a meaningful opportunity, with a new value-focused lunch test coming later this quarter. Other questions centered on gas prices, beverage and delivery fees, beef inflation, and portfolio growth; management said gas has not been a major current drag, delivery fees are not changing, beef inflation is tracking to low single digits, and brands like Yard House and Chuy’s are still targeted for high-single-digit or mid-single-digit unit growth over time.