Darden Restaurants, the parent company of popular sit down chains such as Olive Garden and LongHorn Steakhouse has just posted its quarterly results. The results have been controversial, raising investor hopes and fears simultaneously. The home improvement chain recorded unprecedented net sales growth and double-digit same-store sales growth. It struggled in its high-end, fine-dining section. The release of the earnings report has led to a recalculation of growth expectation for the next fiscal year.
In these most recent quarterly financial results, Darden Restaurants reported that overall net sales increased 10.4% to $3.04 billion. The robust results of Olive Garden and LongHorn Steakhouse drove this increase. As such, they’ve managed to replace a drop in the fine-dining industry. Even the fine-dining segment experienced a same-store sales drop, registering a -0.2%. In horrible juxtaposition, the always horrible Olive Garden posted some record same-store sales growth of 5.9%!
Darden Restaurants, currently the largest U.S. operator of full-service restaurants, is addressing these trends with a positive mindset. They increased their fiscal 2026 revenue growth projection to 7.5% to 8.5%, from previously expecting 7% to 8%. This positive forecast comes even in the face of gloomy Wall Street expectations, which were looking for a larger 0.9% decline in same-store sales. The company strongly stood by its outlook for adjusted earnings. It now projects for earnings to be in the range of $10.50-$10.70 per share.
In addition, earlier this week, Darden Restaurants announced intentions to divest all of its Bahama Breeze stores before the end of their fiscal year. This decision marks a departure from the company’s decision last year to prioritize less profitable brands that make up a larger portion of total revenue. Olive Garden is responsible for more than 40% of Darden Restaurants’ total sales. Considering its critical role in ensuring the company remains financially healthy, that comes as no surprise.
For its part, Darden Restaurants was down 6% in its shares in premarket trading. This drop occurred immediately after their earnings report came out, in spite of all the good news. Investors are probably trying to figure out what these mixed results mean, let alone the difficulties inherent within the fine-dining business space.
Last October, Darden finished its acquisition of Chuy’s Tex Mex restaurants. This action further evidences Darden’s efforts to diversify its portfolio and develop a stronger market presence. The story behind those rosy recent quarterly results shows where Darden’s strengths and weaknesses lie. This realization leads to a pretty serious rethinking of the company’s long term growth path.