On September 19, 2024, Darden Restaurants Inc (DRI, Financial) released its 8-K filing for the first quarter of fiscal 2025, ending August 25, 2024. The company reported a total sales increase of 1.0% to $2.8 billion, driven by the addition of 42 net new restaurants. However, the blended same-restaurant sales decreased by 1.1%, reflecting a challenging operating environment.
Company Overview
Darden Restaurants is the largest restaurant operator in the U.S. full-service space, with consolidated revenue of $11.4 billion in fiscal 2024, resulting in a 3%-4% full-service market share. The company maintains a portfolio of 10 restaurant brands, including Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Ruth's Chris, Yard House, The Capital Grille, Seasons 52, Eddie V's, Bahama Breeze, and The Capital Burger. As of the end of fiscal 2024, Darden operated 2,031 restaurants in the U.S.
Performance and Challenges
Despite the sales growth, Darden Restaurants Inc (DRI, Financial) faced several challenges in the first quarter. The company's same-restaurant sales saw a decline, with Olive Garden experiencing a 2.9% decrease and the Fine Dining segment dropping by 6.0%. However, LongHorn Steakhouse reported a positive same-restaurant sales growth of 3.7%. The reported diluted net earnings per share from continuing operations were $1.74, missing the analyst estimate of $1.84.
Financial Achievements
During the quarter, Darden repurchased $172 million of its outstanding common stock and declared a quarterly cash dividend of $1.40 per share. The company reiterated its full-year financial outlook for fiscal 2025, projecting diluted net earnings per share from continuing operations between $9.40 and $9.60.
Key Financial Metrics
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Sales | $2,757.0 million | $2,730.6 million |
| Operating Income | $269.2 million | $252.9 million |
| Net Earnings | $207.6 million | $194.8 million |
| Diluted Net Earnings Per Share | $1.74 | $1.60 |
Segment Performance
| Segment | Q1 Sales (2025) | Q1 Sales (2024) | Q1 Segment Profit (2025) | Q1 Segment Profit (2024) |
|---|---|---|---|---|
| Consolidated Darden | $2,757.0 million | $2,730.6 million | - | - |
| Olive Garden | $1,209.1 million | $1,227.9 million | $249.0 million | $262.3 million |
| LongHorn Steakhouse | $713.5 million | $669.8 million | $127.6 million | $117.4 million |
| Fine Dining | $278.9 million | $273.5 million | $37.6 million | $39.7 million |
| Other Business | $555.5 million | $559.4 million | $83.7 million | $84.3 million |
Commentary
“We operate in a very dynamic, competitive industry and we have proven we can successfully navigate challenging environments due to our strategy,” said Darden President & CEO Rick Cardenas. “While we fell short of our expectations for the first quarter, I firmly believe in the strength of our business. I am confident in the actions all our brand teams are taking to address their guests’ needs, which do not compromise the long-term health of our business for short-term benefits.”
Analysis
Darden Restaurants Inc (DRI, Financial) demonstrated resilience in a challenging market, with a modest increase in total sales and strategic repurchases of common stock. However, the decline in same-restaurant sales and missing the analyst earnings estimate highlight the competitive pressures and operational challenges the company faces. The reiteration of the full-year financial outlook suggests confidence in the company's strategic initiatives to drive growth and profitability.
Explore the complete 8-K earnings release (here) from Darden Restaurants Inc for further details.
