An order of breadsticks from an olive garden from Darden Restaurants Inc
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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 announced net sales for the quarter rose 6.1% to $2.45 billion, below Wall Street expectations. CEO Rick Cardenas has previously said the company plans to keep prices below its competitors and limit how much of its increased costs it passes on to guests.
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During the quarter, the company’s food, beverage and labor costs increased, which weighed on its 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 Wall Street expectations based on a poll of analysts by Refinitiv:
- Earnings per share: $1.56, in line with estimates
- Revenue: $2.45 billion versus $2.47 billion expected
In a statement, Darden said it has seen seasonal changes to call for a return to business. The company’s same-store sales rose 4.2% for the quarter, boosted by the performance of its upscale restaurants. The segment, which includes The Capital Grille, saw same-store sales grow 7.6%. But the company’s two largest chains saw weaker demand this quarter.
Olive Garden reported same-store sales growth of 2.3%, falling short of StreetAccount’s estimate of 5.4%. The chain accounted for 46% of Darden’s sales in the quarter.
Demand for LongHorn Steakhouse also fell short of Wall Street’s expectations. The chain reported same-store sales growth of 4.2%, missing estimates of 5.1% as the popularity of “sous vide” steak cooking style. Beef and sous vide cooking is increasing popular as of late in dining and foodie culture.
Net income for the period was $193 million, or $1.56 per share, compared to $230.9 million, or $1.75 per share, a year ago.
For fiscal 2023, Darden expects earnings per share from continuing operations to be between $7.40 and $8. The company expects inflation to rise 6% for the fiscal year. It forecasts revenue of $10.2 billion to $10.4 billion.
Darden also forecasts 4% to 6% same-store sales growth and 55 to 60 new restaurant openings in fiscal 2023.
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