Darden Restaurants Inc. reported strong performance for its second quarter, with continued sales growth at its Olive Garden and LongHorn Steakhouse brands. This positive result led to a 14 percent increase in the company’s stock price during after-hours trading. The company exceeded analysts’ earnings per share (EPS) expectations of $2.02, reporting an EPS of $2.03. Darden’s revenue for the quarter was $2.89 billion, slightly below analysts’ projection of $2.9 billion. Net income for the period reached $215.1 million, or $1.82 per share, an improvement over last year’s net income of $212.1 million. When adjusted for acquisition-related costs tied to the Chuy’s acquisition, EPS stood at $2.03.
Same-store sales growth was a standout performer, rising by 2.4%, surpassing the projected increase of 1.5%. CEO Rick Cardenas noted that consumer sentiment has notably improved, particularly among middle-income customers, although high-income diners have continued to visit less frequently. Despite the disruptions caused by Hurricanes Helene and Milton, Darden’s operations were largely unaffected, with the exception of one Cheddar’s Scratch Kitchen location in Asheville, North Carolina, which will remain closed until next year.
The strongest growth driver was LongHorn Steakhouse, which saw same-store sales increase by 7.5%, significantly surpassing analysts’ expectations of a 4.1% rise. It has remained Darden’s most consistent performer, with customers citing the combination of quality and reasonable prices. Olive Garden, which represents over 40% of the company’s revenue, experienced a 2% increase in same-store sales, exceeding the anticipated 1.4% growth. The brand successfully revived its “Never Ending Pasta Bowl” promotion and introduced Uber delivery at 100 locations, with plans for further expansion post-holidays.
In contrast, the fine dining segment, which includes brands like The Capital Grille and Ruth’s Chris Steak House, faced the steepest decline, with same-store sales falling by 5.8%, well below the expected 2.8% drop. The decline is attributed to higher prices in the fine dining sector pricing out customers amid ongoing economic uncertainty. Additionally, the Thanksgiving holiday shifted to the third quarter this year, compared to last year, impacting sales during the second quarter.
On the expansion side, Darden opened 39 net new locations in the quarter, and added 103 locations through its recent acquisition of Chuy’s, which closed in October for $605 million. The company has increased its fiscal 2025 sales forecast to $12.1 billion from an earlier projection of $11.8 billion to $11.9 billion while reaffirming its EPS forecast of $9.40 to $9.60.