With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are food services and hotels and casinos.

Fortune Sector Leaders: Hotels, Restaurants, and Leisure

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-377-Darden Restaurants

Operating out of Orlando, Fla., the group's dine-in restaurant portfolio includes some of the country's most-recognized franchises including Olive Garden, Cheddar's, and Longhorn Steakhouse.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-372-Darden-Restaurants

The multi-brand restaurant operator is the parent of international dining chains including Olive Garden, LongHorn Steakhouse, Bahama Breeze, the Capital Grille, Eddie V's, and Yard House.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Google tops the list once again, marking its eighth appearance and fifth time as No. 1.

Fortune 100 Best Companies to Work For

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Darden Restaurants owns and operates a portfolio of full-service restaurants in the U.S. and Canada. Its well-known brands include Olive Garden, LongHorn Steakhouse, Ruth’s Chris Steak House, the Capital Grille, and Eddie V’s Prime Seafood, among others. Darden is also the former owner of Red Lobster, which the company sold to Golden Gate Capital in 2014 for $2.1 billion. The company was founded in 1968 when William Darden opened the first Red Lobster restaurant in Lakeland, Fla.

Q1 2027

Q4 2026

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Darden Restaurants (DRI): Company Profile, Stock Price, News, Rankings

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Darden Restaurants

darden restaurants

Welcome to the Darden Fiscal Year 2027 first quarter earnings call. Your lines have been placed on listen-only until the question and answer session. To ask a question, you may press star one on your telephone keypad. The conference is being recorded. If you have any objections, please disconnect at this time. I will now turn the call over to Ms. Courtney Aquila. Thank you. You may begin.

Thank you, Donna. Good morning, and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's President and CEO, and Raj Vennam, CFO. As a reminder, comments made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning, and in its filings with the Securities and Exchange Commission. A supplemental materials presentation containing information shared on today's call is available on the Financials tab in the Investors section of our website at darden.com. Today's discussion includes certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation.

Looking ahead, we plan to release fiscal 2027 second quarter earnings on Friday, December 18th, before the market opens, followed by a conference call. During today's call, all references to industry results refer to the Black Box Intelligence casual dining benchmark, excluding Darden on a calendar-aligned basis. Darden's transition from a 53-week fiscal year last year to a 52-week fiscal year this year has created an offset of one week between our reported fiscal periods and the comparable calendar periods used in the industry benchmark. As a result, industry trends should be compared to Darden's comparable calendar results, which helps account for the one-week shift and is intended to provide a clearer year-over-year comparison. On a comparable calendar basis, average same restaurant sales for the industry increased 2.4%, and average same restaurant guest counts decreased 0.2% during our first quarter.

During today's call, we will be referring to comparable calendar periods when discussing our same restaurant sales results. This morning, we will share some brief remarks on the quarter and provide details on our financial results. Now I will turn the call over to Rick.

Thank you, Courtney, and good morning, everyone. The first quarter was a solid start to fiscal 2027. Results were in line with our expectations, and each of our segments delivered positive same restaurant sales. Throughout the quarter, our restaurant teams did a great job of controlling what they can control. They remain focused on strong operating fundamentals, and guest satisfaction scores across our brands remain at or near record highs for the quarter. Equally important, they continue to advance their strategic priorities to support long-term growth. Olive Garden grew same restaurant sales by 1% for the quarter. The brand continued to pair menu innovation with compelling value. Their Calabrian Summer promotion introduced differentiated flavors at an accessible starting price, while their Season of Garlic promotion provided guests with additional choice and multiple protein-forward offerings.

During the quarter, Olive Garden was prepared to communicate about one of its core brand equities, unlimited soup, salad, and breadsticks, but quickly pivoted away from their planned marketing support in response to external events that led to broader consumer concern about lettuce. Olive Garden is a brand that is well-positioned to leverage news to drive traffic, and there is no better example than their signature promotion, Never-Ending Pasta Bowl. This year's offer launched at the beginning of Q2, and we are very pleased with the early results. Adding to the excitement this year are two new bold menu additions, Spicy Alfredo sauce and crispy Shrimp Fritta as a protein topping. Guest preference for the protein-forward options remains strong, and Olive Garden has seen increased buy-ups for unlimited protein toppings with Never-Ending Pasta Bowl.

In support of the launch of NEPB, Olive Garden brought back their Never-Ending Pasta Pass after a six-year hiatus. The Olive Garden team drove significant social media buzz as 3 million devices logged in for the pasta pass sale. All 10,000 passes sold out immediately. More broadly, the response demonstrated the deep connection guests have with the brand and the value and abundance found at Olive Garden. This demonstrates the popularity of Olive Garden, which was further reaffirmed in YouGov's Best bites 2026: U.S. restaurant brand rankings report ranking U.S. restaurant brands. The report ranked them the number one casual dining brand for consideration when dining out by multiple generational cohorts, including millennials. Olive Garden also ranked number one among casual dining brands for service, dining experience, and value. While Olive Garden has delivered strong sales growth over the past several years, the weekday lunch daypart remains a meaningful opportunity.

I'm excited about several initiatives the team is working on that are designed to reinforce their value proposition and drive additional traffic. Later in our current quarter, Olive Garden will activate the previously planned marketing support behind its iconic unlimited soup, salad, and breadsticks lunch offering at a compelling price point. The team also plans to test a new lunch platform that delivers a highly competitive value proposition and includes the abundance that differentiates the Olive Garden. At dinner, the team continues to test additional protein-forward dishes to build on the success of new core menu items like Calabrian Steak & Shrimp Bucatini that has quickly become a guest favorite. LongHorn Steakhouse delivered same restaurant sales growth of 6.8% for the quarter. Their momentum has been powered by disciplined adherence to a clear strategy focused on quality, simplicity, and culture over many years.

Sustaining that momentum is not easy, and the team continues to have a relentless focus on consistently executing 14 great shifts every week. LongHorn also continues to invest in food quality and will be introducing new menu items and menu enhancements during the second quarter designed to strengthen value and variety at both lunch and dinner. Our other business segment delivered same-restaurant sales growth of 4.5%. This was driven by very impressive same-restaurant sales growth of 10% at Yard House. A broad menu and socially energized bar makes Yard House a natural gathering place for group occasions like sporting events. This was true for the World Cup, which presented a great opportunity for Yard House to deepen connections with their loyal guests.

It also grew brand awareness by bringing in many new guests who got to experience all the new menu enhancements the team has introduced over the past few years, including the new burger, pizza, taco, and pasta platforms. Yard House is a high potential growth brand with plans to open 13 new restaurants this fiscal year, giving even more guests an opportunity to experience the brand. Five of the openings will be conversions of Bahama Breeze restaurants, and half of the other locations will utilize the new smaller Yard House prototype. This will be the primary prototype going forward, helping lower construction costs, enabling the brand to consider even more sites while still delivering their impressive AUV of $10.5 million. I am proud of what Bryan Clements and the team at Yard House have accomplished.

Just last week, they reached $1 billion in sales for the trailing 52 weeks, becoming Darden's third billion-dollar brand. Stepping back, I am pleased with the progress our team has made during the quarter. The performance across our portfolio reinforces the importance of having distinctive brands, each with a clear strategy supported by Darden's scale and other competitive advantages. Our focus remains the same: operate our restaurants at a high level, strengthen guest loyalty, invest in our people and brands, and deploy capital in ways that support long-term shareholder value. During the first quarter, we also held our annual leadership conferences with the general managers and managing partners from across our more than 2,200 restaurants. These leaders hold the most influential position in our company, and the opportunity to interact with them and hear what is on their mind is invaluable.

Across the conferences, I saw strong engagement and alignment around what success looks like in fiscal 2027. The message was clear, our brands are aligned and on remaining disciplined. Our success goes beyond the four walls of our restaurants. There is a larger purpose to what we do, and that is to nourish and delight everyone we serve, which includes the communities our guests and team members call home. One way we serve our communities is working to help end hunger. This year, the Darden Foundation and Penske are helping seven more Feeding America food banks add refrigerated trucks to support food distribution in communities with significant need. With these additions, more than 60 Feeding America food banks will have received a truck through the program during the last six years.

Of course, our philanthropic giving would not be possible without the passion of our restaurant teams for nourishing and delighting our guests. On behalf of our leadership team and board of directors, I want to thank our more than 200,000 team members for the care and commitment they bring to serving our guests and communities every day. Now, I'll turn it over to Raj.

Thank you, Rick, and good morning, everyone. The first quarter was another strong quarter for Darden, with sales and earnings growth meeting our expectations. The World Cup positively impacted Yard House same-restaurant sales by approximately 180 basis points. However, the tournament negatively impacted the rest of our brands, resulting in a net negative impact to Darden same-restaurant sales of approximately 80 basis points. This impact was concentrated earlier in the quarter, which is evident in the sequential improvement of traffic throughout the quarter. We've seen this trend further accelerate into September. In the first quarter, we generated $3.2 billion of total sales. This was 5.1% higher than last year, driven by positive same-restaurant sales growth and the addition of 53 net new restaurants. On a comparable calendar basis, same-restaurant sales grew 3.2%.

Diluted net earnings per share from continuing operations were $2.05, an increase of 4.1% over last year's adjusted net earnings per share. We generated $464 million in EBITDA and returned $406 million to shareholders through $184 million in dividends and $222 million of share repurchases. Looking at our margin analysis compared to adjusted performance for last year, food and beverage expenses were 30 basis points higher. Our pricing was in line with commodities inflation of 3.5%. The cost of sales increase was driven by the mix of sales growth across brands with a greater contribution from brands that operate with higher food and beverage costs than the company average. Restaurant labor was 30 basis points lower, driven by productivity improvements and the mix of sales growth across brands. Restaurant expenses were flat as inflation was offset by pricing. Marketing expenses were also flat.

We had incremental marketing activity in the quarter that was funded by cost savings from the prior year initiatives that began in the second quarter last year. All this resulted in restaurant-level EBITDA of 18.8% for the quarter, flat to last year and consistent with our expectations. Pre-opening costs were 10 basis points higher as we continue to ramp up new restaurant growth. G&A expense as a percent of sales were flat to last year, and our effective tax rate for the quarter was 12.9%. In total, our earnings from continuing operations were $234 million, which was 7.3% of sales. In the first quarter, all of our segments grew total sales and generated positive same-restaurant sales growth. LongHorn continued its strong momentum, Fine Dining delivered another quarter of positive same-restaurant sales growth, and Yard House led the growth within the other business segment.

While segment profit margin performance varied across the portfolio, strong margin expansion at some of our brands helped offset the margin investment at Olive Garden and the impact of winding down Bahama Breeze, resulting in consistent year-over-year restaurant level margins at the consolidated level. This is a testament to the power of our portfolio. Olive Garden increased total sales for the quarter by 2.2% with the addition of 20 net new restaurants and comparable calendar same-restaurant sales growth of 1%, despite several unique headwinds during the quarter. Same-restaurant guest counts were negatively impacted by 150-200 basis points from the World Cup and heightened consumer concerns regarding lettuce. In addition, the lighter portion section of the menu created a 50 basis point mix headwind to the check.

They also lapped a high growth quarter last year that included the Uber Direct 1 million free deliveries promotion and one week of Never-Ending Pasta Bowl in the comparable calendar period. On a two-year basis, Olive Garden same-restaurant sales increased 7%, reinforcing the brand's continued strength. Olive Garden continues to have industry-leading segment profit margin, delivering 20.4% for the quarter. Segment profit margin declined 20 basis points from last year, which included the margin investment of approximately 30 basis points related to the addition of lighter portion section to the menu. At LongHorn Steakhouse, total sales increased 10.9%, driven by comparable calendar same-restaurant sales growth of 6.8% and the addition of 29 net new restaurants. LongHorn Steakhouse continues to increase market share and deliver its 22nd consecutive quarter of positive same-restaurant sales growth.

Over the past three years, same-restaurant sales have increased 17%, with minimal marketing spend, highlighting the strength of the brand strategy. Segment profit margin was 18%, 60 basis points above last year. Total sales for the Fine Dining segment increased 6.2%, driven by positive comparable calendar same-restaurant sales of 1% and the addition of six net new restaurants. Segment profit margin was 50 basis points lower than last year. Total sales for the other business segment increased 3.6%, driven mainly by positive comparable calendar same-restaurant sales of 4.5% as the permanent closure of Bahama Breeze restaurants more than offset the addition of 16 net new restaurants at the other brands. Segment profit margin was 15.8%, 30 basis points lower than last year, driven by the costs associated with winding down Bahama Breeze.

Finally, as shared in our press release this morning, we are reaffirming all aspects of our financial outlook for the fiscal 2027, culminating in diluted net earnings per share between $11.10 and $11.35 for the year. As a reminder, Thanksgiving shifts from our fiscal third quarter last year into our second quarter this year. We expect this calendar shift to create an approximately 1% headwind to second quarter sales with an offsetting benefit in the third quarter. The impact will vary across brands based on holiday operating schedules, benefiting our Fine Dining brands, Seasons 52 and Yard House, in the second quarter, while creating a headwind in the second quarter for the remainder of our brands in our portfolio. This calendar shift is reflected in our full-year guidance and is simply a matter of quarterly timing.

In closing, this quarter is further proof that adherence to our strategy and consistent execution enabled our teams to navigate unexpected headwinds and deliver results in line with our expectations. The strength and durability of our portfolio continues to position us well to create long-term value for our shareholders. With that, we will take your questions.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. We do ask that you please limit yourself to one question and one follow-up. Again, that is star one to register a question at this time. Our first question is coming from Chris O'Cull of Baird. Please go ahead.

Thanks. Good morning, guys. Raj, I know that Olive Garden raised the price on the Never-Ending Pasta Bowl promotion this year. Just wondering if this was the company feeling more constructive about the consumer environment or maybe other reasons for the higher price. I had a follow-up.

Yes, Chris, good morning. If you think about the last time we increased the price at Olive Garden was on NEPB, was when we brought it back after COVID, and it was $13.99 for almost five years, basically. When you look at what we have done with pricing over time, we have been very disciplined. Thinking about how to make sure the consumer is still feeling good about the value and abundance they receive. Part of what we have done here is actually added more to the offer.

If you think about some of the additions we made to the Never-Ending Pasta Bowl, including the Spicy Alfredo, the addition of Shrimp Fritta, protein add-ons, those are also helping. By the way, we did not actually raise the price on a protein buy-up, which is unlimited proteins for $4.99. It is a compelling, great value, and I think our performance quarter to date at Olive Garden indicates that that was a great decision.

Okay, you mentioned lunch as an opportunity at Olive Garden. Can you maybe describe the recent traffic trends at that day part and maybe expand on your comments about improving value there? Thanks.

Hey, Chris, this is Rick. Without getting into recent traffic trends, it's been a longer-term traffic trend at Olive Garden, ever since COVID ended. If you think about what we had done before COVID, we had marketed our lunch platform quite a bit, whether it was soup, salad, and breadsticks or sandwich platform. Then we stopped our marketing, and after COVID, we hadn't put it back in. We've seen a little bit more deterioration at lunch than we have in any other place. We thought it was time, and it was already in our five-year plan to work on lunch. We thought it was the right time to talk about it and do more things with it.

Unfortunately, in the quarter, we had a challenge that we couldn't promote the lunch offer that we were hoping to promote. We're doing it this quarter. On variety, we also had reduced some variety at lunch when we simplified our menu. We're going to be testing some offers that add variety to the lunch menu with still a compelling value. We feel really good about it. Raj and I had the food yesterday. It's amazing. We feel really good about what that offer will be as we start testing sometime in this quarter. We hope that after a successful test, that we'd be talking more about it in the back half of this fiscal year.

Thank you. The next question is coming from Chris Carril of KeyBanc Capital Markets. Please go ahead.

Thanks. Good morning. Could you provide any additional detail on the cadence of Olive Garden sales through the first quarter and maybe how you are thinking about the brand here for the balance of the year, and perhaps compared to the consolidated guide? Then, Rick, I know you spoke to the positive response to Never-Ending Pasta Bowl, so to the extent you can provide any color on the current quarter, that would be helpful. Thank you.

Let me start with the question around the cadence of that, and then if Rick wants to jump in about the performance on NEPB, we will get there. From a quarter perspective, as I mentioned in my prepared remarks, we actually saw trends improve throughout the quarter. I think on a calendar basis, when we look at August was our strongest, and September is actually even stronger than that. I do not want to get exactly into the numbers, but I can tell you that the positive traffic has actually further accelerated into September. We feel good about just the underlying business trends we are seeing.

I will add to that with Never-Ending Pasta Bowl. As we said in the prepared remarks, we sold 10,000 pasta passes in the second, and we have seen a lot of guest reaction to that and seen a lot of redemption in that pasta pass. That said, we have also seen a little bit better results than we expected in the beginning of Never-Ending Pasta Bowl this quarter. All of that is contemplated in our guide for the year, but we feel really good about where our NEPB has started. Our buy-ups are a little bit higher than they were before, and as Raj mentioned in an answer a second ago, we did not raise the price on the protein buy-ups, and that protein is unlimited, too. The Spicy Alfredo sauce is doing really well.

Guests have really jumped on to the new things we've added, and NEPB is doing well for us.

Got it. Thank you. And then, maybe just related to the protein comments there. Rick, I think you mentioned in your prepared remarks the opportunity at Olive Garden with more protein-forward options. How are you thinking about that longer term? Any comments on just implications there for check or margins at the brand will be helpful. Thank you.

Yeah. Long term, we're going to continue to look for some more items that have some protein in it at Olive Garden. The second promotion we did this year, with the garlic promotion, had many protein options on it. Some of them, our highest priced item on that promotion did the best. I think guests are looking for great value at an appropriate price for what they're being offered. I won't comment on what the margin implications will be down the road on what we do or the check implications because we still have other things that we're looking at. As we get closer to those things, we'll let you know. But the promotion was strong for us, and the protein was a well-received hit, including an appetizer that has some protein on it too.

Thank you. The next question is coming from Brian Bittner of Oppenheimer and Company. Please go ahead.

Thank you. As it relates to the improving trends through the quarter and into September, can you maybe talk about the drivers of this a little bit more, maybe help us understand how much of this is driven by maybe the ease of the lettuce concerns versus maybe what you're doing?

Hey, Brian, I'd say it's a little bit of both. There are some external factors, and I mentioned, a tougher wrap as we started the quarter, but also the World Cup and then some concerns around lettuce. These are all things that were hurting a little bit earlier in the quarter, but as they eased, we saw our underlying trends continue, improve. Then there are actions we've taken. I think we just talked a lot about what we did with Never-Ending Pasta Bowl. I think a lot of activity around how we launched, the investments we're making in ensuring that the offer is still compelling, and justifies the price. Rick just talked about the proteins.

I mean, that is still a huge value for a guest when you can get unlimited proteins for $4.99, and we added Shrimp Fritta as another protein option, and that's doing really well, too. So there are actions our teams are taking that are helping.

Thanks for that. Just as it relates to pricing, can you update us on where pricing is now for the second quarter and maybe expectations for the model for the year? I know you showcased it in your slide deck, but it looks like commodities are really under control. Can you remind us where you're expecting overall commodity basket to be for 2Q?

Sure, Brian. Let me start with the pricing. I think for the quarter, pricing was basically, first quarter was 3.7%. I expect that to moderate as we go through the year, coming down to basically low to mid twos by Q4. So expect slightly moderating as we go through the year. Second quarter will probably be in that, call it mid 3% range, and then it will go down as we go through the year. From a commodities inflation perspective, for the year, we're still expecting 3%. I would expect second quarter to be in that 2.5%-3% range, and then back half to be closer to 3%. So right now, the commodities are fairly in line with what we expected going into the fiscal year.

While there is some movement between the categories, in aggregate, we're trending pretty close to where we thought we would be at the beginning of the fiscal year.

Thank you. Our next question is coming from Andrew Charles of TD Cowen. Please go ahead.

Great. Thank you. Rick, I recognize over the long term, the correlation is low, but can you remind us in the past how the Olive Garden business fares when there's these acute spikes in gas prices? I guess a side question for Raj, with the reiterated 2027 EPS guidance, how should we think about the impact of fuel surcharges charged by your distributors?

Hey, Andrew, I don't know if you're wearing a headset or something, but your line is kicking back and forth, so it's hard to understand your question. Can you try that one again?

No. If you go slow. Go slow, then maybe we can get it.

Sure. Thanks, Rick. I recognize over the long term, the correlation is low, but can you remind us in the past how the Olive Garden business fares when there is acute spikes in gas prices? As a follow-up for Raj, within reiterated 2027 EPS guidance, how should we think about the impact of fuel surcharges charged by your distributors?

Okay. I think we got it. Correlation is pretty low, and I would say that the impact on gas prices is not necessarily any different for Olive Garden and other brands, except for maybe that consumer that has to drive farther to go to an Olive Garden than some others. As you can see, as gas prices continue to grow throughout the quarter, Raj had mentioned that our performance got better throughout the quarter. We are seeing some pretty good performance in the first part of the second quarter at Olive Garden. Gas prices do not seem to be a challenge. For a few reasons. One, gas prices at $4 a gallon or more are not a shock to people as they were the last time gas prices spiked years ago. The percent of people's wallet in gas is lower today than it was 10, 15 years ago.

It does not seem to be as big of an impact, but if gas prices stay high for a long time, then there could be a chance that it starts to weigh in the category. Last, I think it does impact that consumer at the bottom quintile consumer, that really we do not have as many of those coming to us in our mix as other categories in dining.

Yep. Andrew, on the fuel stuff, yes, we do have some variable fuel charge that is depending on where the diesel prices are. We have contemplated some of that into our guidance. If the prices stay elevated throughout the year, if I have to just quantify at a high level the risk, we are talking about tens of basis points incremental inflation on commodities. When you think about as a percent of sales for Darden, you are probably talking somewhere around 10-15 basis points at a very high level, elevated level, $6+ diesel prices for the whole fiscal year type of thing.

Thank you. The next question is coming from Jon Tower of Citi. Please go ahead.

Great. Thanks for taking the questions. Maybe starting off, curious if you could dig into a little bit how your social media strategy might be changing at all this year. I know we have seen some relative success in campaigns that have been multi-year from other competitors, some within the past year or so, in terms of how they are communicating, particularly with younger consumers. I am curious How you are doing that, not only across broadly, but within the individual brands at Darden Restaurants.

Yeah, Jon, I will not get into individual brands, but I will say that all of our brands have a strong social media presence. It is reflected in how big their audiences are and how much engagement and passion they have for our brands. Our social media strategy is anchored in bringing our brands to life in authentic ways. Without trying to be too shoppy about it is authentically how do those folks in social media or those brands think about our brands, and in channels that are most relevant to our guests. We do have influencer partnerships. We do partner with influencers who already have a love and affinity for our brands. You can see that in some messages that go out on Instagram and TikTok and other things.

But there are other people that are not influencers that have a lot of views just because they love our brand. We are working with social media in ways. Lastly, we are not focused necessarily on a certain age cohort, but we are on TikTok. All of our casual brands are on TikTok, and we are rolling it out to the rest of them. You will see more of us with social media over the next year or so as we continue to move some more marketing into the digital space. But we are really pleased with what we are doing and being authentic in how we use that.

Okay. I appreciate that. Then, maybe since you provided a little bit of color on Olive Garden trends during the quarter and quarter to date, can you provide similar color on LongHorn Steakhouse and how that is been doing?

John, I would say LongHorn is still holding up. LongHorn has had strong momentum with traffic and sales, and I mentioned in my prepared remarks, they have grown their sales on a same restaurant basis from three years ago by 17%. If you look at how much they have grown since COVID, you are talking 40%+. I do not want to get too specific into the exactly, and they have done all of that without any marketing. They are basically spending less than basically 0.4% of sales in marketing. A lot of that is just the basic stuff that has to be, whether it is menus and things like that.

Thank you. The next question is coming from David Palmer of Evercore ISI. Please go ahead.

Thanks. Maybe a little bit of a follow-up, but just on that. Oftentimes, you guys will talk about the consumer in general. There has been some nooks and crannies of the restaurant world out there where we are seeing a little bit of easing. This is really up through now, what are you seeing in the consumer environment out there sometimes when energy and interest rates and the stock market are not behaving, things can wobble at least a little bit in the near term?

Hey, David. I would say that we haven't really seen much change in consumer. Throughout the quarter, we didn't see a whole lot of change, and even as we talked about our trends in this quarter, we feel pretty good about them. It doesn't seem like a consumer has changed very much for us. I'll say, externally, you can see consumer sentiment being down, but consumers are still spending. They're still resilient. They're spending in casual dining. We're not seeing changes in demographic composition of our casual dining brands. There's slight movements here or there, but overall age and income haven't changed. We always come back to, we know that casual dining or dining out, whether it's casual or full service, remains the number one category where customers want to treat themselves, and actually splurge.

We're going to continue to focus on what we can control, delivering an excellent experience and providing value to every guest. If the consumer is wavering, we're not seeing it.

That's awesome. Thank you. I just wanted to circle back to Cheddar's and Yard House. Obviously, great work with those brands. For those of us that don't have those nearby, could you just tell us what's going right there? You said you were working at least on the box a little bit. I think it was on Yard House. Where are the ROIs going to on these brands? Do you think this is like, were we talking high single digit unit growth long term in both of these, or could that even edge up a bit? I'll pass it on.

Yeah, David, thanks for questions on some of the brands. Yard House, we're really pleased. Both brands, Yard House and Cheddar's, specifically. I'll start with Yard House. Yard House, we're really pleased with the performance. You saw the 10% comp that we just had. We are ramping up unit growth, and we've been working on that over the last few years with a new prototype. We're actually going to open more than single digits this year just because of the conversions of Bahama Breeze restaurants. But our goal would be in the higher single digits for Yard House, not double digits in the long term. We do believe that the best way to grow for any of our brands is to stay somewhere below 10%, just because of the people that we need to run these restaurants, and we need them to understand the brands.

Then for Cheddar's, I will come back to why we think it is working for both. On Cheddar's, it is the same thing. Cheddar's is a little bit less growth still. They will be ramping up growth as they continue to get improved operations. We should see them in the mid-single digits over time. We are focusing on the new prototype that we had already introduced. Now, for both brands, what has done that? That is an intense focus on food. Yard House has made a huge focus on their food, thinking about the platforms that we talked about before, providing a great guest value and improving service. The same thing happened to Cheddar's. We have been focusing on food. We just introduced a new burger, which is amazing. We just introduced other new items.

With Cheddar's, it is a little bit more about getting into markets that we do really well in because people know who they are versus growing all over the place. We are focusing our growth at Cheddar's in markets where we have Cheddar's, and we are seeing pretty good results there. I will let Raj talk about the ROI.

Thanks, Rick. Just to add to that, part of the reason we are able to do that is, again, because of the benefit of the portfolio. That we are able to take a long-term view and make the right investments at these brands, and not have to react to do something short term. Some of the investments we made over time are helping us get this ROI, pretty strong ROI. Yard House, as we mentioned, at their AUVs, with the investments we have and the rational segment profit margins that are high teens, that is actually a pretty compelling return on investment. On Cheddar's, in select markets, they are very successful. We are focused on making sure that we are going to the right markets and making the right investment. They have done some work on the prototype, too.

We see opportunity to further improve the economics at Cheddar's, but we feel good about where we are.

Thank you. The next question is coming from Jim Salera of Stephens. Please go ahead.

Hey, guys. Good morning. Thanks for taking our question. Raj, I wanted to ask a little bit on the beef side of things. The low single-digit guidance for commodity inflation for beef seems pretty favorable, yet it feels like we see a lot of negative headlines just around kind of supply and obviously the expansion of the screw worm outbreak. Can you just kind of walk us through what you are seeing there as we move through the rest of the year, and just any updates on the contract program and how you feel about pricing as we move through the back half of the year?

Yeah, Jim, I think there are two dynamics here to think about, right? One, I want to separate what is happening externally versus what is happening with our own inflation. Part of it is, we give a lot of kudos to our great supply chain team that has done an excellent job over the last few years. If you look at our performance last year, we outperformed the market, or they did, helped us outperform the market on beef prices meaningfully. This year, they continue to do that. Some months we may not be as great, as much better versus market as we were last year, but still better than market. I want to start with that. From an external perspective, there have been a few factors, right? Obviously, recently you are starting to see some prices come down, especially on sirloin and to some extent tenders.

That was also because last year they were really high during that timeframe, August, September. As we look at where we thought we would be for beef at the beginning of the year and three months later, we're basically trending pretty much in line with our initial estimate of low single-digit inflation for our fiscal 2027. Things that are helping this are increased cattle weights and imports are helping offset some of the lower slaughter levels. That's part of it. What we're seeing is from a long term, there are some reasons to believe the beef market will improve. One, packers are now in the black. Production may start to increase, which would provide some pricing relief. Also, beef industry seems to be slowly transitioning towards expansion, with heifer retention up for the first time since 2016.

Mexican cattle slowly reentering the U.S., right now about 20% of historic volumes, but could reach 70% by the end of fiscal 2027. So there are some reasons to believe that this market could improve. By the way, there are no active screw worm cases in the U.S., so.

Okay. That's helpful. Maybe shifting gears on fine dining, that's been kind of chugging along modestly positive. As we think about the macro backdrop and if we're worried about kind of deteriorating between interest rates, gas prices, all the headlines we all see. Can you just walk us through the guest engagement across your fine dining portfolio and maybe the split there between price and traffic and expectations for that as we progress through the year?

From a fine dining perspective, look, traffic is still below where we were pre-COVID. We're starting to see gradual improvement, less decline, and pricing is actually. We've actually been very thoughtful about how much we price. So our pricing year-to-year might have been a little different, but cumulatively, when you look at versus pre-COVID, we're still well below even full service CPI which fine dining, I think outside of our brands, most of them have taken a lot more pricing. We are seeing the business spending is still low. That is still declining a little bit year-over-year. We're starting to see some growth in private dining. Then there are some things our teams are doing that are helping us. For example, Generous Pour was in the quarter, helped quite a bit. The Capital Grille had a pretty strong quarter.

There were some things around price certainty that we said were important even for those customers, and some of the things we did were helping it. For example, Ruth's last year had the 360, so that kind of stuff. I do not know, Rick, do you want to add anything? That is really all we have. Clearly, there is the urban versus suburban that continues to be a little bit of a theme, but nothing more to add beyond that.

Thank you. The next question is coming from Brian Harbour of Morgan Stanley. Please go ahead.

Yeah, thanks. Good morning, guys. The smaller portions at Olive Garden, have they kind of performed as you expected? You talked about kind of the mix drag, but has the traffic benefit been there, and could you just talk more generally about customer behavior with those dishes?

Yeah, Brian. The smaller portions, with great affordable prices, have performed as we expected. As you recall, when we launched this, we said this was going to be a long-term investment, and we're using some of the windfall, I wouldn't say, but some of the increased profitability from first-party delivery to help fund it. We had said we were going to use some of that to fund the dining room, and that's what this was for. The lighter portion entrees are, the preference is higher weekday lunch, I mean, weekend lunch, I'm sorry. Weekend lunch, where we don't have a lunch menu. That really was part of the beauty of it, is to put something out there that people can get that are a little bit more lunch-appropriate sized, and we are getting preference at dinner as well.

We're still getting great feedback from our guests saying that it's the right portion for what they're looking for. We are seeing increased frequency for the people that order that versus the people that don't. That frequency is continuing to build. We've always said this is a very long-term play, and we may communicate it one day, but right now we're still letting it build the way it is. We should be wrapping on the full rollout sometime this year. The margin implication of that will deteriorate over time because it's already been wrapping on itself.

Okay, got it. Was delivery a year-over-year contributor or not because of sort of the lapping dynamic that you mentioned? I guess, have you still been messaging that or what are you seeing in that channel?

Yeah, I would say for first-party delivery, because of the wrap on 1 million free deliveries from a year-over-year, it was lower. Just to give you an idea, I think last year, first quarter, first party was basically our delivery was Uber Direct was 5.6% of sales. This year, Q1, they were basically in line with Q3, Q4, around 4.7%, 4.8%. I think we ended up at 4.8%. So, think of it as 80 basis points lower as a percent of total sales year-over-year. But to your point about when we do promote some free delivery, we do see a lift. But it's actually been slowly growing, quarter to quarter. I just mentioned Q3, Q4, we were in the 4.7% of sales, and now we're at 4.8%.

Q1 tends to be a lower off-prem quarter compared to Q3, Q4, and to be able to maintain that level shows that we are still growing organically a little bit.

Thank you. The next question is coming from Jacob Aiken-Phillips of Melius Research. Please go ahead.

Hi, good morning. The first one on LongHorn, segment margin expanded 60 basis points despite the beef backdrop and continued investment in food quality. Is that beginning to reflect the structural conversion to much higher volume base that you have built over the last few years? Then I guess as beef becomes less of a headwind, how should we think about the balance of letting that flow through versus reinvesting behind brand?

Well, Jacob, let me start with the last part first because that is always easy. We always think about the investments we got to make versus kind of taking all to the bottom line. Any investment we make has to have a return. We have to believe that that is actually going to help us long-term. I would argue that is what has helped us over time grow margins and take market share. That is a philosophy that we believe in, and we will continue to do that. From a structural perspective, margin perspective, part of it is just, yeah, as inflation stabilizes a little bit and we are not getting into that mid-single-digit inflation plus for them, for LongHorn, that would help some stabilizing of those segment profit margins and growth year-over-year. Now, the traffic growth is always helpful to margins.

Anybody in the restaurant business, food service, will tell you that's a good leverage to have. That's part of it, but part of it is the inflation on the commodities coming down for them.

Got it. You mentioned that the brand mix hurt the food cost line this quarter but helped labor. As LongHorn Steakhouse, Yard House, and some of the other higher growth brands become a larger percentage of Darden Restaurants, should we expect the portfolio mix to change the consolidated restaurant margin structure over time, even if EBITDA dollars are still growing?

Well, I would actually say the percentage on EBITDA will not probably change either. There's probably always some mix shift between COGS and Labor. Earlier there was a question around proteins, too. As you think about high COGS, high price items, you leverage labor, and that's kind of part of how that works. When you look at our long-term framework, our focus is not on any individual line item. It's on growing earnings after tax margin, flat to positive, and at 20 basis points. That's what we do. That's what we'll look at. Yeah.

Thank you. The next question is coming from Peter Saleh of BTIG. Please go ahead.

Great. Thanks for taking the question. I did want to ask, I do not know if I heard this, but Raj, are you guys still seeing demand destruction at retail for beef? Is that still one of the dynamics going on that is helping to reduce some of the pressure on beef? My second question would be, on the delivery side, are these elevated gas prices for a sustained period of time, does that have any impact on the delivery fee that you guys are charging? Thanks.

Yeah, Peter. Let me start with the last question first. No, we are not increasing. We do not change the delivery fees or commitment. We have a contract for a certain price, and that is what we are charging. That is easy one. From a retail demand perspective, yes, there is still some demand destruction. I think last I checked for the month of August, we got data that is about down 4% on the steaks we look at. But it has come down. It is not as low as it was running 10% decline, I think, a quarter ago when we talked about it for several quarters, for three quarters or so up to that. Now we are starting to see that plateau a little bit, but still down 4%.

Darden Restaurants (DRI) Q1 2027 Earnings Call Transcript

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