Darden Restaurants Q4 2025 Earnings Report

Darden Restaurants EPS Results

• Actual EPS: $2.98
• Consensus EPS: $2.97
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $2.65

Darden Restaurants Revenue Results

• Actual Revenue: $3.27 billion
• Expected Revenue: $3.25 billion
• Beat/Miss: Beat by +$22.65 million
• YoY Revenue Growth: +10.60%

Darden Restaurants Announcement Details

• Quarter: Q4 2025
• Date: 6/20/2025
• Time: Before Market Opens
• Conference Call Date: Friday, June 20, 2025
• Conference Call Time: 8:30AM ET

Founded by Bill Darden in 1968, Darden Restaurants (NYSE:DRI) traces its origins to the opening of its first dining establishment in Orlando, Florida. Originally part of General Mills’s restaurant group, the company launched as an independent, publicly traded enterprise in 1995 under the Darden Restaurants banner. Over the decades, Darden has grown into one of North America’s largest full-service restaurant operators, leveraging a portfolio of recognized brands and a multi‐channel guest engagement model.

Darden’s restaurant portfolio spans a variety of dining concepts, including casual Italian at Olive Garden, premium steak experiences at LongHorn Steakhouse and The Capital Grille, seafood dining at Eddie V’s Prime Seafood and Bahama Breeze, and contemporary American fare at Seasons 52, Yard House and Cheddar’s Scratch Kitchen. Each concept emphasizes fresh ingredients, signature recipes and a hospitable atmosphere designed to appeal to a broad consumer base.

The company supports its brands through a combination of company‐owned restaurants and franchising partnerships, operating more than 1,800 locations across the United States and Canada. Darden has also invested in omnichannel capabilities, offering dine‐in, takeout, delivery and catering services, supported by digital ordering platforms and loyalty programs aimed at enhancing customer convenience and engagement.

Headquartered in Orlando, Florida, Darden Restaurants is led by Chief Executive Officer Rick Cardenas, who succeeded Gene Lee. The organization’s leadership team continues to focus on operational excellence, menu innovation and disciplined growth in existing and new markets.

Darden Restaurants Q4 2025 Earnings Call Transcript

Key Takeaways

• Olive Garden’s return of its Buy One, Take One offer and expanded off-premise initiatives, including nationwide delivery and 1 million free Uber deliveries, drove same-restaurant sales well above industry benchmarks and nearly 20% growth in takeout.
• LongHorn Steakhouse delivered a 6.7% increase in same-restaurant sales, surpassed $3 billion in annual sales, and achieved all-time highs in guest satisfaction and quality scores through ongoing focus on quality, simplicity, and culture.
• Darden reported Q4 sales of $3.3 billion (+10.6%) and full-year sales exceeding $12 billion (+6%), with adjusted EPS up 12.5% to $2.98 for the quarter and 7.5% to $9.55 for the year, while returning $1.1 billion to shareholders.
• For fiscal 2026, Darden expects total sales growth of 7–8%, same-restaurant sales growth of 2–3.5%, 60–65 new restaurant openings, EBITDA of $2.16–$2.19 billion, and diluted EPS of $10.50–$10.70, alongside a 7% dividend increase to $6.00 per share.
• Darden is exploring strategic alternatives for Bahama Breeze, selling its eight Canadian Olive Garden restaurants to Recipe Unlimited, and expanding international franchise agreements in markets including Canada, India, and Spain.

Presentation

[Operator]

Greetings, and welcome to the Darden Restaurants Fiscal Year twenty twenty five Q4 Earnings Conference Call Webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded.

[Operator]

It's now my pleasure to turn the call over to Courtney Aquilut, Senior Director of Finance and Investor Relations. Courtney, please go ahead.

[Courtney Aquilla, Senior Director of Finance & Investor Relations at Darden Restaurants]

Thank you, Kevin. Good morning, everyone, and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's President and CEO and Raj Vanam, 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 the actual results to differ materially from our expectations and projections.

[Courtney Aquilla, Senior Director of Finance & Investor Relations at Darden Restaurants]

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. We are simultaneously broadcasting a presentation during this call, which is posted in the Investor Relations section of our website at darden.com. Today's discussion and presentation include certain non GAAP measurements and reconciliations of these are included in the presentation. Looking ahead, we plan to release fiscal twenty twenty six first quarter earnings on Thursday, September 18, before the market opens, followed by a conference call. During today's call, all reference to the industry results refer to the Black Box Intelligence casual dining benchmark excluding Darden.

[Courtney Aquilla, Senior Director of Finance & Investor Relations at Darden Restaurants]

During the fiscal fourth quarter, average same restaurant sales for the industry grew 30% and average same restaurant guest counts grew 0.9. This morning, Rick will share some brief remarks on the quarter. Raj will provide details on our fourth quarter and full year financial results as well as share our fiscal twenty twenty six financial outlook. Then Rick will close with some final comments. Now I will turn the call over to Rick.

[Rick Cardenas, President & CEO at Darden Restaurants]

Thank you, Courtney, and good morning, everyone. We had a strong quarter with same restaurant sales and earnings growth expectations. I'm proud of the great work by our restaurant teams throughout the quarter, particularly on Mother's Day as several brands achieved sales records for that day. The return of Olive Garden's buy one, take one offer for the first time in five years combined with the continued strength of off premise, drove their impressive sales during the quarter. Olive Garden's marketing strategy to meaningfully communicate strong value, create urgency and introduce food news continue to resonate as guests are motivated by news and compelling price points.

[Rick Cardenas, President & CEO at Darden Restaurants]

Buy One Take One with a starting price point of $14.99 allowed guests to choose one entree for their dining experience and then take a second one home. The take home selections leveraged Olive Garden's existing $6 take home platform, minimizing operational complexity. During buy one, take one, Olive Garden's same restaurant sales gap versus the industry increased to four fifty basis points. With delivery available nationwide the entire quarter, Olive Garden continued to see order volume grow week to week, while retaining higher than average sales per transaction versus curbside pickup orders. This combined with continued growth in catering and curbside to go drove overall takeout sales to grow nearly 20% over last year.

[Rick Cardenas, President & CEO at Darden Restaurants]

At the end of the quarter, Olive Garden launched a campaign to promote delivery across multiple channels, including television advertising with a compelling and memorable offer, 1,000,000 free deliveries, partially funded by Uber. We continue to see strong incrementality with average weekly deliveries per restaurant nearly doubling during the last two weeks of the quarter. The Olive Garden team continued to execute at a high level, which led to an all time high guest satisfaction score for the quarter. I am extremely proud of how Dan Kiernan and his team managed the business throughout the year and the strong momentum they have generated heading into the new fiscal year. At Longhorn Steakhouse, their ongoing commitment to quality, simplicity and culture continues to drive their momentum.

[Rick Cardenas, President & CEO at Darden Restaurants]

Their entire team remains obsessed with serving the highest quality steaks in casual dining. This includes having industry leading specifications and ensuring they perfectly season and grill every steak they serve. To support this, during the quarter, Olive Garden validated each one of their grill masters' expertise with the eighth Annual Steakmaster Series, their internal grilling competition and training program. Congratulations to Tim Crane from the Longhorn Steakhouse in Independence, Missouri, who claimed the championship trophy. This focus on ongoing training continues to pay off, as Longhorn ended the year with an all time high Stakes Grow Correctly score as well as a new all time high guest satisfaction score for the quarter.

[Rick Cardenas, President & CEO at Darden Restaurants]

Laura Williamson and her team have done a great job of building on the business momentum at Longhorn. For the fiscal year, their same restaurant sales increased 5.1 and they reached a major milestone by surpassing $3,000,000,000 in total sales. These results reflect the strength of their focused strategy. Last quarter, we announced Cheddar's Scratch Kitchen had begun piloting Uber Direct. It was a successful pilot and as of last week, delivery is now available in all but eight Cheddar's restaurants.

[Rick Cardenas, President & CEO at Darden Restaurants]

Paid media and email support began earlier this week, partially funded by Uber. The Cheddar's marketing team also continues to build on its use of connected television, debuting the first thirty second spot in Cheddar's history during the quarter. The spot was developed at no cost to Darden, thanks to the scale of our CTV media spend across our portfolio. In addition to Olive Garden and Longhorn, Cheddar's also received an all time high guest satisfaction score for the quarter, as did Ruth's Chris Steakhouse and Eddie V's. We know that engaged, well trained team members helped drive operational success and two of our brands were recognized for their people practices during the quarter.

[Rick Cardenas, President & CEO at Darden Restaurants]

Longhorn and the Capital Grille received the Employer of Choice Awards from Black Box Intelligence for casual dining and fine dining respectively. The award recognizes exemplary performance in managing turnover rates, fostering an inclusive workplace culture and implementing best in class people practices. Overall, I am pleased with our results. Our adherence to our winning strategy anchored in our four competitive advantages and being brilliant with the basics led to a successful year. Our strategy remains the right one for the company and we will continue to execute it to drive growth and long term shareholder value. Now, I will turn it over to Raj.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Thank you, Rick, and good morning, everyone. As Rick said, fiscal twenty twenty five was another strong year driven by disciplined execution of our strategy. In the fourth quarter, same restaurant sales continued sequential improvement from prior quarters with our Casual brands gaining significant market share. This resulted in sales and earnings exceeding our expectations for the quarter. Furthermore, we finished the year with same restaurant sales at the top of our initial guidance range and earnings in the upper half of the range despite the slower than expected start to the year.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Now looking at the fourth quarter. We generated $3,300,000,000 of total sales, 10.6% higher than prior year. This was driven by same restaurant sales growth of 4.6% with positive traffic growth, the acquisition of 103 Chuy's restaurants and the addition of 25 net new restaurants, which include the permanent closure of 22 underperforming restaurants. Same restaurant sales exceeded the industry benchmark for the quarter and were in the top decile of the industry. Adjusted diluted net earnings per share from continuing operations increased 12.5% to $2.98 We generated $582,000,000 of adjusted EBITDA and returned $215,000,000 to shareholders through January in dividends and $51,000,000 of share repurchases.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Turning to the fourth quarter P and L compared to last year. Food and beverage expenses were 60 basis points lower as commodities inflation was better than expected at approximately 1.5%. Restaurant labor was 10 basis points lower as productivity gains more than offset higher performance based compensation and pricing below total labor inflation of approximately 3.5%. Restaurant expenses were 20 basis points higher, driven by brand mix with the addition of Chewy's and the impact of first party delivery at Olive Garden, partially offset by sales leverage. Marketing expenses were flat at 1.3% of sales, consistent with our expectations.

[Raj Vennam, SVP & CFO at Darden Restaurants]

This all resulted in restaurant level EBITDA for the quarter improving 50 basis points to 21.6%. Reopening costs were 10 basis points higher as we accelerated our new restaurant pipeline, opening 19 restaurants during the quarter. Adjusted G and A expenses were 30 basis points higher due to higher incentive compensation accrual compared to the fourth quarter last year and unfavorable mark to market expenses on our deferred compensation. Because of the way we hedge mark to market expense, this is largely offset in the tax line. Interest expense increased 20 basis points due to the financing expenses related to the Chuyse acquisition.

[Raj Vennam, SVP & CFO at Darden Restaurants]

And our adjusted effective tax rate for the quarter was 12.2%, with tax expenses down 20 basis points because of the mark to market hedge impact I referenced earlier. In total, our adjusted earnings from continuing operations were $352,000,000 which was 10.7% of sales. In the fourth quarter, all of our segments grew total sales with three of the four segments growing same restaurant sales and segment profit margin. Olive Garden increased total sales for the quarter by 8.1% with strong same restaurant sales growth of 6.9% and the addition of 15 net new restaurants. Olive Garden same restaurant sales outperformed the industry benchmark by three ninety basis points for the quarter.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Uber direct delivery fees positively benefited check mix by about 40 basis points in the quarter. These fees were passed on to Uber with the revenue fully offset in restaurant expenses. Olive Garden continues to have industry leading segment profit margin, delivering 23.8 for the quarter, which is 100 basis points higher than last year. At LongHorn, total sales increased 9.3%, driven by same restaurant sales growth of 6.7% and the addition of 16 net new restaurants. LongHorn continues to increase market share with strong and sustained sales growth, exceeding the industry same restaurant sales benchmark by three seventy basis points this quarter and eight fifty basis points on a two year basis.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Segment profit margin for the quarter was 20.1%, 80 basis points above last year. Total sales for Fine Dining segment increased 2.3%, driven by the addition of six net new restaurants, which includes the permanent closure of two underperforming restaurants. Same restaurant sales were negative for the quarter, resulting in segment profit margin lower than last year. While the fine dining category as a whole continues to be challenged, we are seeing sequential improvement in guest traffic from households earning $150,000 and above. Total sales for the Other Business segment increased 22.4 with the acquisition of Chewy's and positive same restaurant sales at Yardhouse and Cheddar's.

[Raj Vennam, SVP & CFO at Darden Restaurants]

This positive growth was partially offset by the permanent closure of 20 restaurants during the quarter, including 15 Bahama Breeze restaurants. Positive sales momentum and continued productivity improvements at Your House and Cheddar's contributed to a 17.5% segment profit margin for the Other Business segment, 10 basis points higher than last year. The integration of Chuy's is progressing as planned with synergies on track and a neutral impact to EPS for fiscal twenty twenty five, which is in line with our expectations. As we look at our annual results for fiscal twenty twenty five, we had same restaurant sales growth of 2%, outperforming the industry by 170 basis points. Total sales increased 6%, surpassing $12,000,000,000 for the first time in our history.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Adjusted diluted net earnings per share from continuing operations increased 7.5% to 9.55 We delivered $2,000,000,000 in adjusted EBITDA from continuing operations, driven by strong sales growth, and we returned $1,100,000,000 to shareholders with $659,000,000 in dividends and $418,000,000 in share repurchases. Looking at our fiscal twenty twenty five full year P and L. Restaurant level EBITDA grew 40 basis points, driven by disciplined and pricing leverage. This favorability was partially offset by the increased depreciation and amortization expense, resulting in operating income margin that was 10 basis points higher than last year. Financing expenses related to Chuy's acquisition increased adjusted interest expense 20 basis points from last year.

[Raj Vennam, SVP & CFO at Darden Restaurants]

This all resulted in adjusted earnings from continuing operations of 9.4%, which was 10 basis points below last year. As I mentioned earlier, we permanently closed 15 underperforming Bahamas B's restaurants as well as a few restaurants at other brands. These closures will result in a headwind to our fiscal twenty twenty six total sales growth, but are expected to be slightly positive to earnings. Fiscal twenty twenty six is a fifty three week year, and we anticipate a positive impact from the extra week on diluted net earnings per share from continuing operations of approximately $0.20 Now turning to our financial outlook for fiscal twenty twenty six. We expect total sales growth of 7% to 8%, including approximately 2% from additional week same restaurant sales growth of 2% to 3.5% and opening 60 to 65 new restaurants capital spending between $700,000,000 and $750,000,000 total inflation of 2.5% to 3% with commodities inflation of approximately 2.5% and total labor inflation of approximately 3.5% EBITDA of $2,160,000,000 to $2,190,000,000 an annual effective tax rate of approximately 13% and approximately $117,000,000 diluted average shares outstanding for the year, all resulting in diluted net earnings per share between $10.5 and $10.7 This morning, we also announced that our Board approved a 7% increase dividend to $1.5 per share, implying an annual dividend of $6 Now turning to our long term financial framework, which outlines the strategic priorities and performance expectations that guide our sustained value creation.

[Raj Vennam, SVP & CFO at Darden Restaurants]

We remain committed to delivering 10 to 15% total shareholder return as defined by EPS growth plus dividend yield. However, we're updating the framework to reflect greater emphasis on sales growth with appropriate investments while maintaining our growing margin. As a result, we're increasing new restaurant growth to 3% to 4%, same restaurant sales growth to 10.5%. Additionally, we're updating how we define margin expansion, shifting from EBIT margin to earnings after tax margin to more accurately reflect how we view and manage our business. There are three primary drivers of this change.

[Raj Vennam, SVP & CFO at Darden Restaurants]

First, due to the way we hedge mark to market expense on our deferred compensation, the impact in G and A is largely offset in the tax line. Second, current lease accounting guidelines result in an ongoing negative impact to interest and depreciation with an offsetting benefit in restaurant expense. And third, to account for any interest expense associated with any future acquisitions. Our updated framework targets EAT margin growth to be flat to 20 basis points. This all results in EAT growth contributing 6% to 10% of total shareholder return.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Our dividend remains a priority, and the target payout ratio range of 50% to 60% remains unchanged. Share repurchase is being updated from a dollar range to a percentage range of contribution to shareholder return. Return of cash is now targeted to contribute 4% to 5% of total shareholder return. Looking at our performance since 2019 relative to the updated framework, New restaurant growth, inclusive of acquisitions, was within the updated range, having grown 3.1%. Same restaurant sales of 2.9% is in the top half of the target range.

[Raj Vennam, SVP & CFO at Darden Restaurants]

And eat margin expansion was above the midpoint of the updated range, increasing 13 basis points on an annualized basis, resulting in an annualized EAT growth of 7.6% near the middle of the range. The dividend payout ratio of 58 is near the top end of the range and share repurchase contribution to shareholder return was 1%, culminating in total cash return of 4.1% despite the issuance of 9,000,000 shares of common stock in fiscal twenty twenty. Total shareholder return, as defined by EPS growth plus dividend yield, was 11.6% and within our targeted range. Additionally, our thirty year over our thirty year history as a publicly traded company, Darden has achieved an annualized total shareholder return of 10% or greater for any ten fiscal year period when taking into account Darden's stock appreciation plus dividend yield. Finally, our strong operating model generates significant and durable cash flows.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Since fiscal twenty nineteen, we've grown EBITDA by about $800,000,000 and are on track to reach nearly $1,000,000,000 in EBITDA growth by the end of fiscal twenty twenty six. Our balance sheet at the end of fiscal twenty twenty five is well positioned with adjusted debt to EBITDA of 2.1x. This is at the low end of our targeted range of 2x to 2.5x despite the additional debt related to the acquisition of Chewy's and Ruth's Chris over the past two years. Now I'll turn it back to Rick.

[Rick Cardenas, President & CEO at Darden Restaurants]

Thanks, Raj.

[Rick Cardenas, President & CEO at Darden Restaurants]

Strategic planning And at the Garden level, it ensures that we have the right portfolio of brands, we align strategies and coordinate operations to maximize our portfolio's value, and we capture the available synergies across all our brands. For our brands, our strategic planning process allows us to determine the strategic role in the portfolio, identify their distinct advantages and cultivate differentiated positioning, develop a deep understanding of their guests and the competitive landscape and ensure they adhere to their strategy so they can compete effectively and grow share. During the quarter, we completed our five year planning process. Each of our brands has a clear understanding of their role in their portfolio and they have built a five year strategic plan based on that role, focusing on what they need to do to win today and into 02/1930. They have already begun to put their plans in action and will execute them to drive shareholder value.

[Rick Cardenas, President & CEO at Darden Restaurants]

Additionally, there were some other key outcomes from that process that I would like to share. As Raj mentioned, we made the decision to close 15 Bahama Breeze locations in May, leaving the 28 highest performing Bahama Breeze restaurants in our portfolio. After further review, we have made the difficult decision that these remaining locations and the Bahama Breeze brand are not a strategic priority for us. We also believe that this brand and these restaurants have the potential to benefit from a new owner. Consequently, we will be considering strategic alternatives for Bahama Breeze, including a potential sale of the brand or converting restaurants to other Darden brands.

[Rick Cardenas, President & CEO at Darden Restaurants]

Excluding any one time potential impacts, which are unknown as of today, we do not expect these strategic alternatives, including a potential sale, to have a material impact on our financial results. We also signed a definitive agreement to sell the eight Olive Garden locations in Canada to Recipe Unlimited, the largest full service operator in Canada, and we are on track to close that deal soon. These eight restaurants will become franchised, and upon close, Garden and Recipe Unlimited will enter into an area development agreement to open 30 more Olive Gardens over the next ten years. Their expertise in the Canadian market will help the Olive Garden better operate locally and accelerate the brand's ability to grow throughout the country. Our international franchising team led by Brad Smith is focused on growing our global presence.

[Rick Cardenas, President & CEO at Darden Restaurants]

Today, have 154 franchise locations, which includes 63 United States and 91 outside the Continental United States. One of the benefits of the Ruth's Chris acquisition was the scale it added to our franchise business. The increase in revenue from adding 74 Ruth's Chris franchise locations has allowed the team to grow faster. We were able to add the resources and systems to help our franchisees better operate our brands that would have taken us longer if we had not added the Ruth's Chris restaurants. And the team has been busy signing new area development agreements with international partners.

[Rick Cardenas, President & CEO at Darden Restaurants]

In addition to the agreement with Recipe Unlimited, we also have new agreements with partners in India Spain, each of which calls for the development of 40 Olive Garden locations as well as an agreement with our existing Ruth's Chris franchise partner in Asia for the development of six Capital Grill locations. Brad and his team are doing a great job and I'm excited about the growth prospects of our international franchising business. Also, as you may have seen from our eight ks filing this morning, after thirty three years with Darden, Dan Kiernan will be retiring as President of Olive Garden on August 31. Dan has worked in the industry since he was 16 and began his career at Olive Garden as a manager in training. For the last seven years, he has led Olive Garden to new heights and has been a tremendous steward of the brand.

[Rick Cardenas, President & CEO at Darden Restaurants]

As I said earlier, Dan and his team have generated strong business momentum. And following the successful completion of their five year business plan, Olive Garden is well positioned for this leadership transition. One of the benefits of our scale is having a deep bench of talent to fill leadership roles. I am pleased that we have another proven operator to lead Olive Garden. John Wilkerson, who has led Cheddar's for the past seven will be the next President of Olive Garden, and he will work closely with Dan over the next ten weeks to ensure a smooth transition.

[Rick Cardenas, President & CEO at Darden Restaurants]

John is a thirty year Darden veteran who has done an excellent job of rebuilding the fundamentals of Cheddar's and setting the brand up for growth. John will continue reporting to me. John's replacement of Cheddar's is Mark Cooper, currently President of Seasons fifty two and Bahama Breeze. Laurie Kastler, who has led operations at Seasons for fifty two years Seasons fifty two for eleven years sorry, Lori, didn't want to age you has been named President of Seasons fifty two. Mark and Lori will report to John Martin, Group President.

[Rick Cardenas, President & CEO at Darden Restaurants]

In addition to Cheddar's and Seasons fifty two, John Martin will retain responsibility for Yardhouse, the Capital Grille and Eddie V's. He will also lead Bahama Breeze as we consider strategic alternatives for the brand. Additionally, I am pleased to share that Thomas Hall has been named President of Chewy's. For the past seven years, Tom has served as Executive Vice President of Operations for Longhorn. Tom lets me report to Todd Burrows, Group President, who is responsible for Chewy's and Ruth's Chris as well as Darden's development and international franchising teams.

[Rick Cardenas, President & CEO at Darden Restaurants]

With these changes, I am confident we have the right leaders in place across all our brands to compete effectively and grow share. Finally, last month, Darden celebrated its thirtieth year as a publicly traded company. I was delighted to ring the opening bell at the New York Stock Exchange with several team members with thirty or more years of service, including Lavelle Rutledge, our longest tenured team member at fifty two years. That moment was a great reminder of an enduring quote from Bill Darden. He said, the greatest edge we have on our competition is the quality of our employees reflected each day in the job they do.

[Rick Cardenas, President & CEO at Darden Restaurants]

Our people drive our success and I want to congratulate our teams on a strong quarter and a successful year. On behalf of our leadership team and the Board of Directors, thank you for your continued dedication and commitment to nourishing and delighting our guests and each other. Now we'll take your questions.

[Operator]

Thank you. We'll now be conducting a question and answer session. Our first question is coming from Eric Gonzalez from KeyBanc Capital Markets. Your line is now live.

[Eric Gonzalez, VP & Equity Research Analyst at KeyBanc Capital Markets]

Hi, thanks for the question and congrats on the really strong same store sales results. Obviously, you're executing at a very high level. It's really hard to deny the fact that the industry seems to be in a strong position, particularly some of the larger chains in full service. So perhaps you can give us your perspective on why casual dining is having a bit of a moment right now? And relatedly, I'm curious what your thoughts on how some of the smaller chains or independents may be faring in this environment, whether you think the independents are struggling with the same affordability perception issues that you might have in fast food?

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, Eric. Thanks for the question. Thanks for the comments on our quarter. As we look across what's been going on over the last five or six years, as you recall, we've been very prudent in keeping our pricing below inflation because we knew that over time pricing matters if you take it too much. And what we believe is happening right now in the casual dining space is our is consumers are figuring out that casual dining is a great value.

[Rick Cardenas, President & CEO at Darden Restaurants]

And so they're coming to casual dining more. And we're starting we're seeing that across our brands and some of the industry. And so without commenting on what's happened in other places, we think that's a big part of it. Consumers want to go out and spend their hard earned money, and we think we're taking some wallet share from fast food and fast casual.

[Eric Gonzalez, VP & Equity Research Analyst at KeyBanc Capital Markets]

Maybe if I can, as a follow-up, ask about the unit growth outlook, the 60 to 65 units this year. Your long term range in your algorithm is 3% to 4%. So I think that 60% to 65% implies 2.7% to 3%. So I guess I'm when we might see a ramp in unit growth and which brands might be the largest contributor?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Yes, Eric. I'd say from when you look at 60% to 65, you're right, it could imply 2.7% to three But as you look at actually how we're ramping up growth from where we're starting, we're actually building the pipeline. Our development team has done a great job. We expect to be in the three plus range over the next five years. And we are actually we have a pretty strong pipeline.

[Raj Vennam, SVP & CFO at Darden Restaurants]

As you know, these things take time to build up. But I think we have new practices and processes in place. And from a brand mix, as we've said initially, as you look at next year, I'd say between Olive Garden and LongHorn, we're going to probably have 40 to 45 openings. And then Yard House might be in the mid single digits. And then you have all the other brands contributing probably another 15 or so.

[Raj Vennam, SVP & CFO at Darden Restaurants]

But as we look into the future, we expect the other brands to become a bigger part of the mix. But we do think there's huge opportunity for still LongHorn to be in the 25 to 30 openings a year and then Olive Garden to be in that 20 ish range for the foreseeable future. But then we're also, as I said, the other brands will start to contribute even more as we move into the next few years.

[Operator]

Thank you. Next question is coming from Chris O'Cull from Stifel. Your line is now live.

[Chris O'cull, Managing Director at Stifel Financial Corp]

Yes, thanks. Raj, my question was on the updated long term framework. Does the new margin expansion target reflect a different view on the long term restaurant margin opportunity or even the rate of reinvestment you expect to make in the business?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Yes, Chris, it does a little bit. What we're trying to figure out is, one, let me just start with the just by changing the definition, we're getting a more holistic view because there's a lot of contraction between the G and A and D and A and then tax and interest. So that's why we wanted to get the bottom line number. So that's one. But two, does it imply restaurant level EBITDA maybe not growing at the rate we've targeted in the past?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Yes. Because we're saying that we're going to make investments with a greater emphasis on sales growth. And if sales growth drives even more margin, that's good. But we are going to try to find ways to reinvest to get for the long term.

[Chris O'cull, Managing Director at Stifel Financial Corp]

Okay. Thank you, guys.

[Operator]

Thank you. Next question is coming from David Palmer from Evercore ISI. Your line is now live.

[David Palmer, Senior Managing Director at Evercore]

Thank you. Regarding Uber Direct at Olive Garden, curious about what you can share about mix and same store sales contribution in fiscal 4Q and what you're contemplating for mix and same store sales contribution from it in fiscal twenty twenty six? And also, is there anything different about the incremental margin from that from the base business?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Hey, David. So I think we said on Q for Q4, the mix impact from just the fees was about 40 basis points. Uber Direct was about 3.5% of total sales at Olive Garden. So and I think we talked about in the past what contribution would be to incremental sales and we've said it's 40% to 50. So if you kind of go with that and take in the impact of the fees, it's roughly about 2% incremental sales impact to the quarter.

[Raj Vennam, SVP & CFO at Darden Restaurants]

We are not ready to talk about the future in terms of what the impact would be for next year. But when we did advertise, the exit rate was about 5% of total sales. That included the free delivery offer. And from a margin perspective, we do not expect this to have a meaningful impact of negative on margin any negative impact or positive impact on margin. Because if you look at how we structure the deal, a lot of the fees are just passed on to Uber, but there isn't any margin difference on the base.

[Raj Vennam, SVP & CFO at Darden Restaurants]

And the minimal the geography impact is pretty minimal. You're talking about maybe 10 basis points at best. But then there's also positive. People are buying more through that that helps offset. And you saw that in the fourth quarter.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Olive Garden has a pretty strong positive mix. And I think as we signaled a few times, if Uber Direct contributes even more than we expect going into this year, we're going to reinvest some of that into the business to drive long term growth.

[David Palmer, Senior Managing Director at Evercore]

All right. Thank you for that. And with regard to Uber Direct and other brands, I would assume that this is going as you would have expected for Olive Garden. Are there other dolls that you think are particular to LongHorn and the other brands that you'll want to figure out before you do over direct at those brands that you think might be an additional hurdle? Or are you kind of seeing probably what you need to see from this as a lever that could apply to your other brands? And thank you.

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, David. As we launched it in Cheddar's, and got pretty similar answers to Olive Garden, we were able to ramp it up faster and get it into most of the restaurants faster. The other brands, we'll continue to look at. We have some thoughts on what brand might go next. But we want to make sure that every brand that adds delivery has a great experience for there to go.

[Rick Cardenas, President & CEO at Darden Restaurants]

And so we mentioned that there were eight Cheddar's restaurants that didn't that aren't live. That's because they didn't earn the right to have delivery. That doesn't mean that our other brands don't have a great experience. But there are other brands might have a little less on the curbside space and those kind of things. So they might not even be able to have curbside pickup.

[Rick Cardenas, President & CEO at Darden Restaurants]

And as you recall, we don't want the Uber drivers to come into our restaurant. We want that to be just like another curbside experience. So we're looking through our portfolio to see what we can do on some of the brands that might not have as much curbside, to see if we want to add. But the last thing I'll say on this is, we are not pushing Uber Direct on any brand. Every brand has their president and their leaders and they choose if they want to do it.

[Rick Cardenas, President & CEO at Darden Restaurants]

We can veto if they get it and there are some brands that we would probably veto, but I don't think those brands are thinking about doing it. So without getting into which brand is next, we do have another brand that we think we're going to work on, but it will probably not start until some time right at the beginning of the next calendar year.

[Operator]

Thank you. Next question today is coming from Andrew Charles from TD Cowen. Your line is now live.

[Andrew Charles, Managing Director at TD Cowen]

Great. Thank you. Rick, it's a good segue to my I'm curious, are you prioritizing expanding, rolling out Uber Direct across the remaining brands that make sense, recognizing it's not going be all of them? Or is there aptitude to see how Olive Garden would perform on the Uber marketplace?

[Rick Cardenas, President & CEO at Darden Restaurants]

Right now, our priority is to continue to see how Olive Garden and Cheddar's perform in Uber Direct. Marketplace is something that has challenges for us and we've said what those challenges are. And that's why we developed this Uber Direct offer with Uber, which was the perfect thing for us and a really great thing for Uber. So we'll continue to see how this goes before we determine whether we want to even be on the marketplace at all.

[Andrew Charles, Managing Director at TD Cowen]

Okay. That's helpful. And then Raj, just a follow-up question. With the outlook for 2026 inflation of 2.5% to 3%, can you segue how that's going to look between food and labor?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Yes, Andrew. So the food is we're expecting food to be about 2.5% and labor to be about 3.5%.

[Operator]

Thank you. Next question is coming from Lauren Zimmerman from Credit Suisse. Your line is now live.

[Lauren Silberman, Director at Deutsche Bank]

Thank you very much and congrats on the quarter. I wanted to follow-up on the fiscal twenty twenty six guidance for the EPS. If your top line comes in stronger than expected, how are you thinking about flowing through to earnings versus reinvesting back in the business? And I guess that kind of applies a bit to the long term.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Yes. Lauren, I think if you look at our framework, we said we're going to try to get EAT margin to be flat to positive. So we're not going to do it at the cost of giving up margin, but we're going to we're okay if we if the incremental sales just flow through at the current restaurant level margins and then reinvest the rest. So there's ways to do that and that's kind of how we're thinking about it.

[Lauren Silberman, Director at Deutsche Bank]

Okay. Thanks. And then on the two to 3.5% comp growth, obviously a very strong momentum in the business. Can you just talk about how you're thinking about the cadence of comp as we move through the year?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Well, maybe I'll just start by saying, if you look at fourth quarter was obviously pretty strong for us and some of the momentum from that has carried on into June, June. But as we look at the twelve month out, there's obviously there's a lot of macro uncertainty. And so we thought looking at twelve months, we just it's prudent to kind of go with this range where we reflect the uncertainty because we are going to start wrapping on some of this growth as we get into the back half of the year. And so that's incorporated into guidance. I don't want to get too much into the cadence, but I think it's fair to assume that we'll start stronger.

[Raj Vennam, SVP & CFO at Darden Restaurants]

And from a year over year perspective, should be stronger in the first half.

[Operator]

Thank you. Next question today is coming from Brian Harbour from Morgan Stanley. Your line is now live.

[Brian Harbour, Equity Analyst & Executive Director - Restaurants & Food Distribution at Morgan Stanley]

Yes, thanks. Good morning, guys. Raj, what roughly what pricing do you expect to run-in the coming year? And I guess just how about like longer term? I mean, is sort of continuing to restrain that sort of key to all the brands as we think about the long term plan?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Yes, Brian. For fiscal twenty twenty six, I would expect us to be in that mid-2s for pricing. I think first quarter is going to be close to 2% and then we'll probably get into the mid- to high 2s as we get through the year. Obviously, it depends on how inflation comes in. But our bias but it will still likely be below total inflation.

[Raj Vennam, SVP & CFO at Darden Restaurants]

And our bias is as Rick just mentioned earlier, we've been very disciplined with respect pricing and that is not going to change anytime soon. That's the philosophy. We try to price as little as possible and still get the returns we could get. And it's worked well for us and we always play the long game and we'll continue to do that.

[Brian Harbour, Equity Analyst & Executive Director - Restaurants & Food Distribution at Morgan Stanley]

Okay. And you're talking about sort of reserving the right to reinvest. I mean, it sounds like you're just being more top line focused right, in the current algo. So, I mean, to some extent, what form would that take? Would it be more on the food side? How would that actually show itself in the brands?

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, Brian. Yes, you got it right. We are going to focus a little bit more on top line growth and on just grabbing margin. And that will that can take place in many ways. Every brand has a different way to do that.

[Rick Cardenas, President & CEO at Darden Restaurants]

Olive Garden is testing some things right now, which would bring their mix down a little bit, to be more have some more affordability. And because of the strength of Uber Direct, they're able to do that. Other brands might make some investments in labor to speed up the process. But it's only as we continue to grow sales will we make some of these investments. We think these are the right long term investments to be able to set the company up for the next thirty for the next five years.

[Rick Cardenas, President & CEO at Darden Restaurants]

And the investments that we're making, especially on the menu, whether it's in mix or in affordability, will benefit both dine in and off premise.

[Operator]

Thank you. Next question is coming from Sarah Senatore from Bank of America. Your line is now live.

[Sara Senatore, Senior Research Analyst at Bank of America]

Thank you. I guess just wanted to ask about fine dining. You mentioned that the category has been pressured, but I think unlike some of your other larger casual dining, you might be lagging some peers. The question is maybe broader about like sort of the approach to the portfolio and your decision to sell some Bahama Breeze, which I know is not in fine dining. But is there sort of a limit to the span of control that you can have in terms of the number of brands?

[Sara Senatore, Senior Research Analyst at Bank of America]

Is the acquisition of Ruth's, would that have played any role in Fine Dining maybe being a little bit softer just in terms of managerial resources? I'm just trying to understand sort of as you think about the portfolio, feels like there's a little bit more movement now than I've seen in the past. And I'm trying to sort of think through what might be influencing that.

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, Sarah. I'll start with the end of your question. The movement in portfolio being I think you're being you're talking about leadership. We have if we look if you look back a couple of years ago, we were in a position where we had leaders that are getting closer to retirement age. And so we wanted to set the company up for success over the long term and we made some changes a year ago. And one of those leaders has retired, we were ready for it with the changes we're doing this year. So we're really planful of what we do. In regards to the span of control of the people that we have, now you look at how we've structured the company, on people.

[Rick Cardenas, President & CEO at Darden Restaurants]

The two largest brands report to me Olive Garden and LongHorn and the other brands report to two proven leaders, Todd Burrows and John Martin. And so we think we've got it set up correctly. The number of brands really doesn't isn't a reason that fine dining has gone through the challenges they've gone through. Fine dining has been hit with a consumer that during COVID, we had a lot of growth in fine dining. I don't know what the other brands had, but we had growth in fine dining.

[Rick Cardenas, President & CEO at Darden Restaurants]

And those consumers were not necessarily consumers that we had seen before and they went back to the normal patterns. And so we don't feel at all that our size and scale has hurt fine dining. In fact, we have even stronger leaders there when we've got now we have a President of the two fine dining brands, Capgra and ADV's, led by John Martin. And one of our fine dining brands that we have is Roots Chris, which we've said many times whenever you add a brand, we're going to go through some challenges during integration and that will impact same restaurant sales and they're one of those. So we feel really good about where our fine dining brands are.

[Rick Cardenas, President & CEO at Darden Restaurants]

And then lastly, on the decision on Bahama Breeze, we have when we look at our portfolio and we try to determine what brands we add to our portfolio, we have criteria. And that criteria should be what we look at to keep brands in our portfolio. And we made the decision that Bahama Breeze doesn't meet the criteria anymore. And we think that they have a lot of growth potential with another owner. We were not going to be putting a lot of investment into Bahama Breeze.

[Rick Cardenas, President & CEO at Darden Restaurants]

And so to give those team members and those managers growth opportunities, it's better for them to be under a different ownership.

[Sara Senatore, Senior Research Analyst at Bank of America]

Got it. Okay. And then just a quick follow-up. You had mentioned $150,000 improvement sequentially at Fine Dining. Is there anything else that you can comment on about the demographics?

[Sara Senatore, Senior Research Analyst at Bank of America]

I mean, thought is that the other benefit that casual dining might be facing is just having less exposure to low income consumers. So anything you've been very helpful in sort of parsing out kind of under 50 and sort of some of the dynamics. Any updates there?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Yes, Sarah. I think so from a consumer demographic perspective, let me just kind of parse out a little bit. I think when you look at casual dining in general, we're seeing growth across most income cohorts. The only group that is still soft is the below 50,000 households. And in fact, if you actually look at the 150,000 plus that's actually where we're seeing a little bit more growth on casual dining.

[Raj Vennam, SVP & CFO at Darden Restaurants]

And then when you look at fine dining, you're actually seeing pullback at with households below $150,000 And then only place where we're seeing some growth or stabilization is about $150,000 households. The other dynamic with specifically is that the urban versus suburban that we had discussed. That suburban traffic is actually still at running at 95% of pre COVID levels, so holding up pretty well. But urban is still in the low 80s. It's like 82% or something in Q4.

[Raj Vennam, SVP & CFO at Darden Restaurants]

So it's not clearly a lot less than where it was before COVID. And now I will say one other thing on Fine Dining and then wrap it up is just really when you look at their retention to pre COVID, it has stabilized. We're seeing that more stable month to month and quarter to quarter in the last few months. So that's a good sign that things are starting to stabilize there.

[Operator]

Thank you. Next question today is coming from Peter Saleh from BTIG. Your line is now live.

[Peter Saleh, MD - Restaurants at BTIG]

Great. Thanks for taking the question and congrats on a great quarter. I wanted to ask about the incrementality that you're seeing in the Uber Direct business, the 40% to 50% at Olive Garden. Can you just comment a little bit about who these customers are? Are they higher income?

[Peter Saleh, MD - Restaurants at BTIG]

I mean, I'm assuming they're are they new to the brand? Or is it just increased frequency? Just trying to understand how the customer is using Olive Garden through Uber Direct.

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, Peter. Right now, delivery customer has very minimal overlap in dining. We are seeing higher guest frequency for delivery versus dine in guests, and a higher percentage of them are newer lapsed guests versus pickup or dine in. So we've got a lot of consumers that haven't been to Olive Garden in over a year that are using delivery service. And nearly 40 of our pickup consumers have tried delivery.

[Rick Cardenas, President & CEO at Darden Restaurants]

And then the last thing on the consumer demographics, they are younger and slightly higher income, which you would expect.

[Peter Saleh, MD - Restaurants at BTIG]

Great. That's very helpful. And then just lastly on price going forward, I know you're taking less price than inflation. When you talk about reinvestment, is it are you considering maybe even taking less price going forward? Or is it just reinvesting back in quality?

[Peter Saleh, MD - Restaurants at BTIG]

Just trying to understand kind of the reinvestment comments again, just if you guys can elaborate a little bit.

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, Peter. I think those reinvestments can take many forms. And one of them could be pricing even lower than inflation. But I think we've got some other places that we can invest. And that, as I said, is somewhere in affordability.

[Rick Cardenas, President & CEO at Darden Restaurants]

Do we have enough items under a certain price point? And in labor, are we providing the service experience that our guests expect for the prices they're paying? Now, we're not talking about huge, huge, huge dollars, but it could be tens of basis points in investment or maybe even 20s depending on how much we exceed our sales targets. But one of them could be pricing, but I would say that we've been making that investment for a long time. We'll keep doing that and we're going to continue to do that, but add some other things.

[Operator]

The next question is coming from Jake Bartlett from Truist Securities. Your line is now live.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

Great. Thanks for taking the question. Mine was about the same store sales guidance in 2026 and how it relates to the long term framework. Roughly the same, very similar. But you are seeing this big contributor from delivery now.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

You have easy compares. It looks like you talked about good momentum into the quarter or into the first quarter here. So what are some of the offsets? It sounds like you're baking in some conservatism due to the macro environment. What are you seeing from macro that's making you maybe a little more cautious there?

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

Any more color on the moving pieces? We can see what's driving some of the strength, but what are you worried about in terms of the headwinds?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Hey, Jake. So there's a lot in there. So let me try to unpack. The big headline would be we're going to continue to make investments. And like look, if you go back to during COVID, we were pushed very hard to take a lot more pricing than everybody else was and we didn't.

[Raj Vennam, SVP & CFO at Darden Restaurants]

And that is paying dividends. And so we've invested in price. Now we're going to invest in other places. Rick talked about different areas where we're going to continue to invest. And we like again, we are not trying to achieve a near term over earnings to hurt us for the long term.

[Raj Vennam, SVP & CFO at Darden Restaurants]

We're just playing the long game. And I think we've earned the credibility over time to show that our strategy works. If you look at over time, the fact that we've been able to deliver double digit TSR consistently is a testament to the way we operate this business and we'll not deviate from that. And that's really what's reflected in this guidance.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

Great. My follow-up is on G and A. You were a little higher than guided in 'twenty five fiscal 'twenty five. Could you give us a hand on what we should expect for 'twenty six for G and A?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Yes, Jake. Think just let me start with the first part of why it was a little bit higher in the first in this year than what we thought. It was really mark to market. So because there was such a big run up in the market, it was an incremental impact of about 15,000,000 to $20,000,000 and it was offset in taxes. And that's just that's why we're kind of talking about there is some interaction between G and A and tax and you got to look at them together.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Now as we look at next year, we expect G and A going in to be around $500,000,000 for the year. That includes the fifty third week. So if you take out roughly $10,000,000 for the fifty third week, you're looking at a $490,000,000 G and A on a fifty two week basis. And like I just said, there are several factors that can influence what we'll end up being because especially mark to market and then the incentive comp.

[Operator]

Thank you. Next question is coming from Jim Salera from Stephens. Your line is now live.

[Jim Salera, Research Analyst at Stephens Inc]

Yes, good morning. Thanks for taking our question. Are you able to give the breakout of traffic and ticket of Olive Garden for the quarter? Just trying to size up how much of an impact the buy one, take one contributed on transactions? And do you have a sense for if that deal was more of a frequency driver among loyal Olive Garden guests?

[Jim Salera, Research Analyst at Stephens Inc]

Or if it had kind of enticed new households to come to the brand?

[Raj Vennam, SVP & CFO at Darden Restaurants]

Let me start with the first part and then we'll get to the second part in a second. So from a same restaurant sales breakdown for Olive Garden, their pricing was 2.7%. And catering grew by about 70 basis points. And then they had I mentioned already, Uber delivery mix was about 40 basis points and then there was a positive mix of about 1%. And so their underlying traffic was about 2%, a little over 2%.

[Raj Vennam, SVP & CFO at Darden Restaurants]

But truly, the traffic would be more close to 3% if you take into consideration the catering mix. From a buy one, take one, it's just anytime we do something like that, we do bring in a few new guests, but that also drives frequency. And I think Rick mentioned in the script, we leveraged an existing offer. It actually did not hurt our check at all I mean, our margin. So you saw that.

[Raj Vennam, SVP & CFO at Darden Restaurants]

I mean, Olive Garden printed year over year segment profit growth of 100 basis points. And that's where we talk about how we're not deep discounting to just get traffic. We're doing it in ways that's prudent.

[Jim Salera, Research Analyst at Stephens Inc]

Okay, great. And then thinking about '26, just any comments you can offer on promotional cadence? You mentioned, I believe, industry guest count was up just under 100 basis points in the quarter. And so it seems like consumer may be gradually improving. Just thoughts on how much we pull on the promotional lever in 2026 to kind of support that gradual recovery?

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, Jake. For competitive reasons, I'm not getting into too much detail on the promotional activity. But I can tell you that if you look at a brand like Olive Garden, what this year demonstrated is that Olive Garden can react to whatever environment they compete in. And so if the environment gets a little bit more challenging, maybe we come off of a little bit of promotion activity and make investments in other places. If it gets more challenging, we keep the promotional activity that we have.

[Rick Cardenas, President & CEO at Darden Restaurants]

But we like the cadence that we have now. Recall that we have never ending possible during a time that's a normal low in casual dining. And we have buy one take one at the other time that's a normal low in casual dining. But they're not deep discounted and they do drive some traffic. And then you take Olive Garden out of the mix, you think about some of the marketing testing we're doing at Cheddar's.

[Rick Cardenas, President & CEO at Darden Restaurants]

John Wilkerson and his team have done a lot of great things to improve and make that brand much more foundationally ready to go. And so we're testing right now connected television and that's having a good impact. And so it will get people to see what Cheddar's has done over this year. So if you call that promotional activity that's just marketing their brand. It's not necessarily promotional, but we're going to continue to invest in marketing whether it's promotional or not.

[Operator]

Thank you. Next question today is coming from Dennis Geiger from UBS. Your line is now live.

[Dennis Geiger, Executive Director - Equity Research at UBS Group]

Great. Thanks guys. I wanted to ask and how you're thinking about the strength of the momentum. You kind of gave some color there, Rick. You touched on Uber as well. Just anything at a high level thinking about the combination of Uber, new manual, it seems like you've had good success promos, anything else? So just the confidence in that momentum running through 2026.

[Rick Cardenas, President & CEO at Darden Restaurants]

Jake, you broke up a little bit in the beginning. Sorry to say it. Can you just give us that question again?

[Dennis Geiger, Executive Director - Equity Research at UBS Group]

These work phones are great. Sorry, Rick. Just on Olive Garden momentum. You touched on Uber. In thinking about that momentum in 2026, thinking about the viewer but also the new menu items, the promos, just how you're thinking about the Olive Garden momentum continuing through '26? Thank you.

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, Dennis. I would say Olive Garden has had some strong momentum in the fourth quarter and that momentum that we have in this quarter is contemplated in our guide. And recall what Raj said earlier, our first half of the year has probably got a little bit more a little easier compares. And so our first half of the year should be a little bit better than our second half. That said, we're going to continue to find ways to keep that momentum going.

[Rick Cardenas, President & CEO at Darden Restaurants]

But a brand as big as Olive Garden is going to be pretty similar to Darden, so and where Darden results are. What we're going to do with Uber and if Uber Direct continues to build as it is, we've got some things that are in test right now in a couple of divisions at Olive Garden, perhaps we add it to more divisions. Investments. And so that would impact our same restaurant sales. So if we get more same restaurant sales from Uber, we may reduce our same restaurant sales a little bit based on those tests that we have.

[Rick Cardenas, President & CEO at Darden Restaurants]

It wouldn't necessarily mean that we would go negative, but it would reduce the impact of Uber. But for the right reasons for the long term, as Raj said, we've got a five year plan and we're focusing on being great today and in 02/1930.

[Dennis Geiger, Executive Director - Equity Research at UBS Group]

Thanks. And just a quick follow-up. As it relates to that deceleration or that increase in the long term comp guide for the business overall, is that largely delivery driven? Is there anything with any other initiatives? I know you've got to focus on ops and speed. That's a long term focus. Anything else?

[Rick Cardenas, President & CEO at Darden Restaurants]

No. I would say that if you look at the long term comp guidance, we're assuming a little bit more inflation over the next five years than we saw in the first five years. And so we'll price a little bit below inflation and that's a big component of that. We have our long term framework prior to this assumed in the midpoint that was no traffic growth that we would have traffic growth our comps would come from check growth. I mean our new long term framework has the same general assumption.

[Rick Cardenas, President & CEO at Darden Restaurants]

So we think we have a little bit more on price because of inflation, but we'll also have some growth because of Uber that will help offset, some other things that we're implementing to improve continue to improve our business for the long term.

[Operator]

Thank you. Next question today is coming from Christine Cho from Goldman Sachs. Your line is now live.

[Christine Cho, Analyst at Goldman Sachs]

Thank you so much and congrats on a strong quarter. You've reiterated the ongoing resilience in consumers about thousand in the last few quarters, but I was wondering if there's any notable observation on consumers in various age groups. So for example, have you seen better sales trends or higher net purchase intent from younger guests that is driving acceleration across casual dining as well as your major brands? Thank you.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Hi, Christine. Really, it all comes down to the household income. I mean, what we're seeing is that the higher income is actually doing a little bit more than the lower income in general. So if you look at across our segments, as you move up to incomes in the 100,000, 150,000 households, that's where we're seeing more growth than other places. And now it varies from brand to brand.

[Raj Vennam, SVP & CFO at Darden Restaurants]

But when you look at an aggregate, pretty much every household income is growing in casual dining except for the ones below 50,000 where it's kind of flattish. And that's really the age is really it's more about correlation to income than age.

[Operator]

Thank you. Next question is coming from Gregory Francfort from Guggenheim Securities. Your line is now live.

[Gregory Francfort, Director - Lead Restaurant Analyst at Guggenheim Partners]

Hey, thanks for the question. Rick, I guess my question is for you. Guess in the state category, if I go back five, ten years ago, you might have been competing with a number one player who was more focused on maybe margins and now you're focused you're competing with a number one player that might be a little more focused on top line. How have you positioned Longhorn to compete? I mean, I'm just trying to figure out how you're doing comps at this level, six and change.

[Gregory Francfort, Director - Lead Restaurant Analyst at Guggenheim Partners]

And going forward, do you think you need to reinvest in price? Do you think you need to reinvest in portion sizing? I guess I'm trying to figure how you're going to continue to compete there. Thanks.

[Rick Cardenas, President & CEO at Darden Restaurants]

Hey, Greg. LongHorn, the reason they're performing the way they have been is because of their adherence to their strategy, quality, simplicity and culture. They've made a lot of investments, during COVID, significant investments in all of their items. So they increased the size of all their stakes. They took a lot less pricing than inflation.

[Rick Cardenas, President & CEO at Darden Restaurants]

And they're going to continue to focus on that and improve the service at Longhorn. So, quality isn't just about food. It's about the overall experience. And so, yes, they'll keep making those investments, but not at the detriment of margin. So we think that LongHorn is well positioned to compete with their category.

[Rick Cardenas, President & CEO at Darden Restaurants]

There's not as much overlap between the biggest player and Longhorn as you would think, on consumer. They go there for different reasons. And so we still feel like we've got a great consumer proposition at Longhorn and we would anticipate that continuing and that's contemplated in our guide and our five year long term or our long term framework, not our five year framework, long term.

[Gregory Francfort, Director - Lead Restaurant Analyst at Guggenheim Partners]

Thank you.

[Operator]

Thank you. Our next question today is coming from Andrew Strelzik from BMO Capital Markets. Your line is now live.

[Andrew Strelzik, Restaurant Analyst at BMO Capital Markets]

Hey, good morning. Thanks for taking the questions. Two quick ones for me. Excuse me. The first one is on marketing.

[Andrew Strelzik, Restaurant Analyst at BMO Capital Markets]

Within that long term framework a stronger top line focus, how are you thinking about marketing over the next several years and in 2026 as well? And then the other question was on speed of service, which has been a focus for you. What drivers do you see there for 'twenty six? And can you give us an update on the progress there? Yes,

[Rick Cardenas, President & CEO at Darden Restaurants]

Andrew. On the marketing front, over the next five years, we anticipate marketing growing faster than our sales. Without getting into the total impact of marketing, but as Raj has said in the past, somewhere tens of twenties of basis points, Raj can get more detail on next fiscal year. And I'll turn it over to him in a second. But again, we're going to continue to invest in marketing and you'll see more of that in Cheddar's, you'll see more of that across some of our brands.

[Rick Cardenas, President & CEO at Darden Restaurants]

But it's not and it will grow faster than sales. When you think about speed, we're in the early innings. I know there's a lot of times we got a baseball analogy. We're in the real earnings here. And as I said, when I mentioned speed before, this our speed challenges have been a long time trend in the entire industry.

[Rick Cardenas, President & CEO at Darden Restaurants]

And we will take a good time to reverse that. We've made some progress. It's not as fast as I'd like it to be, but we've made progress. All of our brands are faster. And what we're really trying to do is ensure that the consumer we're meeting the pace that the consumer wants and not holding them hostage in our restaurants.

[Rick Cardenas, President & CEO at Darden Restaurants]

So, that will take, as I said take some time. We've got about 100,000 servers or more in our system and we got to convince all of them that they've got to change a little bit of what they do and we're working on that.

[Raj Vennam, SVP & CFO at Darden Restaurants]

I think Rick you talked about it. Just so for fiscal twenty twenty six specifically, we're still talking maybe in the ten, twenty basis points. I think if you look over the five years same thing. Rick already mentioned that. And one thing I'll just point out is we don't assume that it's actually a margin drag.

[Raj Vennam, SVP & CFO at Darden Restaurants]

The way we look at it is that the investments we're making, we're going to get a return on it and that keeps the margins flat. So I wouldn't view this as a margin erosion.

[Andrew Strelzik, Restaurant Analyst at BMO Capital Markets]

Great. Thank you very much.

[Operator]

Thank you. Next question is coming from Brian Vaccaro from Raymond James. Your line is now live.

[Brian Vaccaro, Managing Director - Equity Research at Raymond James Financial]

Hi, thanks.

[Peter Saleh, MD - Restaurants at BTIG]

Most of mine have been asked,

[Brian Vaccaro, Managing Director - Equity Research at Raymond James Financial]

but just one quick one. Raj, can you walk through the traffic and check dynamics at Longhorn as well? Thank you.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Sure,

[Raj Vennam, SVP & CFO at Darden Restaurants]

Brian. LongHorn was basically their pricing was 3.3%, their traffic was 3.4%, their check was pretty flat to pricing. So I think their total was 6.7 percent.

[Operator]

You. Next question is coming from John Ivankoe from JPMorgan. Your line is now live.

[John Ivankoe, MD - Equity Research at JP Morgan Chase & Co]

Hi. Thank you. According to the government, overall industry growth and units, now this is a broad industry, seems to have slowed from around 2.5% to around 1.5. So my question is, where do you think that that growth rate is changing across the industry? And how might that be influencing your ability to access the type of real estate that Darden typically does best with? In other words, you make a comment about the tightening or loosening of the specific sites that you're looking for over the next couple of years.

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, John. We have built a strong pipeline of sites for the next few years. We are in a better position to start this fiscal year than we were to start last fiscal year. We feel really good about the work that the team has done, including new prototypes for Cheddar's and Yard House and finding increasing the number of potential sites for Cheddar's, Yard House, Olive Garden and LongHorn. I think your comment on the number of units is restaurant growth.

[Rick Cardenas, President & CEO at Darden Restaurants]

And so where that's coming where the slowdown is coming from I think is smaller independents and smaller chains. The big chains like us, continue to grow. We've got great access to capital. We've got great cost of capital and we've shown that we deserve to be able to grow.

[John Ivankoe, MD - Equity Research at JP Morgan Chase & Co]

You.

[Operator]

Thank you. Next question today is coming from Jeffrey Bernstein from Barclays. Your line is now live.

[Jeffrey Bernstein, Equity Research Analyst at Barclays Capital]

Great. Thank you. Rick, it sounds like you're more comfortable with the uptick in promotions in recent quarters. I know you guys were previously more hesitant to do any more promotional activity. So and I think you mentioned focus more on affordability at Olive Garden going forward to perhaps drive more traffic.

[Jeffrey Bernstein, Equity Research Analyst at Barclays Capital]

I'm just wondering if you could talk a little bit more about that increased confidence in wading into the more value or more affordability side of things and your ability at the same time to still protect margin? And then I had one follow-up.

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, Jeff. If you think about the promotions, it's not like we're promotion crazy here. We added buy one, take one, which as Raj mentioned wasn't a margin drag and it was five weeks, at a low time. So it's not like we're going to go into heavy promotional activity. As we talk about the investments that we're looking at, we're looking at a couple of things.

[Rick Cardenas, President & CEO at Darden Restaurants]

One is, as we let's double down on affordability at Olive Garden and at other brands. As you think about what we think has been helping somewhat casual dining and definitely us is the price gap between us and other segments. And so let's keep that moving. Let's get that a little bit stronger. That would mean adding some items on the menu that may not be the same price points as the ones that are on the menu today.

[Rick Cardenas, President & CEO at Darden Restaurants]

And so that would be a mix impact. Whether we promote that or not, I don't know. We may talk about it, but it's not like we're going to we think that we're going to have to have a promotion to do that. We'll talk about it. We'll let our consumers know.

[Rick Cardenas, President & CEO at Darden Restaurants]

And as I said, we've got some of this in test in a couple of divisions at Olive Garden. It's doing pretty well for us. And so we feel really good about it. What it's done to our affordability ratings, which were already strong and what it's done for those guests intent to return. So we feel good about the investments we're making.

[Rick Cardenas, President & CEO at Darden Restaurants]

We wouldn't be making the investments if we didn't think they'd pay off in the long run.

[Jeffrey Bernstein, Equity Research Analyst at Barclays Capital]

Understood. And then just as it relates to your competition on the same front, how do you think the industry is thinking about discounting versus prior, whether or not they're comfortable with the elevated levels or whether you might see some change there?

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, Jeff. All I can I mean, I don't know what the industry is thinking about other than what I see? And we've got a player that's been doing some good communication on a good value item. And looking at the rest of their menu, they're driving some folks in. I can't say what anybody else is going to do.

[Rick Cardenas, President & CEO at Darden Restaurants]

I can just say that we're ready to react our way to whatever happens. And we showed that at Olive Garden this year and what we did to continue to improve the profitability at Olive Garden and drive traffic and drive same restaurant sales.

[Jeffrey Bernstein, Equity Research Analyst at Barclays Capital]

Thank you.

[Operator]

Thank you. Next question today is coming from Deleu Gardullo from Bernstein. Your line is now live.

[Danilo Gargiulo, Senior Research Analyst at Bernstein]

Great. Thank you. Rick, I was wondering if you can comment on the labor environment in The United States and particularly whether you've seen any increase in turnover in the areas that you're operating, maybe not necessarily in your case, but in general in the trade areas that you're most active on, specifically in light of this integration policies that seem to be tightening?

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes. What I would say is I don't we don't get turnover data by market for others. Know what ours are, and we're not really seeing material impact on turnover or people showing up to work. From day to day, things fluctuate in our restaurants. But as of now, nothing material on the top line or on labor.

[Rick Cardenas, President & CEO at Darden Restaurants]

Think me I'll keep I think it's because we've got such a great employment proposition and people want to come to work for us. So if anyone leaves, we're able to fill that job pretty quickly. But we haven't really seen an uptick in turnover. In fact, our brands have been at record turnover levels, record retention levels.

[Danilo Gargiulo, Senior Research Analyst at Bernstein]

Okay. Great to hear. And then regarding your international aspirations, specifically on the franchising side, what do you think your long term objective might be from in terms of like total number of units that you think over the next five to even ten years, people will be aspiring to get to? And which areas do you think are going to be getting most attention? You mentioned like India, Spain.

[Danilo Gargiulo, Senior Research Analyst at Bernstein]

Any other areas that you think could be particularly of interest to you? Thank you.

[Rick Cardenas, President & CEO at Darden Restaurants]

Well, Danilo, we've really started this international push not too long ago, and we're already seeing really great results in signing franchise partners. We want to see them build those restaurants. With India, for example, the 40 restaurants are just in one small part of India. We've got a lot of other areas we can go, but we felt it was prudent to have that partner prove that they can meet those development commitments in that part of India before we give them another part of India. In regards to Spain, they were really high on Olive Garden.

[Rick Cardenas, President & CEO at Darden Restaurants]

And when signing a 40 restaurant deal, we want to see how they go. There's no guarantee that all 40 of those restaurants are going to open, just like there's no guarantee that the 40 India restaurants are going to open. But we feel really good about our progress. And once we get a restaurant in Spain, what generally happens let me take that back. What generally happens, once we get Olive Garden a country, those franchise partners realize how good we support them and they want another brand.

[Rick Cardenas, President & CEO at Darden Restaurants]

And so we'll probably get another brand in those countries if we support them and they see the performance. But I'm not going to give you a number of where we're going to be in five years. What I will say is I believe it will be bigger than it is today and it's already a meaningful business for us on the profit side with really no capital.

[Operator]

Thank you. Our next question is coming from Jim Sanderson from Northcoast Research. Your line is now live.

[Jim Sanderson, MD & Research Analyst at Northcoast Research]

Hey, thanks for the question. I wanted to go back to your fiscal twenty twenty six guidance. What closure rate is implied for 2026? And just wondering if you're looking more closely at some of the smaller brands like Seasons fifty two or Eddie V's that haven't really grown that much, if there's an opportunity to streamline your portfolio going forward.

[Raj Vennam, SVP & CFO at Darden Restaurants]

Jim, I think we basically as part of the five year plan, we went through our portfolio and we closed more than normal this fiscal year. We're not assuming any significant number of closings next year.

[Jim Sanderson, MD & Research Analyst at Northcoast Research]

All right. And a quick follow-up question on the Uber Direct. Mentioned the promotion in the May that generated significant pickup in delivery. Just wondering, did the incrementality, the 40% to 50%, was that consistent? Or did you see more new clients coming to the brand helped by the marketing and promotions for TV on TV?

[Rick Cardenas, President & CEO at Darden Restaurants]

Yes, Jim. It's fairly the incrementality is fairly consistent. Recall, when we offer free delivery, we may have some people that are doing current pickup getting delivery. So I wouldn't say that the incrementality is going to spike because we may have some trade over from our current pickup guests. But it did increase our sales for delivery when we added the commercial.

[Operator]

Thank you. We've reached the end of our question and answer session. I'd to turn the floor back over for any further or closing comments.

[Courtney Aquilla, Senior Director of Finance & Investor Relations at Darden Restaurants]

This concludes our call. I want to remind you that we plan to release first quarter results on Thursday, September 18 before the market opens with a conference call to follow. Thank you for participating. Have a great day.

[Operator]

Thank you. That does conclude today's teleconference webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

Participants

Executives

• Courtney Aquilla, Senior Director of Finance & Investor Relations
• Rick Cardenas, President & CEO
• Raj Vennam, SVP & CFO

Analysts

• Eric Gonzalez, VP & Equity Research Analyst at KeyBanc Capital Markets
• Chris O'cull, Managing Director at Stifel Financial Corp
• David Palmer, Senior Managing Director at Evercore
• Andrew Charles, Managing Director at TD Cowen
• Lauren Silberman, Director at Deutsche Bank
• Brian Harbour, Equity Analyst & Executive Director - Restaurants & Food Distribution at Morgan Stanley
• Sara Senatore, Senior Research Analyst at Bank of America
• Peter Saleh, MD - Restaurants at BTIG
• Jake Bartlett, Senior Equity Research Analyst at Truist Securities
• Jim Salera, Research Analyst at Stephens Inc
• Dennis Geiger, Executive Director - Equity Research at UBS Group
• Christine Cho, Analyst at Goldman Sachs
• Gregory Francfort, Director - Lead Restaurant Analyst at Guggenheim Partners
• Andrew Strelzik, Restaurant Analyst at BMO Capital Markets
• Brian Vaccaro, Managing Director - Equity Research at Raymond James Financial
• John Ivankoe, MD - Equity Research at JP Morgan Chase & Co
• Jeffrey Bernstein, Equity Research Analyst at Barclays Capital
• Danilo Gargiulo, Senior Research Analyst at Bernstein
• Jim Sanderson, MD & Research Analyst at Northcoast Research