Darden Restaurants (DRI) reported fiscal first-quarter results on Thursday that revealed a widening performance gap between its flagship Olive Garden chain and the LongHorn Steakhouse brand, with overall revenue falling just short of Wall Street expectations.
The Orlando, Florida-based company posted net sales of $3.2 billion for the quarter ended August 30, up 5.1% from $3.04 billion a year earlier but slightly below the $3.21 billion analysts had projected, according to data from LSEG. Adjusted earnings per share from continuing operations came in at $2.05, matching the FactSet consensus.
Shares fell as much as 5.6% in premarket trading before paring losses to close down 2.3% on Thursday. The stock has still gained nearly 14% year to date.
Diverging Fortunes Across the Portfolio
The quarter laid bare the contrasting trajectories of Darden’s two largest brands. LongHorn Steakhouse continued its run as the company’s standout performer, with same-store sales jumping 6.2%. The chain, which has eclipsed Olive Garden as Darden’s growth engine even as it generates a smaller share of total revenue, has benefited from diners gravitating toward value-oriented steakhouse offerings.
Olive Garden, by contrast, managed same-store sales growth of just 1.1%. The Italian-themed chain remains Darden’s largest brand by both restaurant count and revenue, but its momentum has slowed as consumers become more selective about discretionary spending.
The fine-dining segment, which includes The Capital Grille and Ruth’s Chris, posted same-store sales growth of 1.6%, while the company’s remaining chains grouped under its other business division grew 3.8%.
On a comparable calendar basis, blended same-store sales rose 3.2%, narrowly missing the 3.3% FactSet estimate. On a fiscal calendar basis, the figure was 3.1%.
“The first quarter was a solid start to our fiscal year with each of our segments delivering positive same-restaurant sales,” said Rick Cardenas, Darden’s president and chief executive officer. “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.”
Segment Financials
SegmentSalesSegment ProfitOlive Garden$1.33 billion$270.8 millionLongHorn Steakhouse$860.9 million$154.6 millionFine Dining$304.2 million$39.6 million
Note: LongHorn Steakhouse sales rose from $776.4 million in the year-earlier quarter. Fine Dining includes The Capital Grille and Ruth’s Chris.
Net income for the quarter totaled $233.4 million, or $2.04 per share, down from $257.8 million, or $2.19 per share, a year earlier.
Full-Year Outlook Reaffirmed
Darden maintained its fiscal 2027 guidance, projecting total sales of $13.60 billion to $13.75 billion and earnings per share from continuing operations in a range of $11.10 to $11.35. The midpoint of that range, $11.23, sits slightly below the analyst consensus of $11.28.
The company had previously guided to same-store sales growth of 2.5% to 3.5% for the fiscal year. The reaffirmation came as little surprise to Wall Street analysts. UBS Securities said earlier this month that it expected the restaurant operator to reiterate its full-year outlook despite softening trends at Olive Garden. Oppenheimer similarly noted last week that Darden’s near-term earnings trajectory should improve as Olive Garden trends accelerate from first-quarter lows.
Seaport Research Partners cautioned that the broader restaurant industry is likely to continue facing a challenging consumer environment amid elevated inflation and macroeconomic pressures, though the firm said it remained broadly constructive on several large-cap names in its coverage universe.
Capital Returns and Scale
During the quarter, Darden repurchased $222.3 million of its common stock and declared a quarterly dividend of $1.62 per share, payable November 2, 2026. The company operated 2,218 company-owned restaurants across its portfolio as of quarter-end.
Darden’s results come against a mixed backdrop for the casual-dining sector. Texas Roadhouse (TXRH) delivered better-than-expected second-quarter results in August, while Brinker International (EAT), parent of Chili’s, issued an upbeat midpoint forecast for fiscal 2027 and expressed confidence that the Chili’s brand can sustain momentum into the fourth quarter.
For Darden, the central question heading into the remainder of the fiscal year is whether LongHorn Steakhouse’s strength can continue to offset Olive Garden’s deceleration. With the company’s guidance intact and capital returns flowing to shareholders, management is signaling confidence that the portfolio’s diversification provides sufficient ballast against a choosier consumer.
