Loading...
01/11 04:51
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects a positive sentiment with strong financial performance, optimistic guidance, and strategic growth initiatives. Despite some concerns about margin pressures and potential wage policy changes, management's confidence in their strategies and investments in marketing and delivery promotions suggest a focus on growth. The positive response to promotions like the Never Ending Pasta Bowl and robust performance in other business segments further support this sentiment. Overall, the company's proactive approach and strong market position indicate a likely positive stock price movement.
Total Sales $3 billion, 10% higher than last year, driven by same-restaurant sales growth of 4.7%, the acquisition of 103 Chuy's restaurants, and the addition of 22 net new restaurants.
Adjusted Diluted Net Earnings Per Share $1.97, 12.6% higher than last year, attributed to strong top-line sales growth and significant scale.
Adjusted EBITDA $439 million, reasons for change not explicitly mentioned.
Shareholder Returns $358 million returned to shareholders, including $175 million in dividends and $183 million in share repurchases.
Food and Beverage Expenses 20 basis points lower, driven by pricing leverage as commodities inflation was approximately 1.5% for the quarter.
Restaurant Labor 20 basis points unfavorable due to high performance-based compensation expense, including a higher 401(k) match for restaurant teams. Total labor inflation of 3.1% was fully offset by pricing of 2.2% and productivity improvements.
Restaurant-Level EBITDA 18.9%, 10 basis points lower than last year, due to Uber Direct fees and brand mix with the addition of Chuy's.
Adjusted G&A Expenses 30 basis points favorable, driven by synergies from the acquisition and leverage from sales growth, partially offset by unfavorable mark-to-market expense on deferred compensation.
Interest Expense Increased 10 basis points due to financing expenses related to the Chuy's acquisition.
Adjusted Effective Tax Rate 10.5%, helped by mark-to-market hedge. Without this impact, it would have been approximately 12.5%.
Olive Garden Total Sales Increased by 7.6%, driven by strong same-restaurant sales and traffic growth, and the addition of 18 new restaurants. Segment profit margin was 20.6%, 10 basis points below last year due to investments in affordability and delivery fees.
LongHorn Steakhouse Total Sales Increased 8.8%, driven by same-restaurant sales growth of 5.5% and the addition of 18 new restaurants. Segment profit margin was 17.4%, 60 basis points below last year due to higher-than-expected beef costs and pricing below total inflation of approximately 100 basis points.
Fine Dining Segment Total Sales Increased 2.7%, driven by the addition of 5 net new restaurants. Same-restaurant sales were slightly negative, but a limited-time offer at Ruth's Chris helped offset challenges. Segment profit margin was lower than last year.
Other Business Segment Total Sales Increased 22.5%, driven by the acquisition of Chuy's and positive same-restaurant sales of 3.3%. Segment profit margin was 16.1%, 90 basis points higher than last year due to positive sales momentum and productivity improvements.
Olive Garden's new menu items: Introduced Spicy 3-Meat Sauce and Bucatini pasta starting at $12.99, and Calabrian Steak and Shrimp Bucatini as a limited-time offering, which became a top 10 guest favorite.
Delivery expansion: First-party delivery through Uber Direct captured younger, affluent guests, doubling weekly deliveries during a campaign and maintaining 40% higher delivery volume post-campaign.
Menu affordability: Tested lighter portion menu with reduced prices, increasing affordability scores by 15 percentage points.
Cheddar's new offering: Introduced Hawaiian sirloin with sides and croissant for $16.49, leveraging Darden's purchasing power.
Expansion in Canada: Sold 8 Olive Garden locations in Canada to Recipe Unlimited and entered an agreement to open 30 more locations over 10 years, with 5 already approved.
Franchise growth: Currently operates 163 franchise locations globally, including 63 in the U.S. and 100 outside the U.S.
Same-restaurant sales growth: Achieved 4.7% growth in same-restaurant sales, with Olive Garden and LongHorn Steakhouse leading the performance.
Cost management: Pricing was kept 30 basis points below inflation, and productivity improvements offset labor inflation of 3.1%.
Focus on long-term growth: Reinvesting in menu affordability and delivery to drive sustained growth.
Leadership engagement: Held an annual leadership conference to align on 5-year business plans and operational priorities.
Fine Dining Segment Performance: Same-restaurant sales for the Fine Dining segment were slightly negative for the quarter, indicating challenges in this category. Despite efforts like limited-time offers, the segment faced continued softness, impacting overall performance.
Beef Cost Inflation: Higher-than-expected beef costs towards the end of the quarter created cost pressures, particularly for LongHorn Steakhouse, which saw a 60 basis point decline in segment profit margin.
Delivery Fees Impact: Delivery fees, particularly from partnerships like Uber Direct, have impacted profit margins, as seen in Olive Garden's segment profit margin, which was 10 basis points below last year despite strong sales.
Commodities Inflation: Commodities inflation of approximately 3% to 4% is expected for the fiscal year, with beef costs being a significant driver. This inflation poses a challenge to maintaining profit margins.
Labor Costs: Labor inflation of 3.1% was reported, with higher performance-based compensation expenses, including a higher 401(k) match, adding to cost pressures.
Canadian Operations: The sale of 8 Olive Garden locations in Canada and the refranchising agreement may pose risks in terms of operational consistency and brand control in the Canadian market.
Fine Dining Price Sensitivity: In the current environment, more guests in the Fine Dining segment are seeking price certainty, which could limit pricing flexibility and impact revenue growth.
Fiscal 2026 Financial Outlook: Total sales growth expected to be 7.5% to 8.5%. Same-restaurant sales growth projected at 2.5% to 3.5%. Approximately 65 new restaurant openings planned. Total inflation anticipated at 3% to 3.5%, with commodities inflation of 3% to 4%. Adjusted diluted net earnings per share guidance remains between $10.50 and $10.70.
Second Quarter Fiscal 2026: Lowest year-over-year EPS growth expected due to significant increase in beef costs. Pricing for the second quarter anticipated to be approximately 100 basis points below total inflation.
Olive Garden Initiatives: Focus on strengthening affordability with lighter portion menu options, currently in 40% of restaurants, showing positive guest response. Continued promotion of first-party delivery, which has shown sustained order volume increase post-campaign.
LongHorn Steakhouse: Sustained sales and traffic outperformance expected, with pricing below total inflation by approximately 100 basis points.
Fine Dining Segment: Actions being taken to address softness in the segment, including limited-time offers like a 3-course menu at Ruth's Chris Steakhouse, which has shown positive guest preference and sales lift.
Franchising and Global Expansion: Plan to open 30 new Olive Garden locations in Canada over the next 10 years under an area development agreement with Recipe Unlimited.
Dividends Paid: $175 million in dividends were paid during the first quarter.
Share Repurchase: $183 million worth of shares were repurchased during the first quarter.
The earnings call summary and Q&A highlight strong sales growth across segments, optimistic future guidance, and strategic initiatives like lighter portions and delivery expansion. Despite some margin pressures and management's reluctance to provide specifics, the overall sentiment is positive with expectations of improvement in labor margins and beef costs. The market is likely to react positively to the strong sales performance and strategic growth plans, especially with the optimistic guidance and new initiatives.
The earnings call reflects a positive sentiment with strong financial performance, optimistic guidance, and strategic growth initiatives. Despite some concerns about margin pressures and potential wage policy changes, management's confidence in their strategies and investments in marketing and delivery promotions suggest a focus on growth. The positive response to promotions like the Never Ending Pasta Bowl and robust performance in other business segments further support this sentiment. Overall, the company's proactive approach and strong market position indicate a likely positive stock price movement.
The earnings call reveals strong financial performance with a 10.6% sales increase and improved margins. The optimistic guidance, increased dividend, and share repurchases are positive indicators. The Q&A highlights strategic growth plans and a positive market outlook, despite some uncertainties around Uber Direct's impact and promotional strategies. Overall, the positive financials and shareholder returns outweigh the risks, suggesting a positive stock price movement.
The earnings call showed mixed results: strong sales growth and improved margins, but concerns about labor costs and vague management responses in the Q&A. Despite positive guidance and strategic initiatives like Olive Garden's Uber Direct pilot, uncertainties remain, such as the impact of advertising spend and inflation. The market's response is likely to be neutral, as positive financial results are balanced by unclear guidance and potential cost pressures.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
