Darden Posts Weak Outlook as Olive Garden Sales Disappoint

Darden Restaurants Inc. issued a cautious profit outlook for fiscal year 2025 on June 20, 2024, as same-store sales at its Olive Garden brand fell short of expectations. Olive Garden's sales increased by only 1.9% in the fourth quarter, significantly underperforming the 3.5% growth analysts had predicted. This underperformance overshadowed Darden's overall better-than-expected earnings for the quarter, which saw total sales rise 4.4% to $2.1 billion. The company's guidance for the upcoming fiscal year anticipates diluted earnings per share between $9.40 and $9.60, a range that disappointed investors. Darden CEO Rick Cardenas attributed the Olive Garden shortfall to factors including increased promotional activity and a shift in consumer spending habits. Despite the concerns raised by Olive Garden's performance, other Darden brands, such as LongHorn Steakhouse and Cheddar's Scratch Kitchen, reported stronger sales growth, with LongHorn's same-store sales up 5.7%. Michael Halen, Bloomberg Intelligence Senior Restaurant and Foodservice Analyst, noted that the disappointing Olive Garden results highlight potential headwinds for casual dining chains facing price-sensitive consumers and increased competition.