Core Insights - Darden Restaurants, Inc. reported strong financial results for the first quarter of fiscal 2026, with total sales increasing by 10.4% to $3.0 billion, driven by a same-restaurant sales increase of 4.7% and contributions from acquisitions [2][6][7]. Financial Performance - Consolidated sales for Q1 2026 were $3,044.7 million, compared to $2,757.0 million in Q1 2025, reflecting a growth of 10.4% [4]. - Same-restaurant sales growth was reported at 4.7%, with Olive Garden and LongHorn Steakhouse showing increases of 5.9% and 5.5%, respectively [2][4]. - Adjusted diluted net earnings per share from continuing operations increased by 12.6% to $1.97, up from $1.75 in the prior year [7][19]. Segment Performance - Olive Garden generated sales of $1,301.1 million in Q1 2026, with a segment profit of $267.6 million, compared to $1,209.1 million and $250.1 million in Q1 2025 [4]. - LongHorn Steakhouse reported sales of $776.4 million and a segment profit of $134.9 million, up from $713.5 million and $128.4 million, respectively [4]. - The Fine Dining segment experienced a slight decline in profit, with a segment profit of $38.7 million compared to $38.9 million in the previous year [4]. Shareholder Returns - The Board of Directors declared a quarterly cash dividend of $1.50 per share, payable on November 3, 2025 [5]. - During the quarter, the company repurchased approximately 0.9 million shares for a total of $183 million, with $865 million remaining under the current $1 billion repurchase authorization [8][7]. Future Outlook - The company updated its full-year financial outlook for fiscal 2026, projecting total sales growth of 7.5% to 8.5%, including approximately 2% growth related to the addition of a 53rd week [14]. - Same-restaurant sales growth is expected to be between 2.5% to 3.5%, with plans to open approximately 65 new restaurants [14].

Financial Data and Key Metrics Changes - The company generated $3.2 billion in total sales, a 6% increase from the previous year, driven by same restaurant sales growth of 0.7% and the acquisition of 103 Chuy's restaurants [30] - Adjusted diluted net earnings per share from continuing operations were $2.80, a 6.9% increase from last year [31] - Adjusted EBITDA was $559 million, with an adjusted effective tax rate of 13.4% [33][34] Business Line Data and Key Metrics Changes - Olive Garden's total sales increased by 1.5%, with same restaurant sales growth of 0.6% [35] - LongHorn's total sales rose by 5.1%, driven by same restaurant sales growth of 2.6% and the addition of 14 new restaurants [36] - The fine dining segment saw total sales increase by 3.3%, although same restaurant sales were negative 0.8% for the quarter [37] Market Data and Key Metrics Changes - The average same restaurant sales for the industry grew by 0.9%, while guest counts decreased by 1.2% [6] - The median same restaurant sales for the industry decreased by 2.3%, indicating a significant disparity between average and median results [7] Company Strategy and Development Direction - The company plans to open between 60 and 65 new restaurants in fiscal 2026, with capital expenditures of $375 million to $400 million for new restaurants [41] - The company is testing smaller restaurant prototypes that are approximately 20% smaller and cost about 15% less to build than legacy prototypes [21][22] - The integration of Chuy's is underway, with a focus on improving efficiency through a streamlined human resources platform [23][24] Management's Comments on Operating Environment and Future Outlook - Management noted that same restaurant sales were positively impacted by the launch of fan favorites at Olive Garden, outperforming industry benchmarks [35] - The company expects total sales for the fourth quarter to be between $3.23 billion and $3.26 billion, with same restaurant sales growth above 3% [40] - Management expressed confidence in the strength of their business model and the ability to navigate challenges posed by weather and consumer sentiment [120] Other Important Information - The company returned $217 million to shareholders through dividends and share repurchases [31] - Marketing expenses increased by 10 basis points, consistent with the company's plan [32] Q&A Session Summary Question: Can you speak to whether the improvement is more related to your own brands or the industry? - Management indicated that Olive Garden and LongHorn have continued to perform well, with overall positive trends despite weather impacts [45] Question: What degree do you think there was a flu impact in the quarter? - Management noted that they do not track flu impacts specifically but emphasized that weather had a more significant effect [53] Question: Can you provide insights on the Uber partnership and its impact on advertising spend? - Management stated that Uber is funding part of the advertising spend, but the overall impact on advertising for the quarter is not expected to be significant [60] Question: Can you elaborate on the EPS guidance for the fourth quarter? - Management acknowledged that inflation is expected to rise in Q4, which may impact operating margins [69] Question: What is driving Olive Garden's recent sales momentum? - Management attributed the sales momentum more to menu news than delivery, as the delivery rollout began later in the quarter [91] Question: How is the company addressing potential tariff impacts? - Management indicated that about 80% of their cost basket is domestically sourced, minimizing exposure to tariffs [110] Question: What are the expectations for the Fine Dining segment? - Management expressed surprise at the Fine Dining performance, noting that consumers were willing to spend during the holiday season [122]