Core Viewpoint - Darden Restaurants, Inc. reported solid second-quarter sales growth and reaffirmed its full-year earnings guidance, despite a slight miss in adjusted earnings per share compared to analyst expectations [1][9]. Financial Performance - The company achieved quarterly sales of $3.102 billion, reflecting a year-over-year increase of 7.3%, surpassing the analyst consensus of $3.071 billion [2]. - Adjusted earnings per share for the second quarter were reported at $2.08, slightly below the consensus estimate of $2.10 [1]. Sales Growth Drivers - Sales growth was attributed to a blended same-restaurant sales increase of 4.3% and contributions from 30 net new restaurants [3]. - Key brands driving same-restaurant sales included Olive Garden with a 4.7% increase, LongHorn Steakhouse with a 5.9% increase, and Fine Dining with a 0.8% increase [3]. Dividend and Share Repurchase - The board declared a quarterly cash dividend of $1.50 per share, payable on February 2, 2026, to shareholders of record as of January 9, 2026 [5]. - The company repurchased approximately 1.1 million shares for $222 million, with $643 million remaining under its $1 billion share repurchase authorization [5]. Earnings Call Insights - Management noted record Thanksgiving reservations and strong holiday bookings, with improving pricing trends allowing for some pricing coverage in the latter half of the fiscal year [6]. - The company is monitoring the impact of GLP-1 usage on consumer behavior, particularly regarding alcohol consumption, and is adapting its menu to include lighter-portion options [7]. Cost and Outlook - Beef costs are expected to remain high into the third quarter, with some relief anticipated in the fourth quarter [8]. - Darden expects fiscal third-quarter earnings per share to grow in the mid-single-digit range compared to the previous year [8]. - The company reaffirmed its fiscal 2026 adjusted EPS outlook of $10.50 to $10.70, with total sales growth projected at 8.5% to 9.3% [9][10].

Core Insights - Darden Restaurants is experiencing sales growth despite rising food costs, indicating resilience in consumer spending on casual dining [2][3] - The company reported a 4.7% increase in adjusted earnings to $1.97 per share, reflecting a 12.6% year-over-year growth [2] Financial Performance - Darden's same-restaurant sales and earnings growth exceeded expectations at the start of the fiscal year [3] - The company raised its full-year total sales growth forecast, showing confidence in its new restaurant pipeline [7] Consumer Behavior - Shifts in consumer behavior are noted, with guests seeking "price certainty" and greater perceived value [3] - Olive Garden is testing smaller portions at reduced prices in about 40% of its restaurants, which has shown an encouraging initial response [3][4] Pricing Strategy - Darden is keeping menu price hikes below its own inflation rate as a strategy to navigate increasing costs [4][5] - The company projects its pricing in the second quarter to be about 100 basis points below total inflation [6] Cost Pressures - Darden raised its commodity inflation forecast for the year to 3% to 4%, attributed to significant spikes in beef and seafood costs [6][7] - Management believes current beef prices are unsustainable, having locked in prices for only a quarter of its supply over the next six months [7]