Darden Restaurants(US:DRI)2025-06-20 13:30Financial Data and Key Metrics Changes - In Q4, total sales reached $3.3 billion, a 10.6% increase year-over-year, driven by a same restaurant sales growth of 4.6% and positive traffic growth [15][19] - Adjusted diluted net earnings per share from continuing operations increased by 12.5% to $2.98, with adjusted EBITDA of $582 million [15][23] - For the full fiscal year, same restaurant sales growth was 2%, outperforming the industry by 170 basis points, with total sales surpassing $12 billion for the first time [22][23] Business Line Data and Key Metrics Changes - Olive Garden's total sales increased by 8.1% with same restaurant sales growth of 6.9%, outperforming the industry benchmark by 390 basis points [19][20] - LongHorn Steakhouse saw total sales increase by 9.3%, with same restaurant sales growth of 6.7%, exceeding the industry benchmark by 370 basis points [20] - The Fine Dining segment experienced a 2.3% increase in total sales, but same restaurant sales were negative, resulting in a lower segment profit margin [21] Market Data and Key Metrics Changes - The casual dining industry saw average same restaurant sales growth of 30% and guest counts grew by 0.9% [5] - Olive Garden's delivery service, Uber Direct, contributed approximately 3.5% of total sales, with a mix impact of about 40 basis points [55][56] Company Strategy and Development Direction - The company remains committed to a long-term financial framework targeting 10-15% total shareholder return, with an increased emphasis on sales growth and margin maintenance [26][29] - Strategic planning has led to the decision to close 15 Bahama Breeze locations, focusing on higher-performing brands and considering strategic alternatives for Bahama Breeze [32][82] - The company is expanding its international presence, with agreements for new Olive Garden locations in Canada and other countries [34][36] Management's Comments on Operating Environment and Future Outlook - Management noted that casual dining is perceived as a great value, leading to increased consumer interest and market share from fast food and fast casual [46] - The outlook for fiscal 2026 anticipates total sales growth of 7-8%, with same restaurant sales growth of 2-3.5% [24][25] - Management expressed caution regarding macroeconomic uncertainties impacting future performance, despite strong momentum observed in Q4 [70][72] Other Important Information - The company announced a 7% increase in dividends to $1.50 per share, implying an annual dividend of $6 [24] - Leadership transitions were discussed, including the retirement of Dan Kiernan as President of Olive Garden and the appointment of John Wilkerson as his successor [36][37] Q&A Session Summary Question: Why is casual dining performing well currently? - Management believes consumers are recognizing casual dining as a great value, leading to increased patronage and market share from fast food [46] Question: What is the outlook for unit growth? - The company expects to open 60-65 new restaurants, with Olive Garden and LongHorn contributing significantly to this growth [48] Question: How does the updated long-term framework affect margin expansion? - The new framework reflects a more holistic view of margin opportunities, with a focus on sales growth and reinvestment [51] Question: What is the impact of Uber Direct on sales? - Uber Direct contributed about 3.5% of total sales at Olive Garden, with a significant portion of new customers using the delivery service [55][90] Question: What are the expectations for inflation in fiscal 2026? - The company anticipates total inflation of 2.5-3%, with food inflation around 2.5% and labor inflation at approximately 3.5% [65]