Darden Restaurants(US:DRI)2025-06-20 13:32Financial Data and Key Metrics Changes - In the fourth quarter, total sales reached $3.3 billion, a 10.6% increase compared to the prior year, driven by same restaurant sales growth of 4.6% and positive traffic growth [16][24] - Adjusted diluted net earnings per share from continuing operations increased by 12.5% to $2.98, with adjusted EBITDA of $582 million [16][24] - For fiscal year 2025, same restaurant sales growth was 2%, outperforming the industry by 170 basis points, with total sales surpassing $12 billion for the first time [23][24] 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%, driven by same restaurant sales growth of 6.7% [20] - The Fine Dining segment experienced a 2.3% increase in total sales, but same restaurant sales were negative for the quarter [21] Market Data and Key Metrics Changes - The casual dining industry saw average same restaurant sales grow by 30% and guest counts increase by 0.9% [6] - The company noted that casual dining is gaining market share as consumers perceive it as a better value compared to fast food [44][45] Company Strategy and Development Direction - The company is focusing on disciplined execution of its strategy, emphasizing sales growth while maintaining margins [15][26] - A five-year strategic planning process was completed, with each brand developing plans to enhance their competitive positioning [32] - The company plans to open 60 to 65 new restaurants in fiscal 2026, with a focus on Olive Garden and LongHorn as the primary contributors [48][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the casual dining sector's recovery, attributing it to consumer preferences shifting towards dining out [44][45] - The company anticipates total sales growth of 7% to 8% for fiscal 2026, with same restaurant sales growth projected at 2% to 3.5% [25][26] - Management acknowledged macroeconomic uncertainties but remains optimistic about maintaining strong sales momentum [69] Other Important Information - The company announced a 7% increase in dividends to $1.50 per share, implying an annual dividend of $6 [25] - Strategic alternatives for the Bahama Breeze brand are being considered, including a potential sale [33][34] - The company is expanding its international franchising efforts, with new agreements for Olive Garden locations in various countries [36] 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 [44][45] Question: What is the outlook for unit growth? - The company expects to ramp up unit growth to over 3% in the next five years, with Olive Garden and LongHorn leading the way [46][48] Question: How does the updated long-term framework affect margin expansion? - The new framework reflects a more holistic view of margins, with a focus on sales growth and reinvestment [51] Question: What is the impact of Uber Direct on Olive Garden's sales? - Uber Direct contributed approximately 3.5% to total sales at Olive Garden, with a positive mix impact of about 40 basis points [54][56] Question: How is the company addressing fine dining challenges? - Management stated that fine dining has faced challenges due to changing consumer behaviors post-COVID, but they are confident in their leadership and strategies [81][82]