Darden, parent of Olive Garden, climbs as CEO says consumers aren’t really pulling back
Turns out we aren’t ready to give up pasta and breadsticks just yet.
Darden Restaurants stock jumped more than 5% Thursday after the Olive Garden parent served up sharp revenue growth and steadied its profit forecast, even as consumers are broadly more wary of unnecessary spending.
The restaurant giant — home to names like Olive Garden, Longhorn Steakhouse, and Capital Grille — posted $3.16 billion in revenue, up 9% from last year but shy of the $3.21 billion analysts had expected, per FactSet. Adjusted earnings per share were $2.80, in line with Wall Street’s expectations, excluding $0.06 in costs related to Darden’s recent Chuy’s acquisition.
“People, even if they say they’re feeling less optimistic, we haven’t seen a huge correlation between that and dining out,” Darden CEO Rick Cardenas said. “Across all income groups, adjusting for weather, the only income group that was negative across our casual brands was below $50,000.”
Meanwhile, same-store sales grew 0.7%, less than half the 1.7% analysts forecast. The results come as consumer spending has been cooling: food services and drinking places in particular posted their third consecutive month without growth in February.
The company narrowed its earnings guidance to between $9.45 and $9.52 per share, compared with previous guidance of $9.40 to $9.60 and analysts’ $9.48 estimate. The company expects $12.1 billion in revenue, also in line with Wall Street’s projections.
Executives blamed snowstorms and cold temperatures for the chilly sales quarter, but when adjusted for weather, said same-store sales grew across all segments. Darden also eased tariff fears, noting that 80% of the company’s supply chain is sourced domestically and much of the remaining 20% could be shifted if needed. Darden shares are up nearly 14% over the past year.
