Darden Restaurants Inc (DRI) Q4 2025 Earnings Call Highlights: Strong Sales Growth and ...
Total Sales: $3.3 billion, a 10.6% increase from the prior year.
Same-Restaurant Sales Growth: 4.6% for the fourth quarter.
Adjusted Diluted Net Earnings Per Share: Increased 12.5% to $2.98.
Adjusted EBITDA: $582 million for the fourth quarter.
Dividends and Share Repurchases: $215 million returned to shareholders, including $164 million in dividends and $51 million in share repurchases.
Olive Garden Same-Restaurant Sales Growth: 6.9% for the quarter.
Olive Garden Segment Profit Margin: 23.8%, 100 basis points higher than last year.
LongHorn Steakhouse Same-Restaurant Sales Growth: 6.7% for the quarter.
LongHorn Steakhouse Segment Profit Margin: 20.1%, 80 basis points above last year.
Fine Dining Segment Sales Increase: 2.3% with six net new restaurants.
Other Business Segment Sales Increase: 22.4%, driven by the acquisition of Chuy's and positive same-restaurant sales at Yard House and Cheddar's.
Fiscal Year Total Sales: Surpassed $12 billion for the first time.
Fiscal Year Adjusted Diluted Net Earnings Per Share: Increased 7.5% to $9.55.
Fiscal Year Adjusted EBITDA: $2 billion from continuing operations.
Fiscal Year Same-Restaurant Sales Growth: 2%, outperforming the industry by 170 basis points.
New Restaurant Openings: 25 net new restaurants in the fourth quarter.
Permanent Closures: 22 underperforming restaurants closed in the fourth quarter.
Warning! GuruFocus has detected 9 Warning Sign with DRI.
Release Date: June 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Darden Restaurants Inc (NYSE:DRI) reported strong same-restaurant sales and earnings growth that exceeded expectations, driven by successful marketing strategies and operational execution.
Olive Garden's 'buy one take one' offer and nationwide delivery contributed to a 20% increase in takeout sales over the previous year.
LongHorn Steakhouse achieved an all-time high guest satisfaction score and segment profit margin, driven by a focus on quality and training.
Darden Restaurants Inc (NYSE:DRI) returned $215 million to shareholders through dividends and share repurchases, demonstrating strong cash flow management.
The company announced a 7% increase in its regular quarterly dividend, reflecting confidence in future cash flow and earnings growth.
Darden Restaurants Inc (NYSE:DRI) permanently closed 15 underperforming Bahama Breeze restaurants, indicating challenges in that brand's performance.
The Fine Dining segment experienced negative same-restaurant sales for the quarter, with segment profit margin lower than the previous year.
The acquisition of Chuy's resulted in increased interest expenses, impacting overall financial performance.
The company faces macroeconomic uncertainties, which could impact future same-restaurant sales growth.
Darden Restaurants Inc (NYSE:DRI) is considering strategic alternatives for the Bahama Breeze brand, including a potential sale, indicating potential instability in that segment.
Q: Congrats on the strong same-store sales results. Can you give us your perspective on why casual dining is performing well right now, and how smaller chains are faring in this environment? A: Ricardo Cardenas, President and CEO, explained that consumers are recognizing the value in casual dining, which is driving increased traffic. He noted that Darden has been prudent with pricing, keeping it below inflation, which has helped attract customers from fast food and fast casual segments.
Q: Regarding the unit growth outlook, when might we see a ramp in unit growth, and which brands will contribute the most? A: Rajesh Vennam, CFO, stated that Darden expects to be in the 3%-plus range for unit growth over the next five years. Olive Garden and LongHorn are expected to open 40 to 45 new locations, with Yard House and other brands contributing additional openings.
Q: Does the updated long-term framework reflect a different view on restaurant margin opportunities or reinvestment rates? A: Rajesh Vennam explained that the new framework emphasizes sales growth with appropriate investments, which may result in restaurant-level EBITDA not growing at previous rates. The focus is on long-term growth rather than immediate margin expansion.
Q: Can you discuss the impact of Uber Direct at Olive Garden on mix and same-store sales, and any differences in incremental margin? A: Rajesh Vennam noted that Uber Direct contributed about 3.5% of total sales at Olive Garden in Q4, with a mix impact of 40 basis points. The incremental sales impact was roughly 2%, and there was no significant negative impact on margins due to the structure of the deal with Uber.
Q: How are you prioritizing the rollout of Uber Direct across other brands, and what are the considerations? A: Ricardo Cardenas mentioned that the priority is to evaluate the performance of Uber Direct at Olive Garden and Cheddar's before expanding to other brands. Each brand's leadership will decide if they want to implement Uber Direct, ensuring it aligns with their operational capabilities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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