DARDEN RESTAURANTS Q1 FY27 earnings call DRI

Olive Garden achieved 1% comparable calendar same-restaurant sales growth despite headwinds from the World Cup and consumer concerns about lettuce. The brand successfully launched its Never Ending Pasta Bowl (NEPB) with new additions like Spicy Alfredo sauce and Crispy Shrimp Fritta, seeing increased buy-ups for protein toppings. A Pasta Pass sale generated significant social media buzz, with 10,000 passes selling out immediately. The team is also focused on revitalizing the weekday lunch daypart with planned marketing support for unlimited soup, salad, and breadsticks, and testing a new value-driven lunch platform. Olive Garden continues to explore protein-forward dinner options following the success of items like Calabrian Steak and Shrimp Bucatini.

LongHorn Steakhouse continued its strong performance with 6.8% comparable calendar same-restaurant sales growth, marking its 22nd consecutive quarter of positive SSS. The brand's success is attributed to its disciplined focus on quality, simplicity, and culture, with minimal marketing spend. Management highlighted a 17% increase in same-restaurant sales over the past three years. LongHorn plans to introduce new menu items and enhancements in Q2 FY27 to further strengthen value and variety at both lunch and dinner.

Yard House delivered impressive 10% comparable calendar same-restaurant sales growth, driven by its broad menu and socially energized bar concept, which benefited from events like the World Cup. The brand recently reached $1 billion in sales for the trailing 52 weeks, becoming Darden's third billion-dollar brand. Yard House plans to open 13 new restaurants in FY27, including 5 Bahama Breeze conversions and new smaller prototypes. This new prototype aims to lower construction costs and enable expansion into more sites while maintaining an average unit volume (AUV) of $10.5 million.

Darden's portfolio of distinctive brands, supported by the company's scale and competitive advantages, enabled it to navigate unexpected headwinds and deliver results in line with expectations. The company generated $464 million in EBITDA and returned $406 million to shareholders through $184 million in dividends and $222 million in share repurchases. Management emphasized a continued focus on operating restaurants at a high level^🎣, strengthening guest loyalty, investing in people and brands, and deploying capital to support long-term shareholder value.

Management noted that the consumer environment has remained largely unchanged for Darden, with consumers continuing to spend in casual dining despite external sentiment. The impact of gas prices on traffic has been low, with performance improving throughout Q1 and into Q2. Darden's pricing strategy is highly disciplined, leveraging analytics to assess elasticity at item, category, and restaurant levels. The company has priced significantly below overall CPI, grocery, full-service, and limited-service CPI over the last seven years, which management believes contributes to less price resistance.

Two years post-acquisition, Chuy's has successfully integrated into Darden's portfolio despite initial challenges with a new point-of-sale system. The brand maintained positive same-restaurant sales during its integration period and is now focused on improving consistency across its restaurants. Darden sees Chuy's as a high-growth potential brand, with plans for mid- to high-single-digit unit growth in the intermediate and long term, particularly in existing markets where it performs well. The strong margins in its top-performing restaurants are expected to be replicated in new units.