Customers enter an Olive Garden restaurant in Pittsburg, California, US, on Friday, Dec. 9, 2022.
David Paul Morris | Bloomberg | Getty Images
Darden Restaurants on Thursday raised its revenue outlook for fiscal 2023 for the second consecutive quarter after reporting quarterly results that showed growth across the board.
For fiscal 2023, Darden now expects sales of $10.45 billion to $10.5 billion, up from its prior range of $10.3 billion to $10.45 billion.
Darden CEO Rick Cardenas credited the quarter’s strong sales growth to its strategy of pricing below inflation. He said on the company’s earnings call that Darden’s sales and traffic outperformed the broader restaurant industry, and that consumers aren’t trading down.
“Now, there is a tension between what people want and what they can afford,” he told analysts.
Still, Cardenas said, most consumers are slow to give up eating at restaurants because it’s an affordable luxury.
Here’s what Darden reported for its most recent quarter, compared with what Wall Street analysts were expecting, based on Refinitiv consensus estimates:
- Earnings per share: $2.34 vs. $2.25
- Revenue: $2.79 billion vs. $2.73 billion
The restaurant company reported fiscal third-quarter net income of $286.6 million, or $2.34 per share, up from $247 million, or $1.93 cents per share, a year earlier.
Net sales rose 13.8% to $2.79 billion, fueled by same-store sales growth of 11.7% across all of its brands, which include chains like Olive Garden, LongHorn Steakhouse and The Capital Grille. Wall Street was expecting same-store sales to increase just 9.1%, according to StreetAccount estimates.
Olive Garden, which accounted for nearly half of Darden’s quarterly revenue, reported same-store sales growth of 12.3%. LongHorn Steakhouse saw its same-store sales climb 10.8%. And Darden’s fine-dining business, which includes The Capital Grille, reported same-store sales growth of 11.7%.
Cardenas said all of Darden’s brands set sales records during the quarter. Olive Garden and LongHorn Steakhouse set weekly sales records during the week of Valentine’s Day.
Darden said it added 35 net new restaurants during the quarter.
In addition to hiking its revenue forecast, Darden narrowed its expected range for fiscal 2023 earnings to between $7.85 and $8 per share. The company also raised its inflation outlook to a range of 7% to 7.5%, up from its prior range of 7%.
Looking ahead to fiscal 2024, Darden expects to open 50 to 55 new locations and spend between $500 million and $550 million on capital expenditures. The company is also forecasting inflation in the low single digits, led by higher beef and produce prices.
Read the full Darden Restaurants earnings report.