Darden Restaurants (NYSE: DRI) reported total sales of $3.2 billion for the first fiscal quarter of 2027, a 5.1% increase year-over-year that slightly missed the $3.21 billion analyst consensus. Comparable calendar same-restaurant sales rose 3.2%, outpacing the casual dining industry benchmark of 2.4%.
Adjusted diluted earnings per share came in at $2.05, matching both estimates and the company's reported figure, up from $1.97 in the year-ago quarter. EBITDA totaled $464 million, with restaurant-level EBITDA holding steady at 18.8% of sales.
"Our pricing flow-through is anywhere in the 90%-plus range," CFO Raj Vennam said. CEO Rick Cardenas described the period as "a solid start to fiscal 2027," noting that consumers remain resilient and continue spending in casual dining.
LongHorn Steakhouse delivered the quarter's strongest performance, marking its 22nd consecutive quarter of positive same-restaurant sales growth. Comparable sales at the chain rose 6.8%, driving total segment sales to $861 million, up 10.9% year-over-year, with profit margin expanding to 18.0% from 17.4%.
Olive Garden, Darden's largest brand, generated $1.33 billion in total sales. Comparable calendar same-restaurant sales grew 1%, while profit margin compressed slightly to 20.4% from 20.6%. Food and beverage costs rose 30 basis points to 30.8% of sales, though restaurant labor improved 30 basis points to 32.2% of sales.
In the fine dining segment, comprising The Capital Grille, Ruth's Chris Steak House, and Eddie V's Prime Seafood, sales grew 6.2% to $304 million. The other business segment — including Cheddar's Scratch Kitchen, Chuy's, Seasons 52, and Yard House — posted sales of $705 million, up 3.6%, with Yard House comparable sales jumping 10%.
Darden added 53 net new restaurants during the quarter, including 20 Olive Garden locations and 29 LongHorn Steakhouse units. Full-year FY2027 expansion targets remain unchanged at 75 to 80 new openings, with capital spending projected at approximately $875 million. Yard House plans 13 new openings, including five Bahama Breeze conversions.
For the full fiscal year, Darden reaffirmed guidance projecting total sales between $13.6 billion and $13.75 billion, with same-restaurant sales growth expected in the 2.5% to 3.5% range. Diluted net EPS is forecast at $11.10 to $11.35, aligning with the $11.31 analyst consensus. EBITDA is guided at $2.26 billion to $2.29 billion against total inflation of approximately 3.0%.
Commodity hedging data showed 65% weighted average coverage for the September-to-February period. Beef, representing 29% of total spend, is 65% covered with low single-digit inflation expected. Seafood, 8% of spend, carries 85% coverage and mid single-digit inflation. Chicken, also 8% of spend, is fully covered with flat pricing projected.
Operating income held flat at 10.0% of sales, while earnings from continuing operations came in at 7.3% of sales, down 30 basis points year-over-year. The effective tax rate was 12.9%, below the full-year guidance midpoint of approximately 13.5%.
A Thanksgiving calendar shift is expected to create roughly a 1% headwind to second-quarter sales, with an offsetting benefit in the third quarter. Pricing flow-through is anticipated to moderate through the year, from the mid-3% range in Q2 to the low- to mid-2% range by Q4.
Shareholder returns totaled $406 million in the quarter, comprising $184 million in dividends and $222 million in share repurchases. Darden has maintained dividend payments for 32 consecutive years, with the stock yielding 3.03%.
Shares slipped 1.22% to $211.08 following the report, trading within a 52-week range of $169 to $229.76.
