Darden Restaurants reported first-quarter fiscal 2027 results that matched Wall Street's earnings estimate but missed on revenue, sending shares lower after the bell.
Adjusted diluted earnings per share came in at $2.05, up 4.1% from the year-ago period, hitting consensus precisely. Revenue totaled $3.2 billion, rising 5.1% year-over-year but falling roughly $10 million, or 0.3%, below the $3.21 billion analyst expectation. Earnings from continuing operations were $234 million, representing 7.3% of sales. Restaurant-level EBITDA margin held flat at 18.8%, while effective tax rate was 12.9%.
Same-restaurant sales grew 3.2% on a comparable calendar basis, outperforming the casual-dining industry benchmark of 2.4%, according to Black Box Intelligence data cited during the call. The company added 53 net new restaurants across the quarter: 20 at Olive Garden and 29 at LongHorn Steakhouse.
LongHorn Steakhouse posted same-restaurant sales growth of 6.8%, marking its 22nd consecutive quarter of positive comps. The brand has grown 17% over the past three years and continues to operate with marketing spend under 0.4% of sales, CEO Rick Cardenas noted. Yard House same-restaurant sales jumped 10%, buoyed by World Cup viewing traffic that provided an estimated 180 basis points of benefit. That same event created a net negative impact of roughly 80 basis points across other Darden brands earlier in the quarter. Yard House also reached $1 billion in trailing 52-week sales, becoming Darden's third billion-dollar brand. Olive Garden same-restaurant sales rose 1%, with segment profit margin at 20.4%, down 20 basis points due to a 30-basis-point investment in lighter portion menu items. The other business segment, including Chuy's and Cheddar's Scratch Kitchen, saw comparable sales rise 4.5%; its profit margin of 15.8% declined 30 basis points, driven by the winding down of Bahama Breeze. Fine dining segment comparable sales were flat, though total sales in the segment rose 6.2%.
Darden returned $406 million to shareholders during the quarter, comprising $184 million in dividends and $222 million in share repurchases. The dividend yield stands at 3.03%, with payments maintained for 32 consecutive years.
Shares fell 1.22%, or $2.61, to $211.08. The stock trades within a 52-week range of $169 to $229.76 and carries a P/E ratio of 20.6 and a PEG ratio of 1.17.
Full-year fiscal 2027 EPS guidance was reaffirmed at $11.10 to $11.35, with a midpoint of $11.23. Pricing is expected to moderate through the year: second-quarter pricing is anticipated in the mid-3% range, down from first-quarter's 3.7%, easing further to the low-to-mid 2% range by the fourth quarter. Commodity inflation is projected at approximately 3% for the full year. A calendar shift—Thanksgiving moving from the prior-year third quarter into the current-year second quarter—will create an estimated 1% headwind to Q2 sales, offset by a corresponding benefit in Q3.
During the quarter, Olive Garden relaunched its Never-Ending Pasta Pass after a six-year hiatus; all 10,000 passes sold out immediately following 3 million device logins. The Never-Ending Pasta Bowl, priced at $13.99—a level unchanged for nearly five years—continues to drive traffic, with protein buy-ups at $4.99.
Cardenas called the quarter "a solid start to fiscal 2027" and said consumers remain resilient in casual dining. CFO Raj Vennam noted the company's pricing flow-through is running above 90%, indicating the current pricing strategy is working effectively.
Darden will report fiscal 2027 second-quarter results on December 18, before market open.
