Darden stock falls as Olive Garden reports slower growth

• Olive Garden same-store sales grew just 1.1%, significantly underperforming the portfolio average of 3.1% as diners cut back on spending
• LongHorn Steakhouse led the portfolio with 6.2% same-store sales growth, continuing its streak as Darden's top performer
• Darden reiterated its fiscal 2027 forecast of $13.60-$13.75 billion in total sales despite the quarterly miss

Darden Restaurants Stock Declines on Mixed Q1 Results and Olive Garden Slowdown

Key Financial Results:

Darden Restaurants reported fiscal Q1 earnings (ended Aug. 30) that narrowly missed Wall Street expectations. The company posted revenue of $3.20 billion versus $3.21 billion expected, while net sales rose 5.1% year-over-year. Net income reached $233.4 million, or $2.04 per share. Overall same-store sales increased 3.1% across all business units.

Performance by Brand:

• LongHorn Steakhouse led the portfolio with 6.2% same-store sales growth, continuing its position as Darden's top performer despite remaining smaller than Olive Garden by total sales and locations.
• Olive Garden, the company's largest chain, saw same-store sales growth decelerate to just 1.1%, reflecting increasing consumer selectivity amid economic pressures.
• Fine dining segment (Capital Grille, Ruth's Chris) posted 1.6% same-store sales growth.
• Other business division grew 3.8% in same-store sales.

Market Implications:

The results signal diverging consumer trends within casual and fine dining. Olive Garden's weakness suggests value-conscious diners are pulling back at mid-tier casual chains, while LongHorn's strength indicates certain concepts are resonating better in the current environment. The earnings miss, though narrow, sent Darden stock lower.

Outlook:

Darden maintained its fiscal 2027 guidance, projecting total sales between $13.60 billion and $13.75 billion with corresponding earnings targets, suggesting management confidence despite near-term headwinds at its flagship brand.

The report underscores ongoing challenges in the restaurant sector as consumer spending patterns shift and operational pressures persist.