Darden Q1 Sales Rise 5.1% as Fiscal 2027 Outlook Is Reaffirmed

Darden Restaurants reported 5.1% sales growth for its fiscal 2027 first quarter and reaffirmed its full-year outlook, as comparable-calendar same-restaurant sales increased 3.2%. Adjusted diluted earnings from continuing operations rose to $2.05 per share from $1.97 a year earlier, while restaurant-level profitability was unchanged as a percentage of sales.

Total sales reached $3.20 billion for the quarter ended Aug. 30, 2026. Earnings from continuing operations were $234.3 million, or $2.05 per diluted share, compared with reported earnings of $257.9 million, or $2.19 per share, in the prior-year period. The earlier quarter included a gain from the sale of Olive Garden Canada and other items; excluding adjustments, prior-year earnings were $231.4 million, or $1.97 per share.

Adjusted EBITDA increased to $463.5 million from $439.0 million. Operating income was $319.3 million, representing 10.0% of sales and an unchanged margin compared with adjusted fiscal 2026 results. Restaurant-level EBITDA rose to $602.9 million and held steady at 18.8% of sales.

Food and beverage costs increased by 30 basis points as a share of sales, while restaurant labor costs improved by 30 basis points. Pre-opening expenses and depreciation and amortization each reduced margins by 10 basis points. A lower effective tax rate partly offset those pressures, although earnings from continuing operations declined by 30 basis points as a percentage of sales.

LongHorn leads segment growth

LongHorn Steakhouse recorded the strongest segment sales increase, with revenue rising 10.9% to $861 million from $776 million. Its segment profit margin expanded to 18.0% from 17.4%.

Olive Garden sales increased 2.2% to $1.33 billion, while its segment margin narrowed to 20.4% from 20.6%. Fine Dining sales rose 6.2% to $304 million, with margin declining to 13.0% from 13.5%. Other Business sales advanced 3.6% to $705 million, while margin decreased to 15.8% from 16.1%.

Darden returned $406 million to shareholders through dividends and common-stock repurchases during the quarter.

Fiscal 2027 outlook maintained

Darden reaffirmed its fiscal 2027 forecast for total sales of $13.6 billion to $13.75 billion and same-restaurant sales growth of 2.5% to 3.5%. The company continues to expect diluted net earnings of $11.10 to $11.35 per share, based on approximately 114 million weighted-average diluted shares, and EBITDA of $2.26 billion to $2.29 billion.

The restaurant operator plans to open 75 to 80 locations and spend approximately $875 million on capital projects during the year. Management expects total inflation of about 3%, including approximately 3% commodity inflation, and an effective tax rate of roughly 13.5%.

For the second and third quarters, Darden said it had coverage for about 65% of its weighted commodity purchases. Chicken costs are expected to be flat, seafood inflation is projected in the mid-single digits, and most other disclosed categories are expected to experience low-single-digit inflation.

Same-restaurant sales figures and guidance exclude Bahama Breeze because all locations are expected to be closed or converted to other Darden brands by the fourth quarter of fiscal 2027.

The company identified cost pressures, labor and insurance expenses, staffing challenges, economic conditions, tariffs, interest rates, competition, changing consumer preferences, food safety, cybersecurity, supply disruptions and higher-than-expected development or remodeling costs among the factors that could cause actual results to differ from its outlook.