Darden Restaurants recently reported their quarterly results, and unfortunately Olive Garden’s same-store sales have fallen for the second consecutive quarter. This is a concerning trend for the Italian-inspired chain, as they were expected to report flat same-store sales growth this quarter. However, Olive Garden saw a 1.5% decrease in same-store sales, which was greater than analysts had predicted.
Struggles in the Fine-Dining Division
In addition to Olive Garden’s challenges, Darden’s fine-dining restaurants, including The Capital Grille and Eddie V’s, also experienced a decline in same-store sales. This division saw a 2.6% shrinkage in same-store sales for the quarter. The recent acquisition of Ruth’s Chris Steak House has not yet been included in these results, but it will be interesting to see how this impacts the overall performance of the fine-dining segment in the upcoming quarters.
Success of LongHorn Steakhouse
Despite the struggles at Olive Garden and in the fine-dining division, LongHorn Steakhouse continues to shine as the standout performer in Darden’s portfolio. The chain reported a 4% increase in same-store sales for the quarter, outpacing the other segments within the company. This success at LongHorn Steakhouse could potentially help offset some of the losses experienced in other parts of Darden’s business.
Looking ahead to fiscal 2025, Darden is forecasting modest growth in earnings per share, with expectations ranging from $9.40 to $9.60. This is in line with Wall Street’s predictions of $9.55 per share. Net sales are expected to reach between $11.8 billion and $11.9 billion, which is on the lower end of analysts’ expectations. Darden is also projecting total inflation of 3% and same-store sales growth of 1% to 2% for fiscal 2025.
As part of their growth strategy, Darden plans to spend between $550 million to $600 million on capital expenditures in the coming year. This investment will likely be focused on enhancing the customer experience, driving sales growth, and improving operational efficiency across their different restaurant brands. By allocating resources in this way, Darden is positioning themselves for future success in a competitive industry.
Darden Restaurants’ recent quarterly results have presented a mixed picture, with some segments performing well while others face challenges. It will be important for the company to address the issues at Olive Garden and in the fine-dining division, while continuing to build on the success of LongHorn Steakhouse. By making strategic investments and focusing on driving sales growth, Darden can position themselves for a stronger performance in the quarters to come.
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