Inve News inve.money

Darden Restaurants · DRI

Darden held its $11.10-$11.35 earnings guide, but the next three quarters must grow far faster than the first

Darden reaffirmed full-year guidance after a quarter that grew 4.1%, but by our arithmetic the rest of the year has to grow roughly twice as fast, and Olive Garden is running behind its own guidance.

Published · Updated · Inve Research Desk

Darden Restaurants' company page · More news from Sep 29, 2026

Plates of pasta and salad wait on a restaurant kitchen pass while a mostly empty dining room shows through the window behind.
Illustration Illustration: Inve Research Desk

4.1%

growth in earnings per share last quarter

Inside what the company guided in June, but well under the 7.5% to 10.5% the rest of the year needs on a like-for-like basis, by our arithmetic.10

How they did last quarter

Better than its cost guidance and in line with its earnings hint, but worse than the pace the full-year guide needs at its largest brand, and a narrower lead over the industry.

EPS, continuing operations $2.05, up 4.1% on last year's adjusted $1.97

vs June 2026 guidance of low to mid single-digit growth for the quarter Inside the range the company set for itself.10

Olive Garden same-restaurant sales up 1.0%, the fourth straight slowdown

vs June 2026 guidance of closer to the lower end of 2.5% to 3.5% for the year Below the pace the year needs; about 3.0% a quarter is required from here.11

Sales lead over the industry 3.2% against an industry average of 2.4%

vs a lead of about 3.2 points the quarter before The lead shrank to about 0.8 points, or about 1.6 if the industry figure carried no such effect; the company did not say.12

Commodity cost inflation 3.5%

vs roughly 4% guided on 25 June 2026 Costs came in better than guided.14

Guide reaffirmed, but the first quarter grew slower

Darden Restaurants said on 24 September that it was reaffirming its full-year earnings guidance of $11.10 to $11.35 a share1. Last quarter's earnings per share rose 4.1%, in line with the low to mid single-digit growth the company had guided in June10,5.

The quarter was planned to be slow. The question is whether the other three are as fast as the plan needs.

Darden Restaurants, Inc.: Sales growth and operating margin, last eight quarters, Aug '25 to May '26. The latest filed quarter's sales growth includes an extra week, so last year is a harder base for the rest of this one than the growth rate alone suggests.
Chart Chart: Inve Research Desk from Inve data · income statement

The rest of the year has to grow about twice as fast

Last year's adjusted earnings included an extra week that this year does not have; without it the fair base is about $10.392. By our arithmetic, the remaining three quarters must grow roughly 7.5% to 10.5% like-for-like to reach the guide, against the 4.1% just delivered1,2,3,10. None of this is new: in June management said the first quarter would be the slow one, because commodity inflation and one-time costs peaked in it, and the rest of the year would be more even5. What is new is that the first quarter, with costs below what it expected, still grew only that much14.

Put plainly, the guide assumes a business that has just grown at one speed will soon grow at another.

Management offered a direction rather than a number. It said August was the strongest month and September stronger still. It did not say by how much.

Sales growth and operating margin, last eight quarters

The latest filed quarter's sales growth includes an extra week, so last year is a harder base for the rest of this one than the growth rate alone suggests.

%

Sales YoYOperating margin
Aug 2024–9.8%
Nov 2024–10.1%
Feb 2025–13.2%
May 2025–11.7%
Aug 2025+10.4%11.1%
Nov 2025+7.3%10.3%
Feb 2026+5.9%12.1%
May 2026+13.7%13.9%

Olive Garden, the largest brand, is running behind guidance

Olive Garden's same-restaurant sales, meaning sales at comparable restaurants, have slowed in each of the last four quarters, from 5.9% a year ago to 1.0% now6,11. In June the company said the brand would land closer to the lower end of its range for the year7. By our arithmetic that needs about 3.0% in each remaining quarter, while menu pricing fades6,7,11.

Management blames the World Cup and consumer worry about lettuce for lost guest counts11. That may be right. Only the company can measure it, and it gave no figure for the quarter now under way.

Fewer shares did much of the work; the industry lead shrank

Earnings rose only about 1%. A smaller share count, by our arithmetic, explains roughly two-thirds of the per-share growth13,4. The tax rate was also above last year's, which was flattered by a hedge gain (about 12.5% without it), and the full-year guide implies a higher rate still for the rest of the year13,4,9.

The lead over the casual-dining industry narrowed too: sales at Darden's comparable restaurants beat the industry average by about 0.8 points, against about 3.2 points the quarter before12,8. Management puts the World Cup at about 0.8 points of Darden's own sales growth12. That lead is the evidence that Darden can grow faster than its peers, so a smaller lead makes the acceleration harder to assume. One quarter is not a trend.

What we do not know yet

We do not know how the current quarter is going, and management declined to give recent weekday-lunch traffic at Olive Garden when asked17. The next report, in December, will carry a Thanksgiving shift that costs that quarter about 1% of sales, with an offsetting gain in the third15.

Last year Darden held its $10.50 to $10.70 range for two quarters, narrowed it in March and finished at $10.64, while it raised its sales guidance at each of the first three calls2,16. A company that plans a slow start and a fast finish is asking to be judged late, and Darden has now told its owners twice, in June and September, that it expects to be.

Sources

  1. 1. FY27 adjusted EPS guidance · $11.10 to $11.35, sales $13.6 billion to $13.75 billion, same-restaurant sales 2.5% to 3.5% · FY27, first given Q4 FY26 (25 June 2026) · Inve Guidance Tracker
  2. 2. FY26 adjusted EPS, incl. extra week · $10.64 (guidance $10.50 to $10.70); about $0.25 from the extra 14th week · FY26 · Inve Guidance Tracker
  3. 3. Q1 FY26 adjusted EPS · $1.97, up 12.6% · Q1 FY26 / call 2025-09-18 · Inve data
  4. 4. Q1 FY26 earnings, margin and tax rate · $231 million, 7.6% of sales; adjusted tax rate 10.5% (about 12.5% without a hedge gain) · Q1 FY26 / call 2025-09-18 · Inve data
  5. 5. June Q1 EPS growth hint · Low to mid single-digit EPS growth expected for the first quarter; rest of the year fairly balanced · call 2026-06-25 · Inve data
  6. 6. Olive Garden same-restaurant sales, FY26 quarters · 5.9% (Q1), 4.7% (Q2), 3.2% (Q3), 2.4% (Q4) · Q1 to Q4 FY26 · Inve data
  7. 7. FY27 Olive Garden guidance · Closer to the lower end of the 2.5% to 3.5% range; margin flat to positive · FY27 / call 2026-06-25 · Inve call summaries
  8. 8. Darden vs industry same-restaurant sales, last quarter · Darden 4.6% vs industry 1.4%, a lead of about 3.2 points · Q4 FY26 / call 2026-06-25 · Inve data
  9. 9. FY27 effective tax rate guidance · approximately 13.5% · FY27 · Inve Guidance Tracker
  10. 10. Q1 FY27 EPS from continuing operations · $2.05 diluted EPS from continuing operations, up 4.1% on last year's adjusted $1.97; guidance reaffirmed · call 2026-09-24 · the company's results call
  11. 11. Olive Garden Q1 FY27 same-restaurant sales · Up 1.0%; margin 20.4%; guest counts hurt 150 to 200 basis points; pricing 3.7% in Q1 fading to low-to-mid 2s by Q4 · call 2026-09-24 · the company's results call
  12. 12. Darden vs industry same-restaurant sales, Q1 FY27 · Darden 3.2% vs industry average 2.4%; World Cup effect about 0.8 points · call 2026-09-24 · the company's results call
  13. 13. Q1 FY27 earnings, tax and share buybacks · $234 million, 7.3% of sales; tax rate 12.9%; $222 million of buybacks · call 2026-09-24 · the company's results call
  14. 14. Q1 FY27 commodity inflation · 3.5% against roughly 4% guided on 25 June 2026 · call 2026-09-24 · the company's results call
  15. 15. Q2 timing: Thanksgiving shift · Thanksgiving moves into Q2, about a 1% headwind to Q2 sales, offset in Q3; Q2 report 18 December 2026 · call 2026-09-24 · the company's results call
  16. 16. FY26 total sales growth guidance and result · 7% to 8% raised to 7.5-8.5%, 8.5-9.3%, about 9.5%; delivered 9.4% · FY26 · Inve Guidance Tracker
  17. 17. Lunch traffic question · asked for recent lunch traffic, CEO began 'Without getting into recent traffic trends' and gave none · call 2026-09-24 · the company's results call
The record: notes, full financial tables, guidance history

Notes

  1. Impact 4/5 Guidance Mixed

    Darden reaffirms $11.10-$11.35 EPS guide after 4.1% Q1; rest of year needs 7.5%-10.5%

    Darden reaffirmed all aspects of its fiscal 2027 outlook on 24 September after diluted EPS from continuing operations of $2.05, up 4.1% on last year's adjusted $1.97. In June the company had guided the quarter to low to mid single-digit growth and said the other quarters would be more even, so the quarter was on plan and the acceleration was too. Against last year's $10.64, less about $0.25 from an extra week and the $1.97 first quarter, the remaining three quarters must grow roughly 7.5% to 10.5% by our arithmetic.

    “we are reaffirming all aspects of our financial outlook for fiscal 2027”— Rajesh Vennam, CFO
    Sources (4)
    ClaimValuePeriodFrom
    FY27 adjusted EPS guidance$11.10 to $11.35FY27Inve Guidance Tracker
    FY26 adjusted EPS incl. extra week$10.64; about $0.25 from the extra 14th weekFY26Inve Guidance Tracker
    Q1 FY27 EPS from continuing operations$2.05, up 4.1% on last year's adjusted $1.97call 2026-09-24the company's results call
    June Q1 EPS growth hintFirst quarter low to mid single-digit EPS growth, rest of year fairly balancedcall 2026-06-25Inve data

  2. Impact 4/5 Demand Negative

    Olive Garden sales slow a fourth straight quarter to 1.0%, under the pace guidance needs

    Olive Garden's same-restaurant sales grew 1.0% in the quarter, with margin at 20.4%, down 0.2 points. Management said August was its strongest month and September stronger still, without giving numbers. The path from a year ago is 5.9%, 4.7%, 3.2%, 2.4% and now 1.0%, each lower than the last. June 2026 guidance was closer to the lower end of 2.5% to 3.5% for the year, and reaching 2.5% needs about 3.0% in each remaining quarter, by our arithmetic.

    “Same-restaurant guest counts were negatively impacted by 150 to 200 basis points from the World Cup and heightened consumer concerns regarding lettuce.”— Rajesh Vennam, CFO
    Sources (3)
    ClaimValuePeriodFrom
    Olive Garden same-restaurant sales, FY265.9% in Q1 FY26, then 4.7%, 3.2% and 2.4%Q1 to Q4 FY26Inve data
    FY27 Olive Garden guidanceCloser to the lower end of 2.5% to 3.5%FY27 / call 2026-06-25Inve call summaries
    Olive Garden Q1 FY27 same-restaurant salesUp 1.0%; margin 20.4%, down 0.2 pointscall 2026-09-24the company's results call

  3. Impact 3/5 Demand Mixed

    Darden's sales lead over casual-dining industry narrows to about 0.8 points from 3.2

    Darden's comparable-calendar same-restaurant sales rose 3.2% against an industry average of 2.4%, a gap of about 0.8 points. On 25 June 2026 the company reported 4.6% against 1.4%, a gap of about 3.2 points, and the gap has run from below zero to about five points over the past five quarters, though the industry benchmark was restated upward in May 2026. Management put the World Cup drag on Darden at about 0.8 points, which would make the underlying gap about 1.6 if the industry figure had no such effect; the company did not say. It did not repeat the guest-count comparison it gave in June.

    Sources (3)
    ClaimValuePeriodFrom
    Darden vs industry sales, Q4 FY26Darden 4.6% vs industry 1.4%Q4 FY26Inve data
    Darden vs industry sales, Q1 to Q3 FY26Darden 4.7% vs industry 5.0% (Q1 FY26), 4.3% vs 1.3% (Q2), 4.2% vs -1.2% (Q3)Q1 to Q3 FY26Inve data
    Darden vs industry sales, Q1 FY27Darden 3.2% vs industry 2.4%; World Cup effect about 0.8 pointscall 2026-09-24the company's results call

  4. Impact 3/5 Margin Mixed

    Darden Q1 EPS rose 4.1% on a share count about 2.7% smaller; earnings margin fell to 7.3%

    Earnings from continuing operations were $234 million, 7.3% of sales, against $231 million and 7.6% a year earlier. That is about 1% more earnings, so by our arithmetic a share count about 2.7% smaller, after $222 million of buybacks in the quarter, explains nearly two-thirds of the 4.1% per-share growth. The tax rate was 12.9% against 10.5% a year ago, and the full-year guide is about 13.5%. Last year's rate was helped by a hedge gain and was about 12.5% without it; the CFO calls the flat-to-positive margin aim a long-term framework.

    “our focus is not on any individual line item. It's on growing earnings after-tax margin, flat to positive 20 basis points.”— Rajesh Vennam, CFO
    Sources (3)
    ClaimValuePeriodFrom
    Q1 FY26 earnings, margin, tax rate$231 million, 7.6% of sales; tax rate 10.5% (about 12.5% without a hedge gain)Q1 FY26Inve data
    FY27 effective tax rate guidanceapproximately 13.5%FY27Inve Guidance Tracker
    Q1 FY27 earnings, tax, capital returned$234 million, 7.3% of sales; tax 12.9%; $406 million returned, $222 million buybackscall 2026-09-24the company's results call

  5. Impact 3/5 Risk Mixed

    Darden sizes diesel risk at 0.10-0.15 points of sales; Q1 cost inflation 3.5% vs 4% guided

    Commodity inflation came in at 3.5% against roughly 4% guided in June. Yet fuel is a risk again: the CFO sized the diesel exposure at 0.10 to 0.15 percentage points of sales, on top of the fuel cost he said guidance already contemplates, in a scenario he called a very high level, with diesel at $6-plus for the whole year. In June the company said fuel pressure would ease through the year. On $13.6 billion to $13.75 billion of guided sales, a 13.5% tax rate and 114 million shares, our arithmetic puts that scenario at about $0.10 to $0.16 of EPS, against a guided range $0.25 wide.

    “somewhere around 10 to 15 basis points at a very high level”— Rajesh Vennam, CFO
    Sources (5)
    ClaimValuePeriodFrom
    June fuel and commodity statementsQ1 commodity inflation about 4%; fuel impact expected to ease through the yearcall 2026-06-25Inve data
    FY27 sales guidance$13.6 billion to $13.75 billionFY27Inve Guidance Tracker
    FY27 effective tax rate guidanceapproximately 13.5%FY27Inve Guidance Tracker
    FY27 diluted share count guidanceapproximately 114 millionFY27 / call 2026-06-25Inve call summaries
    Q1 commodity inflation and diesel sensitivity3.5% in Q1; full-year 3%; diesel scenario 10 to 15 basis points of salescall 2026-09-24the company's results call

  6. Impact 3/5 Demand Mixed

    Olive Garden weekday lunch has fallen further behind pre-COVID than the rest of the day

    The CFO said weekday lunch, about 20% of Olive Garden traffic, has performed worse than the rest of the day against pre-COVID levels, by hundreds of basis points; the CEO blamed marketing that stopped after COVID. A new lunch platform is to be tested this quarter, with more to say in the back half of fiscal 2027. On 25 June 2026 no weekday-lunch shortfall had been sized; asked for recent lunch traffic, management gave none and did not say how much the lunch effort is worth to this year's guidance.

    “we have seen a little bit more deterioration at lunch than we have in any other place.”— Ricardo Cardenas, CEO
    Sources (2)
    ClaimValuePeriodFrom
    June call: lunch mentions (weekend lunch only)Two mentions of lunch, both about weekend lunch and the lighter-portions menucall 2026-06-25Inve data
    Weekday lunch share and gapAbout 20% of traffic; off by hundreds of basis points vs the rest of the dayparts, measured against pre-COVID; test this quartercall 2026-09-24the company's results call

Financials

Income statement, last 8 quarters

$ million; YoY and margin in %
Quarter endSalesYoYOperating profitOp. marginPBTNet profit
May 20263,719+13.7%51713.9%466405
Feb 20263,345+5.9%40612.1%357307
Nov 20253,102+7.3%32010.3%272237
Aug 20253,045+10.4%33911.1%294258
May 20253,272–38311.7%337304
Feb 20253,158–41813.2%373323
Nov 20242,890–29210.1%246215
Aug 20242,757–2699.8%232207

Balance sheet

$ million
As ofEquityDebtCashFixed assetsTotal assets
May 20262,2082,3312205,04912,862
Feb 20262,1042,4312404,98412,889
Nov 20252,0802,5772244,94412,940
Aug 20252,2262,2772114,82712,760

Cash flow

$ million
Year endInvestingFinancing
May 2026−711−1,164
May 2025−1,278−386
May 2024−1,325−483
May 2023−568−1,033

Guidance history

Management's targets and their status each quarter
MetricTargetDueVerdictBy quarter
FY27 effective tax rate (full-year guidance)approximately 13.5%FY27On Track
  • Q3 FY26 New
  • Q4 FY26 On Track
FY27 capital spending (full-year guidance)approximately $850 millionFY27Revised Down
  • Q3 FY26 New
  • Q4 FY26 Revised Down
FY27 new restaurant openings (full-year guidance)75 to 80 new restaurants, plus 14 Bahama Breeze conversionsFY27On Track
  • Q3 FY26 New
  • Q4 FY26 On Track
FY27 total sales (full-year guidance)$13.6 billion to $13.75 billionFY27New
  • Q4 FY26 New
FY27 same-restaurant sales growth (full-year guidance)2.5% to 3.5%FY27New
  • Q4 FY26 New
FY27 adjusted diluted EPS from continuing operations (full-year guidance)$11.10 to $11.35FY27New
  • Q4 FY26 New
Long-term financial framework: total shareholder return (EPS growth plus dividend yield)10% to 15%On Track
  • Q4 FY25 New
  • Q3 FY26 On Track
  • Q4 FY26 On Track
Sale of 8 Canadian Olive Garden restaurants to Recipe Unlimitedon track to close soonQ1 FY26Achieved
  • Q4 FY25 New
  • Q1 FY26 Achieved
Olive Garden Lighter Portions menu system-wide rolloutcomplete rollout system-wide in JanuaryQ3 FY26Achieved
  • Q2 FY26 New
  • Q3 FY26 Achieved
Third Darden brand adopting Uber Direct first-party deliveryon the platform sometime in Q3 FY26Q3 FY26Achieved
  • Q1 FY26 New
  • Q2 FY26 Achieved
FY26 effective tax rate (full-year guidance)13% to 13.5%FY26Pending
  • Q3 FY25 New
  • Q4 FY25 On Track
  • Q1 FY26 On Track
  • Q3 FY26 Revised Up
  • Q4 FY26 Pending
FY26 total inflation / commodities inflation (full-year guidance)total inflation 2.5% to 3%, commodities inflation approximately 2.5%FY26Pending
  • Q4 FY25 New
  • Q1 FY26 Revised Down
  • Q2 FY26 Revised Down
  • Q3 FY26 Revised Up
  • Q4 FY26 Pending