Earnings for the parent company of Olive Garden, LongHorn Steakhouse, and other restaurant chains fell short of estimates in the fiscal first quarter, but the company stuck to its full-year forecast. This caused Darden Restaurants Inc.’s stock to rise 11% before the market opened on Thursday.
Raj Vennam, the chief financial officer, said that the miss was caused by a “significant” drop in traffic in July. Many store owners and restaurant owners have seen drops in sales this year. This is because of high inflation, which makes people less likely to spend money.
“After a slow month in July, our sales trend has continued to get better,” he said in prepared comments. “We are restating our guidance for fiscal year 2025 because of this recovery and the planned programs to help the rest of the fiscal year.”
In a separate announcement, the company said it would be working with Uber Technologies Inc. UBER 2.81% to send Olive Garden menu items through Uber Direct.
On or around December 20, 2024, the business will begin a test run at a few Olive Garden restaurants. If the trial works, it will be rolled out across the whole country by May 2025.
After a year of making $194.5 million, or $1.59 a share, the Orlando, Fla.-based company DRI 7.41% had a net income of $207.2 million, or $1.74 a share, for the quarter ending August 25.
If you take out the one-time costs of buying the Tex-Mex chain Chuy’s, adjusted earnings per share were $1.75, which was less than the $1.84 that FactSet predicted.
The number of sales went up from $2.731 billion to $2.757 billion, which was less than the $2.803 billion that FactSet predicted. Sales at the same restaurants went down 1.1%, while FactSet thought they would go down 0.3%.
CEO Rick Cardenas said, “We work in a very dynamic and competitive industry, and we have shown that our strategy helps us do well in tough situations.” “Even though the first quarter didn’t go as planned, I’m confident in the strength of our business.”
Sales at Olive Garden went down 2.9%, LongHorn went up 3.7%, and sales at the company’s fine dining section went down 6%.
The company stuck to its fiscal 2025 forecast, which calls for adjusted EPS between $9.40 and $9.60. So far this year, the stock is down 3%, while the S&P 500 SPX has gone up 17.8%.
