Darden posts first same-store sales decline since pandemic, offset by Ruth’s Chris acquisition

Darden Restaurants on Thursday reported mixed quarterly results as the Olive Garden owner’s same-store sales shrank for the first time since the Covid pandemic.

Shares of the company fell more than 5% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: $2.62 adjusted, meeting expectations
• Revenue: $2.97 billion vs. $3.03 billion expected

Darden reported fiscal third-quarter net income of $312.9 million, or $2.60 per share, up from $286.6 million, or $2.34 per share, a year earlier.

Excluding items, the restaurant company earned $2.62 per share.

Net sales rose 6.8% to $2.97 billion, fueled by Darden’s acquisition of Ruth’s Chris Steak House and 53 other new restaurant locations.

But Darden’s overall same-store sales fell 1% in the quarter as almost all of its restaurant segments reported same-store sales declines. Only LongHorn Steakhouse saw same-store sales growth. A year earlier, Darden reported same-store sales growth of 11.7%.

Olive Garden, usually the crown jewel of Darden’s portfolio, reported its same-store sales fell 1.8%. Analysts were expecting the chain’s same-store sales to rise 1.3%, according to StreetAccount estimates.

LongHorn Steakhouse’s same-store sales rose 2.3%, but still fell short of StreetAccount estimates of 3.1%.

Darden’s fine dining business, which includes The Capital Grille, saw its same-store sales decline 2.3%. That division now includes Ruth’s Chris, but those same-store results won’t be included in the category total for several more quarters.

Remaining chains, like Cheddar’s Scratch Kitchen, collectively saw same-store sales fall 2.6%.

Darden also updated its outlook for fiscal 2024. The company now expects adjusted earnings per share of $8.80 to $8.90, narrowing its earnings forecast from a prior range of $8.75 to $8.90. Darden also lowered its revenue projection from $11.5 billion to $11.4 billion and changed its same-store sales outlook from a range of 2.5% to 3% growth to a range of 1.5% to 2%.