Olive Garden parent Darden Restaurants beats earnings estimates, despite weak fine dining sales

Darden Restaurants on Thursday reported earnings and revenue that topped analysts’ expectations in its first quarter as the owner of Ruth’s Chris Steak House.

But same-store sales of Darden’s fine-dining segment fell more than expected, signaling that consumers are spending less on upscale restaurant meals.

Shares of the company fell more than 1% in premarket trading.

Here’s what the company reported for the quarter ended Aug. 27 compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: $1.78 adjusted vs. $1.74 expected
• Revenue: $2.73 billion vs. $2.71 billion expected

Darden reported fiscal first-quarter net income of $194.5 million, or $1.59 per share, up from $193 million, or $1.56 per share, a year earlier.

Excluding its acquisition of Ruth’s Chris, integration costs related to the deal and other items, the restaurant company earned $1.78 per share from continuing operations.

Net sales rose 11.6% to $2.73 billion.

Darden’s same-store sales, excluding those of Ruth’s Chris, rose 5% in the quarter.

The company won’t include Ruth’s Chris in its same-store sales results until it has owned the steakhouse chain for 16 months. The $715 million acquisition was completed in mid-June.

LongHorn Steakhouse was the top performer in Darden’s portfolio this quarter. The chain reported same-store sales growth of 8.1%, topping StreetAccount estimates of 6.1%.

Olive Garden, which accounts for roughly 45% of Darden’s revenue, reported same-store sales growth of 6.1%, meeting expectations.

Darden’s fine-dining restaurants saw same-store sales shrink 2.8%, wider than expectations of a 1.8% decline. The segment includes The Capital Grille and Eddie V’s, but its same-store sales metric doesn’t yet include Ruth’s Chris.

Darden also reiterated its outlook for fiscal 2024. The company is forecasting net sales of $11.5 billion to $11.6 billion, same-store sales growth of 2.5% to 3.5%, and adjusted earnings per share from continuing operations of $8.55 to $8.85.