Darden’s fourth quarter results were met with a positive market response, as the company delivered revenue above Wall Street expectations while non-GAAP earnings per share landed slightly below consensus. Management attributed the quarter’s performance to strong same-store sales momentum across brands, particularly the success of Olive Garden’s Never Ending Pasta Bowl and first-party delivery initiatives. CEO Rick Cardenas highlighted record guest satisfaction scores, underpinned by operational execution and targeted menu enhancements. Commodity inflation, especially in beef, was cited as a significant margin headwind, but productivity improvements and cost discipline helped preserve operating margins year over year.
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Darden (DRI) Q4 CY2025 Highlights:
- Revenue: $3.10 billion vs analyst estimates of $3.07 billion (7.3% year-on-year growth, 1% beat)
- Adjusted EPS: $2.08 vs analyst expectations of $2.10 (0.8% miss)
- Adjusted EBITDA: $466 million vs analyst estimates of $465.7 million (15% margin, in line)
- Management reiterated its full-year Adjusted EPS guidance of $10.60 at the midpoint
- Operating Margin: 10.3%, in line with the same quarter last year
- Locations: 2,182 at quarter end, up from 2,152 in the same quarter last year
- Same-Store Sales rose 4.3% year on year (2.4% in the same quarter last year)
- Market Capitalization: $22.09 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Darden’s Q4 Earnings Call
- Brian Bittner (Oppenheimer): Asked about the sales impact and guest demographics of the lighter portion menu. CEO Rick Cardenas explained that the rollout is increasing frequency among both new and existing guests, and will have a modest short-term check mix impact.
- David Palmer (Evercore ISI): Inquired about Olive Garden’s comp guidance and the potential effect of fiscal stimulus. CFO Raj Vennam clarified the outlook is based on macro uncertainty and internal brand initiatives, with stimulus as a possible benefit.
- Brian Harbour (Morgan Stanley): Queried the sustainability of beef cost relief and the future of first-party delivery. Vennam noted recent coverage at favorable prices, while Cardenas said delivery could grow further with marketing support.
- Jake Bartlett (Truist Securities): Sought clarity on marketing spend trends and macro assumptions. Vennam stated marketing will see a modest year-on-year increase, and Cardenas described the consumer as resilient but cautious, with growth strongest among higher-income households.
- Sara Senatore (Bank of America): Asked if value promotions are attracting new guests or increasing existing frequency. Cardenas said promotions primarily benefit core customers but also attract lapsed guests, especially at Ruth’s Chris with the three-course menu.
Catalysts in Upcoming Quarters
In upcoming quarters, our analysts will watch (1) the nationwide rollout and guest response to Olive Garden’s lighter portion menu, (2) the pace and scale of first-party delivery adoption across additional brands, and (3) evidence of easing commodity inflation, particularly in beef, and its effect on margins. Progress on unit growth and the impact of fiscal stimulus will also be key signposts.
Darden currently trades at $187, down from $189.53 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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