Darden’s Earnings Hit by High Food and Labor Costs. Stock of Olive Garden’s Parent Declines.

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Darden Restaurants, owner of Olive Garden and LongHorn Steakhouse, falls after reporting a decline in net earnings and higher operating costs. (Luke Sharrett/Bloomberg)

Key Points

Darden Restaurants falls after the company reports a drop in et earnings for the fiscal quarter.
Net earnings fall about 9% to $234.3 million, while operating costs and expenses grow 6.5% to $2.88 billion.
Darden Restaurants reports adjusted earnings of $2.05 a share on sales of $3.2 billion, in line with analysts’ estimates.

Shares of Darden Restaurants dropped after the company posted fiscal first-quarter earnings that fell from a year earlier because of higher food and labor costs.

The company posted adjusted earnings of $2.05 a share on sales of $3.2 billion for the quarter, both in line with analysts’ estimates.

Operating costs and expenses grew 6.5% to $2.88 billion, which the company attributed to higher costs for food, beverages, and labor. The company’s net earnings fell about 9% to $234.3 million, down from $257.9 million the prior year.

CEO Rick Cardenas called the latest quarter a “solid start” to fiscal 2027, pointing to positive same-restaurant sales growth from each of Darden’s segments.

The company’s LongHorn Steakhouse brand saw the most growth, with comparable sales climbing 6.2% in the latest quarter. Same-restaurant sales for its Olive Garden division grew only 1.1%. Across the entire company, comparable sales rose 3.1%, slightly below analysts’ projections for a 3.3% increase.

Darden Restaurants reaffirmed its fiscal 2027 outlook, calling for earnings per share from continuing operations of $11.10 to $11.35.

The stock fell 2.7% to $208 in premarket trading.

Write to Mariapaula Gonzalez at mariapaula.gonzalez@barrons.com

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