Darden Restaurants Inc Q4 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Eric Gonzalez - KeyBanc Capital Markets Inc. - Analyst : Congrats on the really strong same-store sales results. Well, obviously, you're executing at a very high level. It's really hard to deny the fact that the industry seems to be in a strong position, particularly some of the larger chains in full service. So perhaps you can give us your perspective on why casual dining is having a bit of a moment right now. And relatedly, I'm curious what your thoughts on how some of the smaller chains are independently [fairing] in this environment? Whether you think the independents are struggling with the same affordability perception issues that you might have in fast food?

Question: Eric Gonzalez - KeyBanc Capital Markets Inc. - Analyst : Maybe if I could, as a follow-up, ask about the unit growth outlook, the 60 to 65 units this year. Your long-term range in your algorithm is 3% to 4%. So I think the 60 to 65 implies 2.7% to 3%. So I guess I'm curious when we might see a ramp in unit growth and which brands might be the largest contributor?

Question: Chris O'Cull - Stifel Nicolaus and Company, Incorporated - Analyst : Raj, my question was on the updated long-term framework. Does the new margin expansion target reflect a different view on the long-term restaurant margin opportunity or even the rate of reinvestment you expect to make in the business?

Question: David Palmer - Evercore ISI - Analyst : Regarding Uber Direct at Olive Garden, curious about what you can share about mix and same-store sales contribution in the in fiscal 4Q and what you're contemplating for mix and same-store sales contribution from it in fiscal '26? And also is there anything different about the incremental margin from that from the base business?

Question: David Palmer - Evercore ISI - Analyst : And with regard to Uber Direct and other brands, I would assume that this is going as you would have expected for Olive Garden. Are there other stalls that you think are particular to Longhorn and the other brands that you'll want to figure out before you do Uber Direct at those brands that you think might be an additional hurdle? Or are you kind of seeing probably what you need to see from this as a lever that could apply to your other brands?

Question: Andrew Charles - TD Cowen - Analyst : Rick, it's a good segue to my next question. I'm curious, are you prioritizing expanding rolling out Uber Direct across the remaining brands that make sense, recognizing it's not going be all of them? Or is the attitude to see how Olive Garden would perform on the Uber marketplace? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 20, 2025 / 12:30PM, DRI.N - Q4 2025 Darden Restaurants Inc Earnings Call

Question: Andrew Charles - TD Cowen - Analyst : Okay. That's helpful. And then, Raj, just a follow-up question. With the outlook for 2026 inflation of 2.5% to 3%, can you segue how that's going to look between food and labor?

Question: Lauren Silberman - Credit Suisse - Analyst : Congrats on the quarter. I wanted to follow up on fiscal '26 guidance for the EPS. If your top line comes in stronger than expected, how are you thinking about flowing through to earnings versus reinvesting back in the business? And I guess that kind of applies a bit to the long term?

Question: Lauren Silberman - Credit Suisse - Analyst : Okay. And then on the 2% to 3.5% comp growth, obviously, a very strong momentum in the business. Can you just talk about how you're thinking about the cadence of comp as we move through the year?

Question: Brian Harbour - Morgan Stanley - Analyst : What -- Raj, what -- roughly what pricing do you expect to run in the coming year? And I guess just how about like longer term? I mean is sort of continuing to restrain that sort of key to all the brands as we think about the long-term plan?

Question: Brian Harbour - Morgan Stanley - Analyst : Okay. And your comment about sort of reserving the right to reinvest. I mean it sounds like you're being more top line focused, right, in the current algorithm. So I mean, to some extent, what form would that take? Would it be more on the food side? Or how would that actually show itself in the brands?

Question: Sara Senatore - BofA Global Research - Analyst : I guess -- just wanted to ask about fine dining. You mentioned that the category has been pressured, but I think unlike some of your other larger casual dining, you might be lagging some peers the question is maybe broader about like sort of the approach to the portfolio and your decision to sell some Bahama Breeze during those nine Fine Dining. But is there sort of a limit to the span of control that you can have in terms of the number of brands -- is the acquisition of Ruth, would that have played any role in fine dining maybe being a little bit softer just in terms of manage resources? I'm just trying to understand sort of as you think about the portfolio, it feels like there's a little bit more movement now than I've seen in the past. And I'm trying to sort of think through what might be influencing that?

Question: Sara Senatore - BofA Global Research - Analyst : Got it. Okay. And then just a quick follow-up. You had mentioned 150,000 improvement sequentially at Fine Dining. Is there anything else that you can comment on about the demographics? I mean, one thought is that the other benefit that casual dining might be facing is just having less exposure to low-income consumers. So anything you've been very helpful in sort of parsing out kind of under 50 and sort of some of the dynamics? Any updates there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 20, 2025 / 12:30PM, DRI.N - Q4 2025 Darden Restaurants Inc Earnings Call

Question: Peter Saleh - BTIG - Analyst : Congrats on a great quarter. I wanted to ask about the incrementality that you're seeing in the Uber Direct business, the 40% to 50% at Olive Garden. Can you just comment a little bit about who these customers are? Are they higher income? I mean I'm assuming are they new to the brand? Or is it just increased frequency? Just trying to understand how the customer is using Olive Garden through Uber Direct?

Question: Peter Saleh - BTIG - Analyst : Great. That's very helpful. And then just lastly, on price going forward, I know you're taking less price than inflation. When you talk about reinvestment, is it are you considering maybe even taking less price going forward? Or is it just reinvesting back in quality? Just trying to understand kind of the reinvestment comments again, just if you guys can elaborate a little bit?

Question: Jake Bartlett - Truist Securities - Analyst : Mine was about the same-store sales guidance in '26. And how it relates the long-term framework. Roughly the same, very similar -- but you are seeing this big contributor from delivery now. You have the easy compares -- looks like you talked about good momentum into the quarter -- into the first quarter here. So what are some of the offsets? It sounds like you're baking in some conservatism due to the macro environment. What are you seeing from macro that's making you maybe a little more cautious there? Any more color on the moving pieces? We can see the -- what's driving some of the strength. But what are you worried about in terms of the headwinds?

Question: Jake Bartlett - Truist Securities - Analyst : Great. My follow-up is on G&A. You were a little higher than guided in '25 -- fiscal '25. Can you give us a hand on what we should expect for '26 for G&A?

Question: Jim Salera - Stephens Inc. - Analyst : Can you give the breakout of traffic and ticket of Olive Garden for the quarter? Just trying to size up how much of an impact the buy one take one contributed on transactions? And do you have a sense for if that deal was more of a frequency driver among loyal Olive Garden guests or were kind of entice new households to come to the brand?

Question: Jim Salera - Stephens Inc. - Analyst : Okay. Great. And then thinking about '26, just any comments you can offer on promotional cadence? And you mentioned I believe industry guest count was up just under 100 basis points in the quarter. And so it seems like consumer may be gradually improving. Just thoughts on how much we pull on the promotional lever in '26 to kind of support that gradual recovery?

Question: Dennis Geiger - UBS Equities - Analyst : I wanted to ask how you're thinking about the strength of the momentum. You kind of gave some color there, Rick, you touched on Uber as well. Just anything at a high level, thinking about the combination of Uber, new [menu] seems like you've had good success promos, know anything else. So just the confidence in that momentum running through '26?

Question: Dennis Geiger - UBS Equities - Analyst : Sorry, Rick. Just on Olive Garden momentum, you touched on Uber in thinking about that momentum in the '26, thinking about the viewer, but also the new menu items, the promos, just how you're thinking about the Olive Garden momentum continuing through '26?

Question: Dennis Geiger - UBS Equities - Analyst : And just a quick follow-up. As it relates to that acceleration or that increase in the long-term comp or the business overall. Is that largely delivery driven? Is there anything with any other initiatives? I know you've got a focus on ops and speed, that's a long-term focus. Anything else? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 20, 2025 / 12:30PM, DRI.N - Q4 2025 Darden Restaurants Inc Earnings Call

Question: Christine Cho - Goldman Sachs - Analyst : Congrats on a strong quarter. You've reiterated the ongoing resilience in consumers above $50,0000 in the last few quarters. But I was wondering if there was any notable observation on consumers in various speeds groups. So for example, have you seen better sales trends or higher net purchase intent from younger guests that is driving acceleration across casual dining as well as your major brands?

Question: Gregory Francfort - Guggenheim Securities LLC - Analyst : Rick, I guess my question is for you. I guess, in the state category, if I go back five, 10 years ago, you might have been competing with the number one player who was more focused on maybe margins and now you're focused -- you're competing with the number one player that might be a little more focused on top line. How have you positioned Longhorn to compete? I mean, I'm just trying to figure out how you're doing comps at this Level 6 and change. And going forward, do you think you need to reinvest in price? Do you think you need to reinvest in portion sizing? I guess I'm trying to figure how you're going to continue to compete there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 20, 2025 / 12:30PM, DRI.N - Q4 2025 Darden Restaurants Inc Earnings Call

Question: Andrew Strelzik - BMO Capital Markets - Analyst : Two quick ones from me. The first one is on marketing. Within that long-term framework, and a stronger top line focus. How are you thinking about marketing over the next several years and then '26 as well? And then the other question was on speed of service, which has been a focus for you, what drivers do you see there for '26? And can you give us an update on the progress there?

Question: Brian Vaccaro - Raymond James - Analyst : Most of mine have been asked, but just one quick one. Raj, can you walk through the traffic and check dynamics at LongHorn as well?

Question: John Ivankoe - JPMorgan - Analyst : According to the government, overall industry growth and units, and this is a broad industry seems to have slowed from around 2.5% to around 1.5%. And so my question is, where do you think that, that growth rate is changing across the industry? And how might that be influencing your ability to access the type of real estate that Darden typically does best with? In other words, you make a comment about the tightening or loosening of the specific sites that you're looking for over the next couple of years.

Question: Jeffrey Bernstein - Barclays - Analyst : Rick, it sounds like you're more comfortable with the uptick in promotions in recent quarters. I know you guys were previously more hesitant to do any more promotional activity. So -- and I think you mentioned focus more on affordability at Olive Garden going forward to perhaps drive more traffic. I'm just wondering if you could talk a little bit more about that increased confidence in waiting into the more value or more affordability side of things and your ability at the same time to still protect margin? And then I have one follow-up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 20, 2025 / 12:30PM, DRI.N - Q4 2025 Darden Restaurants Inc Earnings Call

Question: Jeffrey Bernstein - Barclays - Analyst : Understood. And then just as it relates to your competition on the same front, how do you think the industry is thinking about discounting versus prior, whether or not they're comfortable with the elevated levels or whether you might see some change there?

Question: Danilo Gargiulo - Bernstein - Analyst : Great. Rick, I was wondering if you can comment on the labor environment in the United States and particularly whether you've seen any increase in turnover in the areas that you're operating, maybe not necessarily in your case, but in general, India in the trade areas that you're most active on, specifically in light of immigration policies seem to be tightening?

Question: Danilo Gargiulo - Bernstein - Analyst : Okay. Great to hear. And then regarding your international aspirations, specifically on the franchising side, what do you think your long-term objective might be from -- in terms of like total number of units that you think over the next five to even 10 years, it will be aspiring to get to? And which areas do you think are going to be getting most attention? You mentioned like India, Spain, -- any other areas you think could be particularly interesting to you?

Question: Jim Sanderson - Northcoast Research - Analyst : I wanted to go back to your fiscal '26 guidance, what closure rate is implied for 2026? And just wondering if you're looking more closely at some of the smaller brands like Season 52 or Eddie V's that haven't really grown that much if there's an opportunity to streamline your portfolio going forward?

Question: Jim Sanderson - Northcoast Research - Analyst : All right. And a quick follow-up question on the Uber Direct. You mentioned the promotion in the last part of May, that generated significant pickup in delivery. Just wondering, did the incrementality, the 40% to 50%, was that consistent? Or did you see more new clients coming to the brand helped by the marketing and promotions for TV -- on TV?