Darden Restaurants Reports 5.1% Revenue Increase to $3.20 Billion in Q1 Fiscal 2027

Darden Restaurants, Inc. reported a revenue increase of 5.1% for the first quarter of fiscal 2027, achieving total sales of $3.20 billion compared to $3.04 billion in the same period last year. The company's net earnings from continuing operations were $234.3 million, down from $257.9 million in the prior year, resulting in diluted net earnings per share of $2.04, a decrease from $2.19. The decline in profitability was attributed to higher operating costs, including food and beverage expenses, which rose by 6.0%, and restaurant labor costs, which increased by 4.1%.

In terms of operational changes, Darden's total operating costs and expenses increased by 6.5% to $2.88 billion, driven by higher food and beverage costs and increased marketing expenses. The company also reported a significant reduction in impairments and gains on asset disposals, which fell to a loss of $3.9 million from $42 million in the previous year. The number of company-owned restaurants increased to 2,218, with notable growth in brands such as LongHorn Steakhouse and Cheddar’s Scratch Kitchen, while the Bahama Breeze brand underwent strategic closures and conversions to other Darden brands.

Darden's strategic focus included the completion of the review process for the Bahama Breeze brand, resulting in the permanent closure of approximately half of its restaurants. The company plans to convert the remaining locations to other Darden brands over the next 12 to 18 months. Additionally, Darden's capital expenditures for the quarter were $175.3 million, reflecting ongoing investments in new restaurant construction and remodels.

Looking ahead, Darden anticipates fiscal 2027 sales from continuing operations to range between $13.60 billion and $13.75 billion, supported by same-restaurant sales growth of 2.5% to 3.5% and the opening of 75 to 80 new restaurants. The company expects its effective tax rate to be approximately 13.5% for the fiscal year and plans to invest around $875 million in capital expenditures for new restaurant openings and technology initiatives. Darden's management remains optimistic about its growth trajectory despite the challenges posed by rising operational costs and market conditions.