Darden Restaurants, Inc. DRI closed fourth-quarter fiscal 2026 with management emphasizing a familiar message that gained more weight in its latest earnings call. The company believes disciplined pricing, a broader brand mix and steady unit growth can keep it ahead of the casual dining industry.
That framing mattered as DRI posted adjusted EPS of $3.66, topping the Zacks Consensus Estimate of $3.63 by 0.8%. Revenues of $3.72 billion came in just below the $3.73 billion consensus mark, with a negative surprise of 0.4%.
Darden Restaurants, Inc. Price, Consensus and EPS Surprise
Darden Restaurants, Inc. price-consensus-eps-surprise-chart | Darden Restaurants, Inc. Quote
DRI Leans on Portfolio Breadth
CEO Ricardo Cardenas used much of his prepared commentary to argue that DRI’s portfolio is becoming more balanced and less dependent on Olive Garden. Cardenas said the company’s reach across cuisines, price points and dining occasions reduces reliance on any one brand and gives management more levers to drive growth.
CFO Rajesh Vennam backed that up by noting Olive Garden represented 42% of fiscal 2026 sales and 47% of segment profit, down from 50% and 55%, respectively, in fiscal 2019. Vennam said that the shift reflected both LongHorn’s consistent expansion and a bigger contribution from the rest of the portfolio, including acquisitions.
That broader mix sits behind management’s long-term case for 3% to 4% unit growth, with Olive Garden expected to trend toward the low end, LongHorn to the high end and smaller brands growing at or above that range.
Darden Sets Fiscal 2027 Guardrails
Darden’s fiscal 2027 outlook was one of the call’s clearest investor takeaways. Management guided for total sales of $13.6 billion to $13.75 billion, same-restaurant sales growth of 2.5% to 3.5%, EBITDA of $2.26 billion to $2.29 billion and EPS of $11.10 to $11.35.
The assumptions underneath that range were equally important. Vennam said the outlook includes about 3% total inflation, including commodities inflation of about 3% and labor inflation of about 3.5%, plus roughly $875 million in capital spending and 75 to 80 gross openings.
He also highlighted 11 Bahama Breeze conversions and said the step-up in openings would create about a $15 million profit impact and roughly a 10-cent EPS drag for the year. Even with that added growth cost, management said the guidance still implies a flat to positive earnings-after-tax margin.
DRI Says Traffic Held Up
On the demand backdrop, Cardenas said consumer spending remained resilient even as sentiment stayed cautious. He told analysts that the company did not see a major change from recent quarters and the same-restaurant sales cadence was fairly consistent through the quarter.
That message was supported by the quarter’s operating numbers. DRI reported 4.6% same-restaurant sales growth, positive traffic growth and adjusted EBITDA of $678 million, while management said both same-restaurant sales and guest counts exceeded the industry benchmark by more than 300 basis points.
Cardenas also pointed to a year-over-year increase in visits from all income groups at the company’s casual brands, including the lowest income quintile. He said guests under 35 were softer, but management’s tone on overall demand remained steady rather than defensive.
Darden Defends Olive Garden Playbook
Questions around Olive Garden centered on value, traffic and margin durability. Vennam said the brand should land near the lower end of DRI’s 2.5% to 3.5% same-restaurant sales range in fiscal 2027, but he also said margins should be flat to positive.
Cardenas defended the company’s approach to “lighter portions” and other menu changes as long-term brand investments rather than short-term traffic tactics. He confirmed the items are not being heavily featured, but customers using them are returning more frequently, and management will keep applying filters around simplicity, value and brand equity.
In another notable Q&A exchange, management said Olive Garden made meaningful progress on speed of service in the last quarter, with service and pace-of-meal scores rising. That suggested operational execution, not just menu news, remains central to the brand’s plan for fiscal 2027.
DRI Sees LongHorn as a Share Gainer
LongHorn was the clearest standout on the call. The chain posted 9.5% same-restaurant sales growth in the quarter, and management said its value, food quality and service continue to resonate with guests.
Cardenas said years of food-quality investment are still paying off, while Vennam noted the brand’s average unit volumes have climbed to $5.6 million after more than 20% same-restaurant sales growth over the past three years. Fiscal fourth-quarter segment profit margin reached 21.2%, up 110 basis points from a year earlier.
Management also acknowledged some trade-down from fine dining and some trade-in from retail. That exchange reinforced the idea that LongHorn is benefiting from both brand-specific execution and a favorable value position in a high-beef-inflation environment.
Darden Keeps the Focus on Execution
The closing tone of the call was measured and consistent. Management repeatedly returned to controlling what it can control, especially execution, pricing discipline and new-unit growth, instead of relying on a stronger industry backdrop.
DRI also paired that posture with continued shareholder returns. The company returned $310 million in the quarter and $1.4 billion in fiscal 2026. The board approved an 8% increase in the quarterly dividend to $1.62 per share.
Zacks Signals for DRI
DRI carries a Zacks Rank #3 (Hold), along with a Value Score of C, Growth Score of B, Momentum Score of A and VGM Score of B. Under Zacks’ framework, the rank remains the first screen, while Style Scores help gauge value, growth and momentum characteristics over the next one to three months.
That combination points to supportive growth and momentum characteristics, but a Hold-rated stock does not carry the same near-term implication as a Zacks Rank #1 (Strong Buy) or 2 (Buy). The current rank can also change as earnings estimate revisions move after the quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
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