Olive Garden parent, Darden Restaurants, surpasses earnings expectations despite a decline in fine-dining sales

Darden Restaurants announced on Thursday that its first-quarter earnings and revenue exceeded analyst expectations, despite a decrease in sales within its fine-dining sector, which includes Ruth’s Chris Steak House.

The decline in same-store sales within the fine-dining segment indicates that consumers are choosing to spend less on upscale restaurant meals.

In premarket trading, the company’s shares fell more than 1%.

Here’s how the company’s performance for the quarter ended Aug. 27 compared to Wall Street’s expectations, based on a survey of analysts conducted by LSEG, formerly known as Refinitiv:

• Earnings per share: $1.78 adjusted versus $1.74 expected
• Revenue: $2.73 billion versus $2.71 billion expected

In the fiscal first quarter, Darden reported a net income of $194.5 million, or $1.59 per share, compared to $193 million, or $1.56 per share, in the same period last year.

Excluding certain items, the restaurant company earned $1.78 per share from its ongoing operations.

Net sales increased by 11.6% to $2.73 billion.

Darden’s same-store sales, excluding those of Ruth’s Chris, experienced a 5% growth in the quarter.

The results for Ruth’s Chris are not included in Darden’s same-store sales until it has owned the steakhouse chain for at least 16 months. The acquisition, valued at $715 million, was finalized in mid-June.

In terms of performance, LongHorn Steakhouse ranked the highest among Darden’s portfolio during this quarter, with same-store sales growth of 8.1%, surpassing StreetAccount estimates of 6.1%.

Darden Restaurants also reaffirmed its expectations for fiscal 2024, projecting net sales of $11.5 billion to $11.6 billion, same-store sales growth of 2.5% to 3.5%, and adjusted earnings per share from ongoing operations of $8.55 to $8.85.