Olive Garden owner Darden Restaurants hikes revenue outlook as value plays help bring in diners

Darden Restaurants on Thursday reported strong sales growth, fueled by demand at Olive Garden and LongHorn Steakhouse as thrifty diners look for good deals.

For the second straight quarter, the company hiked its full-year outlook for revenue growth, although it only reiterated its projections for its earnings.

"The second quarter exceeded our top-line expectations as every segment delivered positive same-restaurant sales," Darden CEO Rick Cardenas said in a statement.

Shares of the company rose roughly 1% in early trading.

Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Darden reported fiscal second-quarter net income of $237.2 million, or $2.03 per share, up from $215.1 million, or $1.82 per share, a year earlier.

Higher ingredient costs, particularly for near-record prices for beef, weighed on the company's restaurant-level margin, CFO Raj Vennam said on the company's conference call.

Excluding restaurant closure costs and expenses related to its acquisition of Chuy's, the restaurant company earned $2.08 per share.

Net sales rose 7.3% to $3.1 billion.

Darden's same-store sales increased 4.3% in the quarter, topping Wall Street estimates of 3%, according to StreetAccount.

While the broader restaurant industry has seen sluggish sales growth, Darden has found success by raising its menu prices by less than inflation and adding promotions aimed at diners looking for value.

"Weaker consumer sentiment doesn't necessarily translate into reduced spending during the quarter," Cardenas said during the conference call.

Cardenas said the company saw high-income consumers trade into its casual-dining chains, although demand from diners making less than $50,000 fell slightly. Darden also got a traffic bump from consumers who are at least 55 years old.

Olive Garden, which accounted for roughly 44% of Darden's quarterly sales, reported same-store sales growth of 4.7%. Executives credited the popularity of the Italian chain's $13.99 Never Ending Pasta Bowl promotion that ran during the quarter, plus Olive Garden's growing delivery business.

In an appeal to inflation-weary consumers, Olive Garden is also adding the option of smaller portions at a lower price for select menu items. Cardenas said the change is improving its value perception among some diners. About 40% of the chain's locations offered the lighter portions menu during the quarter, and another 20% added it early in the fiscal third quarter.

LongHorn Steakhouse saw same-store sales growth of 5.9%. While Olive Garden still outnumbers LongHorn based on its restaurant footprint, the steakhouse chain's sales are growing faster.

Cardenas said that LongHorn saw higher traffic from consumers who make less than $50,000, despite the chain's higher average check relative to Olive Garden. He credited higher beef prices, which mean that a steak at LongHorn could be the same price or cheaper than buying one from the grocery store.

The company's other business segment reported same-store sales growth of 3.1%, fueled by strong demand at Yard House, according to Cardenas.

Darden's fine-dining business, which includes Ruth's Chris and The Capital Grille, saw same-store sales growth of 0.8%, bucking the malaise of the sector.

The broader fine-dining segment has struggled as consumers spend less when dining out and many companies have cut back on business lunches and other expenses. Darden tried to appeal to those budget-conscious diners by bringing back a deal at Ruth's Chris for a three-course meal priced at $55 per person.

"It's a profitable deal for us," Cardenas said.

For fiscal 2026, Darden now expects total sales growth of 8.5% to 9.3%, up from its prior forecast of 7.5% to 8.5%. The fiscal year includes a 53rd week, which is expected to contribute about 2%.

Darden also adjusted its expectations for inflation to 3.5%, on the high end of its prior range of 3% to 3.5%. Higher costs will weigh on the company's margins, leading the company to reiterate its forecast for adjusted earnings in a range of $10.50 to $10.70 per share.