Darden Restaurants’ total sales rose in the third quarter of fiscal year 2025, led by new store openings and acquisitions. These initiatives helped the company expand its store locations, compensate for weak same-store sales, and send its shares higher on Wall Street.
Most of the sales gains came from acquiring 103 Chuy’s restaurants and opening 40 new restaurants.
The LongHorn Steakhouse chain led the gains in the third quarter, followed by the Olive Garden chain, as the remaining chains recorded slide sales losses.
Excluding Chuy’s transaction and integration-related costs of $0.06 per share, adjusted diluted net earnings per share from continuing operations were $2.80, reflecting a 6.9 percent increase from the same period a year earlier.
Darden President and CEO Rick Cardenas was pleased with the company’s performance, pointing to sales records for certain brands during the busy holiday season and Valentine’s Day.
“We had a solid quarter, and I am proud of how our teams managed their business and controlled what they could control,” he said. “All of our segments grew total sales and segment profit margin, while several brands set sales records during the holidays and on Valentine’s Day, reinforcing the strength of our portfolio and the loyalty of our guests.”
“Darden’s brands continue to outperform in an increasingly challenging environment for restaurant operators,” he told The Epoch Times via email.
“While much of the industry saw visitation trends decline in February due to macroeconomic uncertainty, rising inflation in key food categories like eggs, and inclement weather across the country, Darden remained ahead of industry trends. This resilience was driven by a strong focus on value—such as Olive Garden’s Never-Ending Pasta Bowl—balanced with strategic new product launches across its portfolio.”
Cardenas credited the chain’s rising sales and profits to its business model and strategy.
“Our ability to deliver profitable sales growth in a challenging environment is a testament to the strength of our business model and adherence to our proven strategy,” he said.
One of Darden’s business model and strategy strengths is economies of scale and the benefits of managing multi-brand restaurant chains, such as better supplier bargaining and lower overhead costs.
“Our total sales are more than twice that of our closest full-service restaurant competitor. We also have higher-than-average individual restaurant sales and lower overhead costs, which we achieve by centralizing our support functions and margins significantly higher than our competitive set.”
Another advantage is the extensive data and insights from serving more than 1 million guests daily. These allow the company to make smarter, faster, more impactful decisions to improve the guest experience and drive incremental sales.
A third advantage is rigorous strategic planning to ensure that the company develops and maintains the right portfolio of brands.
“As part of our planning, we determine the distinct advantages and differentiated positioning of each brand, so they have the right strategy to compete effectively and grow share,” Darden said.
The fourth advantage is a results-oriented culture, which focuses on hiring, training, rewarding, and retaining the best talent in the industry.
As of 2:30 p.m. on March 20, Darden Restaurants’ shares increased by 4.92 percent. Over the past five years, the stock has gained 487 percent compared to the S&P 500’s 147 percent increase and has outperformed the popular index during the previous 12 months.
Looking ahead, Darden is capitalizing on the growing trend of on-demand delivery by expanding its partnership with Uber.
“We have developed a strong partnership with the Uber Direct team,” said Chris Chang, chief information officer at Darden. “We learned a lot from the initial pilot at Olive Garden, and that, combined with the success of the full rollout, gave us the confidence to quickly move to piloting delivery at Cheddar’s.”
