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Casual dining isn’t dead.
Darden Restaurants (DRI+13.15%) is on a winning streak thanks to two of its standout chains: Olive Garden and Longhorn Steakhouse. The company reported strong earnings on Thursday, driving shares up by more than 13% in early trading hours, pushing its stock to a new 52-week high. Darden’s stock is now the best performer on the S&P, reflecting the growing appetite for its popular restaurants.
“We had a strong quarter, and our four biggest brands generated positive same-restaurant sales,” said Rick Cardenas, Darden’s CEO, in a statement. This momentum has been key for the restaurant group, as diners not only return to their favorite spots but do so in droves.
Cardenas told investors during the company’s earnings call on Dec. 19 that customers with annual incomes between $50,000 and $100,000 are dining at Darden’s restaurants more frequently. Meanwhile, higher-income diners are visiting more sporadically.
Longhorn Steakhouse, in particular, has been a standout performer. The affordable steakhouse posted an impressive 7.5% growth in same-store sales, outpacing other Darden-owned chains. That’s partly due to consistent pricing, which has attracted budget-conscious customers looking for a good meal without breaking the bank.
Meanwhile, Olive Garden, Darden’s largest chain by revenue, saw a more modest but still robust 2% increase in same-store sales, surpassing analysts’ expectations. The brand adjusted its marketing for its “Never Ending Pasta Bowl” promotion, which included extending the deal and starting it earlier than usual. With nearly 900 locations, Olive Garden is also testing a new delivery partnership with Uber to capture more customers who prefer dining at home. That partnership is expected to expand nationwide by May 2025.
With diners eager to return to eating out, Darden raised its full-year sales forecast, signaling a strong future despite a 5.8% decline in its fine dining segment.
Darden narrowly missed Wall Street’s revenue expectations. During the quarter, it reported revenue of $2.89 billion. Analysts expected it would generate revenue of $2.9 billion, according to FactSet (FDS-0.79%).
Darden’s earnings are part of a larger casual dining trend. In October, Brinker International (EAT+3.04%), the parent company of Chili’s, reported a 14.1% increase in comparable restaurant sales for the brand, driven by promotions like its “Big Smasher” burger “3 for Me” combo.
