Darden Restaurants began fiscal 2027 with sales gains across every segment, led by another strong quarter at LongHorn Steakhouse and a 10 percent same-restaurant sales increase at Yard House. Olive Garden posted a smaller gain, but Darden sees an opportunity to rebuild its weekday lunch business.
First-quarter sales rose 5.1 percent to $3.2 billion, supported by 53 net new restaurants and 3.2 percent same-restaurant sales growth. Restaurant-level EBITDA margin held steady at 18.8 percent.
The quarter’s sales pattern improved as it progressed, then gained further momentum in September, CFO Raj Vennam said. Darden estimated that the World Cup reduced companywide same-restaurant sales by roughly 80 basis points. The tournament helped Yard House, but drew visits away from the rest of the portfolio.
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Olive Garden’s same-restaurant sales rose 1 percent. Guest counts faced an estimated 150 to 200 basis points of pressure from the World Cup and consumer concerns over lettuce, which also prompted the brand to postpone marketing for its unlimited soup, salad, and breadsticks lunch offer. Lighter portion entrées created a 50-basis-point headwind to the average check.
Darden plans to promote the lunch offer in the current quarter and test a new weekday lunch platform with more variety. The work addresses a daypart that has lost ground since the pandemic. Weekday lunch accounts for roughly 20 percent of Olive Garden traffic, and its performance relative to other dayparts is down by hundreds of basis points from pre-pandemic levels.
“We’ve seen a little bit more deterioration at lunch than we have in any other place,” CEO Rick Cardenas said during the company’s Q1 earnings call. “We thought it was time, and it was already in our five-year plan to work on lunch.”
The brand also sees demand for meals suited to different appetites. Its lighter portion entrées have gained the most traction during weekend lunch, when Olive Garden does not offer a separate lunch menu. Cardenas said guests who order those dishes are visiting more frequently than guests who do not, though the company considers the program a long-term investment.
Olive Garden’s Never-Ending Pasta Bowl returned at the start of the second quarter with Spicy Alfredo sauce and Shrimp Fritta among the additions. The brand raised the offer’s starting price after holding it at $13.99 for nearly five years, but kept the unlimited protein add-on at $4.99. Cardenas said early results have exceeded Darden’s expectations, with protein add-ons drawing higher interest than before. All 10,000 Never-Ending Pasta Passes sold immediately after six years off the market.
Protein is also influencing Olive Garden’s regular menu development. Cardenas said a higher-priced dish in its Season of Garlic promotion was the promotion’s best performer. The brand is testing more protein-forward dinner items after the introduction of Calabrian Steak & Shrimp Bucatini.
LongHorn Steakhouse supplied the quarter’s strongest growth among Darden’s two largest chains. Same-restaurant sales rose 6.8 percent, marking its 22nd consecutive quarter of growth, and total sales increased 10.9 percent. Segment profit margin climbed 60 basis points to 18 percent. The chain added 29 net new restaurants compared with the prior-year quarter.
LongHorn has increased same-restaurant sales 17 percent over three years despite minimal marketing spending, Vennam said. New menu items and upgrades planned for the second quarter will add options at lunch and dinner. Darden expects beef costs to rise at a low-single-digit rate during fiscal 2027, consistent with its initial forecast.
Yard House gave Darden another source of momentum. Its 10 percent same-restaurant sales gain received an estimated 180-basis-point lift from the World Cup as guests gathered for games. The chain recently reached $1 billion in trailing 52-week sales, becoming Darden’s third brand to cross that mark.
Darden plans to open 13 Yard House restaurants this fiscal year, including five conversions of Bahama Breeze locations. Half of the remaining openings will use a smaller prototype that lowers construction costs and expands the pool of potential sites. Yard House’s average unit volume stands at $10.5 million. Cardenas said Darden’s longer-term goal is to grow the chain at a high-single-digit annual rate.
Cheddar’s Scratch Kitchen could also add restaurants at a faster pace over time, though its planned growth is more modest. Cardenas pointed to improving operations, menu work and a newer prototype as factors in its expansion plans. Darden is concentrating Cheddar’s openings in markets where the brand already has a presence, with a longer-term goal of mid-single-digit unit growth.
For Chuy’s, the near-term task is greater consistency across restaurants following its integration into Darden. Cardenas said a new point-of-sale system created difficulties after the acquisition, though Chuy’s still achieved positive same-restaurant sales during its first full fiscal year under Darden ownership. He sees room for mid- to high-single-digit unit growth over time.
Fine Dining same-restaurant sales rose 1 percent. Vennam said business spending is still declining slightly from a year earlier, though private dining has begun to grow. Across Darden, pricing averaged 3.7 percent in the first quarter and is expected to ease toward the low- to mid-2 percent range by the fourth quarter.
Cardenas said Darden has seen little change in the composition of its casual-dining guests. Traffic improved through the first quarter even as gas prices rose. For now, he sees guests continuing to make room for restaurant visits.
“If the consumer is wavering, we’re not seeing it,” he said.
