Same-store sales at Olive Garden rose 4.7% in the company’s fiscal second quarter. | Photo: Shutterstock.
Consumers are apparently eating plenty of steak and pasta right now.
Olive Garden’s same-store sales rose 4.7% in the company’s fiscal second quarter ended Nov. 23, parent company Darden Restaurants said on Thursday. Sister chain LongHorn Steakhouse’s same-store sales rose 5.9%, and the company’s consolidated measure of comparable-store sales rose 4.3% in the period.
That prompted the Orlando-based company to raise its guidance for sales and earnings for the full year, the second straight quarter the company has done so. Darden expects sales to grow 8.5% to 9.3% this fiscal year, up from 7.5% to 8.5%.
The company also expects its same-store sales in the year to increase 3.5% to 4.3% for the full year.
The results sent Darden’s stock up more than 4% in premarket trading on Thursday.
“The second quarter exceeded our top-line expectations as every segment delivered positive same-restaurant sales,” Darden CEO Rick Cardenas said in a statement. “Our restaurant teams did a great job of being brilliant with the basics, driving record, or near-record, guest satisfaction scores across all our brands.”
Cardenas did cite “significant commodity headwinds,” though he noted that the company continued to “provide strong value for our guests.”
Cardenas said on the company’s earnings call said that beef costs were higher than expected in the quarter.
He said that Olive Garden’s sales were driven in part by first-party delivery along with the company’s Never-Ending Pasta Bowl promotion.
Total sales increased 7.3% to $3.1 billion in the quarter. Darden added 17 new restaurants in the period. Earnings per share rose 2.5% to $2.08.
Same-store sales at Darden’s fine-dining business, including chains like Ruth’s Chris Steak House and Capital Grille, rose 0.8%. Same-store sales at its “other business” segment, including Cheddar’s and Yard House, rose 3.1%. The company is expected to sell one of its chains, the 28-unit Bahama Breeze.
Full-service chains like LongHorn and Olive Garden appear to be doing better despite an otherwise difficult operating environment, in part because consumers with higher incomes continue to spend. Other consumers have shifted spending to such chains out of frustration with higher prices at limited-service restaurants.
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Restaurant Business Editor-in-Chief Jonathan Maze is a longtime industry journalist who writes about restaurant finance, mergers and acquisitions and the economy, with a particular focus on quick-service restaurants.
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