Darden Restaurants (DRI) Q2 2026 earnings call transcript

18-Dec-2025 Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 CORPORATE PARTICIPANTS Courtney Aquilla Vice President-Finance & Investor Relations, Darden Restaurants, Inc. Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. OTHER PARTICIPANTS Brian Bittner Analyst, Oppenheimer & Co. , Inc. David Palmer Analyst, Evercore ISI Brian Harbour Analyst, Morgan Stanley & Co. LLC Jacob Aiken-Phillips Analyst, Melius Research LLC Jake Rowland Bartlett Analyst, Truist Securities, Inc. Andrew M. Charles Analyst, TD Cowen Jeffrey A. Bernstein Analyst, Barclays Capital, Inc. Sara H. Senatore Analyst, BofA Securities, Inc. Jim Salera Analyst, Stephens, Inc. Lauren Silberman Analyst, Deutsche Bank Securities, Inc. Peter Saleh Analyst, BTIG LLC Jon Tower Analyst, Citigroup Global Markets, Inc. Jeff Farmer Analyst, Gordon Haskett Research Advisors Dennis Geiger Analyst, UBS Securities LLC Andy Barish Analyst, Jefferies LLC Chris O'Cull Analyst, Stifel, Nicolaus & Co. , Inc. Andrew Strelzik Analyst, BMO Capital Markets Corp. Danilo Gargiulo Analyst, Bernstein Institutional Services LLC Gregory Francfort Analyst, Guggenheim Securities LLC Brian M. Vaccaro Analyst, Raymond James & Associates, Inc. Jim Sanderson Analyst, Northcoast Research Partners LLC John Ivankoe Analyst, JPMorgan Securities LLC Christine Cho Analyst, Goldman Sachs & Co. LLC Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 MANAGEMENT DISCUSSION SECTION Operator: Greetings and welcome to the Darden Restaurants Q2 Fiscal Year 2026 Earnings Conference Call and Webcast.

At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Courtney Aquilla, Vice President, Finance and Investor Relations. Courtney, please go ahead. Courtney AquillaVice President-Finance & Investor Relations, Darden Restaurants, Inc. Thank you, Kevin.

Good morning, everyone, and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's President and CEO; and Raj Vennam, CFO. As a reminder, comments made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning and in the filings with the Securities and Exchange Commission. We are simultaneously broadcasting a presentation during this call, which is available on the Financials tab in the Investors section of our website at darden. com. Today's discussion and presentation includes certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation.

Looking ahead, we plan to release fiscal 2026 third quarter earnings on Thursday, March 19, before the market opens, followed by a conference call. During today's call, all references to industry results refer to the Black Box Intelligence casual dining benchmark excluding Darden. During our fiscal second quarter, average same-restaurant sales for the industry grew 1.3% and average same-restaurant guest count decreased 0.4%. Additionally, median same-restaurant sales for the industry grew 1.9% and median same-restaurant guest count decreased 0.5%. This morning, Rick will share some brief remarks on the quarter. Raj will provide detail on our second quarter financial performance and share our updated fiscal 2026 financial outlook. Then, Rick will close with some final comments.

Now, I'll turn the call over to Rick.

Ricardo CardenasPresident, Chief Executive Officer & Director, Darden Restaurants, Inc. Thank you, Courtney. Good morning, everyone. We had a strong quarter that exceeded our sales expectations as each of our segments delivered positive same-restaurant sales. Commodity headwinds were stronger than we anticipated, as beef prices remained at historically high levels throughout the quarter. Our restaurant teams did a great job of being brilliant with the basics during the quarter, driving record or near-record guest satisfaction scores across all of our brands. Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 At the Darden level, we continued to leverage our four competitive advantages to enable our brands to compete effectively and continue providing strong value to our guests. The power of our scale enables us to continue to price below inflation over the long-term and not pass all the costs on to our guests, while the breadth of our portfolio enables our brands to stick to their strategy even if they are overly impacted by a single commodity.

We opened 17 new restaurants during the quarter and are on pace to exceed our planned openings for the full fiscal year. These new restaurants opened faster than planned, collectively contributing 40 additional operating weeks versus our plan for the quarter. This is a testament to the outstanding job Todd Burrowes and the entire development team, led by Marc Braun have done to strengthen our pipeline. Olive Garden delivered positive same-restaurant sales of 4.7% for the quarter, driven by the success of the Never-Ending Pasta Bowl promotion and first-party delivery, combined with strong operational execution that led to all-time high guest satisfaction scores. For the fourth consecutive year, the starting price for Never-Ending Pasta Bowl was $13.99. Preference was strong and refill rates reached a record high, demonstrating that guests continue to find abundance and meaningful value at Olive Garden in this environment.

First-party delivery through our partnership with Uber Direct continued to drive strong results. This channel attracts younger, more affluent guests who crave Olive Garden at home, value convenience and order more frequently. These guests have a higher check average than dining guests. Uber Direct sales represented 4% of total sales for the quarter and approximately half of that was incremental. As we have discussed on recent calls, across the portfolio, we are placing a greater emphasis on sales growth and reinvesting to drive long-term success. At Olive Garden, the success of first-party delivery is helping fund investments such as the addition of the lighter portion section on their menu, which features seven existing dishes with a smaller portion and a lower price.

This section is designed to give guests more choices and is offered in addition to the Olive Garden's regular portion sizes. Olive Garden has seen a double-digit increase in affordability perceptions from guests who order from the lighter portions menu and an increase in frequency among these guests, which should help build traffic over time. 40% of restaurants offered this menu during the quarter and they added another 20% of locations early in the third quarter. Olive Garden plans to complete the rollout system-wide in January. As we begin the third quarter, the Olive Garden team is poised to build on their momentum. They are currently offering two Fan Favorites for a limited time, Ravioli di Portobello and Braised Beef Tortelloni.

Thousands of Olive Garden fans requested the return of these iconic dishes, which included multiple online petitions to bring them back. Turning to LongHorn Steakhouse, the team's ongoing commitment to their strategy, rooted in quality, simplicity and culture continue to guide their success as they delivered strong top line momentum, driven by same- restaurant sales growth of 5.9%. The relentless focus on executing every dish on their menu to their high standards was reflected in an all-time high [indiscernible] (00:06:33) score for the quarter. Their ability to consistently operate at this high level is enabled by having one of the most experienced teams in the industry. In fact, LongHorn further strengthened their impressive retention by setting their record low for team member turnover during the quarter.

The investments LongHorn has made in food quality combined with their grilling expertise have built strong guest loyalty. And to further build on their leadership in food quality, LongHorn brought back a guest favorite for the holidays, the 14 ounce 7-Pepper Crusted New York Strip with brown butter sauce, which was met with enthusiastic reviews by guests and social media influencers. Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 Same-restaurant sales for our Other Business segment grew 3.1% during the quarter, driven by strong performance at Yard House. During the quarter, Yard House's Oktoberfest event returned for the fifth year. This event continue to deepen guest engagement and drive results through limited time menu offerings that strengthen Yard House's competitive advantages of a socially energized bar and distinctive culinary with broad appeal.

The event also featured a $5 refillable beer stein that was a hit with guests, with all steins selling out within the first few weeks. Also during the quarter, Yard House began rolling out first-party delivery through our partnership with Uber Direct. While the impact on total sales won't be as significant as what we've seen at Olive Garden, the team is pleased with the initial results and plans to continue rolling it out to additional restaurants in the third quarter. Same-restaurant sales for the Fine Dining segment grew 0.8% for the quarter, driven by strong performance at Ruth's Chris Steak House and improving trends at The Capital Grille. As guests continue to seek price certainty, Ruth's Chris brought back its limited time offer, featuring a three course menu for $55.

It was a key driver of sales and traffic growth, and featured a new 8-ounce Prime Thick-Cut Strip and two guest favorites, stuffed chicken, and salmon and shrimp. Each entrée came with a super salad, an individual side, and a dessert. The Capital Grille's Wagyu & Wine event returned during the quarter, featuring the choice of a Dave Phinney wine and Wagyu burger for $35. This event delivered strong guest preference and sales momentum at The Capital Grille continued to grow throughout the quarter. I am pleased with our performance as we move back into the back half of our year. Our brand teams have the appropriate plans in place and the power of Darden positions us well to win in a competitive environment.

Now, I will turn it over to Raj.

Rajesh VennamSenior Vice President & Chief Financial Officer, Darden Restaurants, Inc. Thank you, Rick, and good morning, everyone. As Rick mentioned, the second quarter was another strong sales quarter for Darden, with top line momentum exceeding our expectations. While elevated commodity costs driven by beef were a significant headwind for the quarter, we priced 130 basis points below inflation as we remain committed to providing strong value to our guests. This large investment in underpricing inflation resulted in restaurant-level margins being below last year. The near-record beef costs have sustained longer than we anticipated and are likely to remain elevated into the third quarter with some relief as we get into the fourth quarter. In the second quarter, we generated $3.1 billion of total sales, 7% higher than last year, driven by same- restaurant sales growth of 4.3%, the addition of 30 net new restaurants, and the acquisition of Chuy's in October of last year.

Both our same-restaurant sales and same-restaurant guest counts were on the top decile (sic) [quartile] (00:10:21) of the industry again this quarter. Same-restaurant sales exceeded the industry benchmark by 300 basis points and the positive gap widened throughout the quarter. Adjusted diluted net earnings per share from continuing operations of $2.08 were 2.5% higher than last year. We generated $466 million of adjusted EBITDA and returned $396 million to our shareholders this quarter by paying $174 million in dividends and repurchasing $222 million in shares. Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 Now, looking at our adjusted margin analysis compared to last year, food and beverage expenses were 90 basis points higher, primarily due to elevated beef costs driving total commodities inflation of approximately 5.5% for the quarter.

Restaurant labor was 10 basis points higher, with total labor inflation of 3.3%. Restaurant labor in our comparable restaurants was favorable to last year, driven by productivity improvements that more than offset pricing below labor inflation. Restaurant expenses were 10 basis points higher as sales leverage was more than offset by Uber Direct fees and brand mix with the addition of Chuy's. Marketing expenses were 10 basis points lower due to sales leverage. We had incremental marketing activity in the quarter that was funded by cost savings. This all resulted in restaurant- level EBITDA of 18.7%. Adjusted G&A expenses were 60 basis points favorable, driven by leverage from sales growth and lower incentive compensation accrual as well as favorable mark-to-market expense on our deferred compensation.

Due to the way we hedge mark-to-market expense, this favorability is fully offset in the tax line. Our adjusted effective tax rate for the quarter was 13.2% and we generated $243 million in adjusted earnings from continuing operations which was 7.8% of sales. Looking at our segments, all segments grew sales for the quarter, driven by positive same-restaurant sales. The high beef cost pressured segment profit margins at all of our segments, except for Olive Garden. Total sales for Olive Garden increased by 5.4%, driven by strong same-restaurant sales and traffic growth, as well as the addition of 11 net new restaurants. The sales momentum continued from prior quarters with same-restaurant sales in the top decile of the industry and outperformed the industry benchmark by 340 basis points.

Olive Garden delivered a strong segment profit margin of 21.8% for the quarter, which was 30 basis points above last year, even with an approximate 20 basis points of margin investment related to the lighter portions menu and the continued impact of delivery fees. At LongHorn, total sales increased by 9.3%, driven by same-restaurant sales growth of 5.9% and the addition of 21 new restaurants. The sustained sales and traffic outperformance resulted in same-restaurant sales and traffic in the top decile again this quarter. The LongHorn team is doing a great job of staying focused on their strategy and maintaining momentum despite elevated beef costs. Our measured approach in reacting to inflation resulted in pricing 320 basis points below inflation at LongHorn that resulted in segment profit margin of 16.2%.

Total sales at Fine Dining segment increased 3.3%, driven by positive same-restaurant sales and the addition of three net new restaurants. High beef costs also had a large impact on the brands in this segment, resulting in segment profit margin of 14.8%, 280 basis points lower than last year. The Other Business segment sales increased 11.3%, with positive same-restaurant sales of 3.1% and the acquisition of Chuy's benefiting part of the quarter. The positive sales growth and the continued productivity improvements in multiple brands within this segment were not enough to fully offset the elevated commodity pressures from beef and the impact of delivery fee. This resulted in segment profit margin of 13.4%, 60 basis points lower than last year.

Turning to our financial outlook for fiscal 2026. We have updated our guidance to reflect year-to-date performance, the evolving commodities environment, and the expectations for the back half of the year. We now Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 expect total sales growth for the year of 8.5% to 9.3%, same-restaurant sales growth of 3.5% to 4.3%, 65 to 70 new restaurant openings, total capital spending of $750 million to $775 million, total inflation of approximately 3.5% with commodities inflation of 4% to 5%, and approximately 116.5 million diluted average shares outstanding. All other aspects of our guidance remain unchanged, including adjusted diluted net earnings per share between $10.50 and $10.70, of which approximately $0.20 is related to the addition of 53rd week.

We expect earnings per share growth in the third and fourth quarters to sequentially improve as the gap between pricing and total inflation narrows in the back half of the year. Specifically for the third quarter, we expect earnings per share growth in the mid-single digits compared to the third quarter of last year.

In summary, we're pleased with our strong top line performance and continued industry outperformance this quarter. While our pricing strategy amid elevated commodity costs has impacted margins in the near-term, we believe it's the right approach to support our long-term success. As we move through the rest of the fiscal year, we remain confident in our ability to grow sales, manage costs and deliver value to our guests and shareholders.

Now, I'll turn it back to Rick.

Ricardo CardenasPresident, Chief Executive Officer & Director, Darden Restaurants, Inc. No, sorry. My microphone is off. Sorry. As I reflect on the performance, I'm reminded of the power of the platform we built over time and our ability to navigate whatever comes our way. When you look at our company, there are three key attributes that we believe make Darden a great company and a great stock.

First, our winning strategy grounded in our four competitive advantages and our commitment to managing the business for the long-term has led to a long track record of success. Over our 30-year history as a public company, Darden has achieved annualized total shareholder return of 10% or greater for any 10 fiscal year period when considering Darden stock appreciation plus dividend yield.

Second, we have a clear roadmap to grow our portfolio of iconic brands, which includes two dominant brands, three high potential growth brands and several balanced brands that are leaders in their respective categories. And third, our strong commitment to disciplined capital stewardship enables us to return capital to shareholders, while making appropriate investments in the business for long-term success. I'm incredibly proud of the results we continue to deliver for our shareholders, and we remain committed to executing our strategy to drive shareholder value now and for generations.

Finally, I want to take a moment to acknowledge the recent passing of Darden's first CEO, Joe Lee. Joe is a visionary leader whose leadership helped shape not only Darden, but the entire casual dining industry. I was fortunate to work with Joe, and one of the things that always stood out to me was the care and compassion he had for his people. He always said, if you take care of your people, they will take care of your guests. Those words remain fundamental to Darden's culture today, and they are especially meaningful during the holidays. Now is the busiest time of the year in our restaurants, and I'm so proud of our 200,000 team members who do such a remarkable job of nourishing and delighting everyone they serve.

On behalf of our entire leadership team and the Darden board of directors, thank you to all of our team members for everything you do. I wish you and your families a happy holiday season. Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 Now, we'll take your questions.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Hey, Brian. There is an impact to internal metrics, value perception, affordability and the right portion size, but we will see some impacts to sales in a couple of ways. In the long term, as we said, we've got higher frequency in the guests that are ordering this versus guests that aren't and the guests are increasing frequency as well. So, this is a good topspin. In the short-term, there will be a little bit of check mix. So, as Raj mentioned, in the second quarter, we had about 20 basis points or 30 basis points of mix from the lighter portion. As we roll it out to more restaurants, there'll be a little bit of bigger mixed impact, but that's being offset by other things we have with the strong performance of delivery.

It might not be necessarily in mix offset, but in total sales. So, we believe this is the right thing to do for our guests in the short-term and the long term, and that's why we've actually accelerated the rollout.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Hey, Brian, this is Raj. So, from a labor margin perspective, I think I said in my prepared remarks, if you actually look at our comparable restaurants, which is where we obviously had the same-restaurant sales growth, you have actually labor leveraging. We actually saw labor improve year-over-year even with us underpricing inflation, because labor inflation, as I said, was about 3.3%. Our pricing was 2.6%. So, we were able to offset that underpricing inflation and drive labor leverage through productivity improvements. Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 The reason you don't see it at the total Darden level is because of the growth over the last year and the acquisition of Chuy's.

And so that's really what you got to look at the brand mix combined with some of the nuances. So, it's more, I would say, idiosyncratic versus a systematic issue. We actually feel like as we go through the back half, you should start to see labor start to be more of a good guy.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Yeah. David, thanks for those comments. So, from a same-restaurant sales perspective, if you look at our guidance, we talked about for the full year 3.5% to 4.3%, which essentially means roughly 2.5% to 4% in the back half, which would imply basically flat traffic at the midpoint of that range. I don't want to get specifically into the brands, but here is how we think about the total. When we look at the – take into consideration the first half of the year, some macro uncertainty, but potential consumer spending benefit from the fiscal stimulus in early 2026 and we have several initiatives at the brand levels to drive sales.

We feel like the outlook we provided is reasonable. And so I think that's really all I have to say on that front. Thanks.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Hey, David. So, yeah, on the pricing front, let me start at a bigger picture and then get back to LongHorn specifically. So, we did price for the quarter, at the Darden level, was about 130 basis points below inflation. And we do expect that to cut in half by the time we get to third quarter and actually catch up to inflation as we get to fourth quarter, primarily because of, one, we're taking some pricing, but also we expect inflation to come down, especially as we go into the fourth quarter. And specifically at LongHorn, yeah, I don't expect LongHorns to have underpricing by 320 basis points as you move forward.

We'll take some modest price increases. But, look, that's the benefit of the portfolio, right? We've talked about, Rick mentioned in his prepared remarks, that when there is some near-term pressure on one of the commodities, the portfolio provides the air cover to be able to kind of deal with this for the near term. Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 And so all that said, look, our bias is to minimize pricing, and we'll do what we think is right to protect the guest, even if that means some margin erosion in the near term, primarily we're talking about second and third quarter, because we expect margin growth as we get into the fourth quarter.

Raj, can you maybe just talk more about the beef piece and what kind of gives you the confidence that that starts to come down by 4Q? Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Hi, Brian. I guess maybe let me start with what happened in the second quarter and how we're transitioning and how we see this, because beef prices peaked in our fiscal second quarter, and they were well above the normal seasonal trends due to supply constraints that stemmed from packer cutbacks and halted Mexican cattle imports due to the screwworm outbreak. We have seen retail demand destruction accelerate over the past few months, and we think November was actually down about 14% demand, volume down in steaks.

Prices have started to improve in recent weeks and we've been able to take some coverage for the back half. I think, this morning, we showed about 45% coverage for the back half. And actually as we're speaking, our team is getting a little bit more coverage. And the prices that we're – the coverage we're getting at is at the levels that are in line with our updated thinking. And all of that is contemplated in our guidance. If you look at what happened in the near term, prices are expected to ease a little bit as beef production actually increased to near prior year levels the last couple of weeks, few weeks driven by packer profitability and lower cattle prices.

Now, there is enough inventory on feedlot to support the recent production increase.

With first-party delivery, is 4% of sales, is that kind of where you're expected to be at this point, or I guess, what else do you think could continue to push that higher if you, in fact, want that, or are you still seeing sort of sequential increases in delivery mix? Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah, Brian, we're really pleased with the 4%. As you recall, we didn't do any marketing. You didn't know that. But we didn't do any marketing in Q2 and we're at 4%. I think the way that would increase is if we do some more marketing and get more people into it, but it's tracking pretty, pretty closely to our overall To Go business.

And we Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 feel good where that is with the incrementality we're getting. But if we want to drive that up, we have some options on the marketing side.

So, I wanted to ask on Olive Garden delivery. You said about half of the 4% was incremental, but as delivery grows, do you expect the incremental share to hold or does cannibalization increase with penetration? And then what are you doing like operationally to try to preserve the incrementality? Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Hi, Jacob. I would hypothesize that as delivery grows, the incrementality will stay where it is or get better, because it's these folks that are ordering delivery [ph] are (00:29:28) higher frequency and lower – a little bit younger and more affluent.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah. As you see our sales performance and the casual dining industry itself, I think the industry has been growing faster than other segments. I think we've been growing faster than industry. So, I would say that we're continuing to take share from casual and we're taking share from a little bit on the limited service.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Hey, Jake. So, recall we said in the last quarter, I think we talked about, we got about call it roughly $20 million of savings in marketing with some of the work our – great work our teams did to go back and take a look at how we spend the dollar. So, anyway, when we take that into consideration, that helped increase marketing activity, even though the dollars were basically flat to last year. Now, as we look at the full year, we're probably closer to somewhere around 10 basis points increase year-over-year, but if something changes, we'll update you next quarter.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah. I would say that we see the same reports you see. We've said that before, but the consumer is still resilient. They're being cautious. As we've said a few times, the weaker consumer sentiment doesn't necessarily translate into reduced spending. During the quarter, so this is what's happening on our brands, during the quarter, our casual brands saw an increase of visits year-over-year from guests within middle to higher income groups. So, it hasn't kind of moved up for us to the middle income groups, with the largest growth, though, coming from our higher income households. We did see strong traffic growth from guests $55 and over as well, so on the demographic side, but there was a little pull back in those earning less than $50,000 in the casual brands.

But I'll end it with the way we always talk about it. We know casual dining is the number one category where consumers intend to treat themselves and indulge, and when they're kind of thinking about where they spend their hard earned money, they want to go to a place that they get a great value and a good experience for a great price. So, we'll continue to focus on delivering an excellent experience and deliver value for every guest that choose to dine with us.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Yes, Andrew. There is a little bit of increase in price. As I said, we actually expect our pricing to be closer to mid- threes in the back half, for the full year to be close to 3%. So, if you think about where we started the year, I think we were 2.2% in the first quarter, 2.6% in the second quarter, so there's a little bit of an increase there that we incorporated into our guidance.

And Rick, in the past, you laid out your hesitations around listing Olive Garden on third-party delivery. I'm curious if any of those pieces around things you've laid in the past, like data sharing, tip sharing, the ability to throttle with on and off, do you believe are better addressable as ultimately contemplating the decision to add Olive Garden to third-party delivery? Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Hey, Andrew. I would say the two big third-party delivery providers know what our concerns are on third-party. And as long as we get a solution for those concerns, then we would look at it. It wouldn't make sense for us not to look at it, but we really do have some concerns and they know what they are.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Hey, Jeff. Look, we did see an increase in our performance, and we've said historically when industry slows down a little bit, we have widened that gap. But as we look at the back half, we don't really start with what the industry numbers are. We actually look at a lot of what's macro and then all the things I mentioned about the brand initiatives, because industry is a representation of some of it, but not all of it. And so we do it differently. And so I don't want to comment on what we expect the gap to be going forward.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Hey, Jeff. I'll start with the Yard House part. We don't anticipate it to be as big an impact because Yard House is a smaller brand, not just because they're a bar, but they also do a little bit lower To Go business. So, if you think about when we implemented it at Olive Garden and then at Cheddar's, the percent delivery lined up pretty, pretty well with the percent To Go. So, Cheddar's right now I think is doing about 15% off-premise. LongHorn does about 15% off-premise. So, it's not a small off-premise business. And we do know that when guests order at LongHorn off-premise, the mix is different.

So, they order more chicken and seafood, and a little less steak than they do in the dining room. So, it's something that LongHorn is learning from the other brands to see if it makes sense for us to go onto Uber Direct. And if it does, then we'll start testing it, but we don't have anything to say about that right now.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah, Sara. Most of our promotions really help our core customers. We are seeing a little bit of an increase in new customers or customers who haven't seen in a while when we do these, but we actually see an increase in our core too, so it's not targeted to get for new people. It's targeted for anybody. And we do see a little bit of a mix at Ruth's Chris when we do the $55 prefix menu, but that's because guests are looking for certainty and price Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 certainty. And so that's what we're giving them, and it drives quite a bit of volume at Ruth's Chris, and it's a good thing for us.

It's a profitable deal for us.

And then just on the follow up, Raj, you mentioned I think that demand has declined about 14% in November for beef. I guess are there certain kind of rules of thumb about what that would mean for beef prices, just as I think about it, it seems like this is the first time we've really seen like retail demand pull back. So, just trying to understand how that translates into kind of the market prices for beef? Thanks. Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Sara, I would say the last few months have been different from what we would have seen historically. Historically, there was retail demand destruction. You saw the prices come down sooner.

I don't want to get into a lot of the dynamics, but there is something with how the – between the packers and how things are working. It seems like there is some constraining of supply, but it's hard, it's hard for us to really know what's happening. Maybe they have other challenges, but – so it's really going to be a function of how much production is out there, right. And so, yeah, I don't think we have a good crystal ball on that, but I did share we are seeing some green shoots and that's – that are actually starting to see the coverage that comes – come more in line with our expectations.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Yeah. So, from a guest, from an Olive Garden breakdown, the comp – same-restaurant sales were 4.7%. The traffic, as we measure, was 1.7%, but when you add the catering of 1.1%, that's basically traffic growth of 2.8%, and their pricing was 2.6%. So, there was some negative mix, but also there was some help from Uber Direct fees, but that's the mix of the traffic and the sales. From a guest perspective, I think Rick already addressed it in the script or in his prepared remarks about we're seeing more increased growth across all income levels above $50,000 and we're seeing a little bit more growth Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 from the – as we move up the age spectrum.

There's a little bit of a pullback the below $50,000 and lower or younger folks, but that's really it.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah, Jim, I'll start with LongHorn, and I think LongHorn, their outperformance is driven by years of what they've done focusing on their strategy. Continue to price a little below inflation, invest in their food, and cook their steaks better, and been that's been very helpful for them. Now, I think they may be benefiting right now with such a high price of beef that consumers are actually going to LongHorn instead of eating at home. And when we talk about the $50,000 consumer, under $50,000, I think LongHorn grew under $50,000. So, it's interesting they have a higher check than Olive Garden, but they grew their guest count at $150,000 range.

That could be because such a disparity between how much you have to pay in the grocery store versus what you pay in the restaurant, which could be driving some of the traffic growth, but it is impacting their margin. So, on the Fine Dining side, I'll finish with one other thing at LongHorn. I still think they might be taking a little bit of share from Fine Dining. That said, Fine Dining had a good quarter this quarter. Its trends are improving, and it may be that we're getting closer to kind of clearing everything out that happened during COVID. We're seeing some good value, some good performance at Ruth's Chris, Capital Grille had had a good quarter. But it's not over yet.

We've got to see that continue for a while to feel really great about it. We feel good about it. We wanted to feel great about it. So, as we think about what's happening in the industry, we continue to say that as long as we do the things that we're supposed to do, provide a great value, cook the food properly, give a great experience to our guests, they're going to be coming back.

Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Hey, Lauren. I don't want to get into the quarterly cadence of comps, but I'll just say from an earnings perspective, I think we kind of provided high level how we're thinking about it. And it's really more driven by pricing. As I said, pricing gap, inflation is expected to cut in half as we get into third quarter, as we take a little bit more price and inflation actually is probably closer to the Q2 level. But then as we get to the fourth quarter, we expect pricing to go up a little bit more and inflation to come down a little bit more.

And so that's kind of why we talked about what we expect the earnings growth to be more in the third quarter to be in the mid-single digits, but I don't want to get too much into the quarterly sales comp.

Lauren, I would say all of our brands benefit from stimulus, depending on how it comes in. But I will say that if you think about the folks that benefit from no tax on tips and no tax on overtime, they may be a median income and lower. So, that could help our brands like Olive Garden or Cheddar's or Chuy's that have a little bit higher mix there. But all of our brands benefit when there's stimulus that gives – it gives more money to consumers.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Hey, Peter. The reason we didn't do any marketing on Uber Direct in the second quarter was we had just kind of done some in Q1 and we had other things that we wanted to spend our marketing dollars on, particularly Never- Ending Pasta Bowl. Never-Ending Pasta Bowl is our best promotion at Olive Garden and I think others had some concern that we were wrapping on Never-Ending Pasta Bowl and how that would go. And as Raj mentioned, our gap to the industry grew every month in the quarter, even though Never-Ending Pasta Bowl was kind of coming towards the end of the promotion period. So, we think that that we were better off Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 spending marketing dollars on Never-Ending Pasta Bowl than we are on delivery at that time.

I can't comment on if we're going to do it in the third and fourth quarter, but it's something that people will see pretty quickly if we do.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Yeah, Peter. Not a lot. I mean at this point, part of our commodities inflation includes some of the tariff impact. It's in the tens of basis points as a percent of sales, which is in line with what we had indicated earlier. From a construction cost, I'd say we're still – from the data we're seeing, it's in that mid-single digit impact. No change there. Thanks.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah. Jon, currently we're not expecting or we're not thinking about marketing it to our guests because it's doing pretty well on the menu the way it is and it's driving a little bit more frequency and the guests would order it and maybe the word of mouth from other guests will do that. But our plans right now don't include marketing it, but those could change.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yes. The way we think about 1P is if it's on our menu, it's probably available for delivery.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah, Jon, when we're talking about five restaurants, it's a couple of brands that are driving that. So, without telling you exactly which one, because that can change throughout the year where we end up at the fiscal year. So, we did say 65 to 70. It isn't necessarily a pull forward from next year that doesn't get backfilled by other brands. So, we don't anticipate that this year's growth a little bit ahead of plan will damper next year's because our teams are out there working hard, going and finding sites and getting deals done faster than they had before. And as you recall, in the June call, I said that we are farther along in development than any point in any June we've had in years.

So, we feel really good about it and that team is still doing great work to get us more sites.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Hey, Jeff. I would just refer you back to the long term framework and we've talked about that we put out at the beginning of the year and we said we're focused on earnings after tax margin flat to positive 20 basis points. And I think our guidance still implies we're going to be in that range, give or take 10 basis points. But that's kind of how we look at it. We don't want to get too bogged down on any one line item. We manage the business holistically to get a good return to the investors. And I would encourage you all to look at it through that lens.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 Yeah. Jeff, we are making investments with these incremental sales. And primarily it's in the lighter portion section on the Olive Garden menu. We're rolling out faster than we anticipated. We had originally expected to roll it out over the fiscal year and maybe even into next fiscal year, but it's doing so well and delivery is doing so well. We just decided to keep going. And then we're also making big investments and still pricing below inflation.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah, Dennis, every brand is implementing it a little differently, depending on what they need to do. I would say that some brands are getting their speed up faster than other brands, but all brands are making some improvement. And again, this is going to take a lot of effort and a lot of time to convince a group of folks that they have to do something a little differently than they thought. And to help the teams understand that the guests want things faster and we don't really get a whole lot of complaints about being too fast, we get about being too slow. So, those are the things that we have to keep doing.

This is changing people's habits and that takes a while. But we're seeing some improvement.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Absolutely. I think especially during peak times, if we can get speed better, then table turns should speed up and it would increase traffic during those times. But I think it will increase traffic long term anyway because people are getting the experience they want at the pace they want and they'll come back more often.

Could you give us just kind of a Cheddar's brand update and not a lot of call out there, I imagine there's some pressure just given the success of some big bar and grill concepts right now. But just kind of where that stands and what you might look at as a key for more unit growth there. Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah. Andy, Cheddar's is part of the other segment. The other segment also grew same-restaurant sales, and Cheddar's didn't disappoint, so they grew their same-restaurant sales as well. Even if other bar and grills are kind of out there talking a little bit more, a lot more about value, Cheddar's is still doing what they do, provide a great everyday experience with [ph] wow (00:57:13) pricing.

The other thing that we've been able to do over the years is to significantly improve their operational turnover. So, if you think about turnover, when we bought Cheddar's, it was well, well above the industry average and now it's below industry average. It's much closer to Darden averages for turnover, and that means a better experience. And so we do believe that Cheddar's is one of those brands that I mentioned earlier that have high potential for growth. And what I would say is I want to remind everybody that we think that growing way too fast is an issue in the industry. So, our growth rates for any of our brands won't exceed 10%. But for Cheddar's, this year is the year that they're kind of finalizing and building their pipeline.

And so it might take a year or so before you start seeing a little bit more growth at Cheddar's.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Sure, Andy. So, the traffic was, as we measure, was up 1.7%. Catering was another 1.1%. So, I'd say really the traffic growth was 2.8% and then the...

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A ... check was 2.6%. Yeah. And then...

Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A ... not check, sorry, pricing, pricing was 2.6%. So, if you look at it through that lens of 2.8%, then the implied check would be 1.9%.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Yeah.

Rick, is there a plan to take the smaller portion approach with any of the other brands? Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A We do have another brand testing smaller portions of current menu items, but they're doing it in a different way and not as many items. So, there are some brands that lead to being able to do different kind of portions based on the protein. And so, other brands already have it. So, you think about LongHorn has different sizes for some steaks. They're testing a little bit more. They have different sizes for their chicken tenders. So does Cheddar's, I believe. So, we do have other brands doing it, but not at the same way.

We don't have a separate section on the menu for it.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A We're continuing to monitor the usage and the impact on eating and drinking. It's impacting drinking more than it's impacting eating, especially in our kind of brands. The data that we see is they're basically pulling back on some restaurant visits, but more so limited service. That said, the lighter portion section is helpful for that, but we aren't doing the lighter portion just for GLP-1s. We're doing it to give all of our guests more options. It just so happens to benefit the consumers that might want smaller portions that are on GLP-1 medications and we have a lot of options like that in all of our menus.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A No, Andrew, it doesn't surprise us. They're more similar to off-premise guests than on-premise guests. So, if you think about Olive Garden and the percentage of sales they do to go, and you look at the ratio of what they do off- premise versus delivery, then I would expect that same ratio to happen at our other brands because they are more similar. Our off-premise guests that are not delivery are also a little bit higher frequency than on-premise guests. These are just the delivery guests are even higher frequency. So, it wasn't surprising that the same kind of mix happened at other brands.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Well, so let's start with the CapEx part of it. So, CapEx is really a function of some of the openings happening sooner than we planned at the beginning of the year. And again, kudos to the team for doing a great job on that. But it's also a function of what we're – as we fill up the pipeline for next year, because the spending this year happens for some of the restaurants opening, especially in the front half of next year. So, we feel good about the pipeline. We just updated our framework to reflect 3% to 4% unit growth contribution from new units and we think we're going to be in that range based on what we provided here.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah, Danilo, I would say that granularity of data and where we're outperforming more is a little bit harder to get, because we don't know where other parts of the industry are getting their guests. We do know that we've had over the last couple of years a little bit better performance in our higher income consumer than not, but I would say during COVID, we had a great performance in our lower income consumers. So, it's really hard to say where we're getting the outperformance versus the industry. I can just tell you we've got a great portfolio of brands that meet all the different consumer needs.

And so, if a higher income consumer is feeling great, we've got great brands for them. If a lower income consumer is feeling great, we've got great brands for them. So, that's the beauty of our portfolio and that's what makes us pretty different than most.

Whether you see like a greater mix of protein, fewer desserts and size, and what's your best estimate on how this is going to be evolving over time and how it would be impacting the overall spending behavior in the industry? Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A I would say the only real big change in mix that we're seeing is in alcohol sales and we've been seeing that for a little while, and you can see that more in the Fine Dining brands and the other brands. We're not seeing a dramatic – we are seeing a little bit of mix in appetizers and desserts, probably from some folks that are on GLP-1 drugs, because I think when people get on GLP-1s, they also want to try to change their lifestyle and they want to eat little less fried food.

And if you think about most restaurants, the appetizers are fried. So, that could be part of it. But we've got a broad menu and we are going to continue to monitor what's going on with folks on GLP-1 drugs. We believe we have a great brands that have a lot of protein, which is something that GLP-1 users want. And I would say we've got a great brand that was designed 20 years ago that is in the sweet spot of GLP-1s and that's Seasons 52. So, we've got a lot of things that we can offer folks on those medications and anybody else. So, I don't want to focus just on GLP-1 users. We've got a broad portfolio that can serve any guest need.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Hey, Greg. I would just say the turnover is actually pretty low. We continue to be better year-over-year. I think we're still trending probably double-digit increase versus prior year from a turnover, essentially lower turnover. And so, I think from most of our brands, probably this is like a record low, like, yeah, and so from that perspective, we feel really good about that environment. And I think the other factor I'll mention is our hourly wage rate is – inflation on the hourly wage was about 3%. This is kind of lower than what we saw even before COVID. We used to be in the mid-3s.

So, to be around 3% tells you that the labor environment is actually pretty solid for us.

Brian, I would start with the Never-Ending Pasta Bowl. We did see a little bit more mix to Never-Ending Pasta Bowl. So, a little bit more preference in it. We did see a much stronger refill rate. I think we had our record refill rate potentially. And we did see a little bit fewer buy-ups to the higher protein, the more protein. But it could be because we've got more guests coming in and because the refills were so high, as they were getting great value. In regards to the lighter portion menu, still about – still somewhere 1.5%, but around. So, it could be up 10 basis points, down 10 basis points here or there. As we talk about frequency growing, it's going to take a while for that frequency to really make a meaningful impact in that mix.

And we feel good about that mix.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Yeah, Brian, I'd say we're still probably at our – when we look at the full year, we're probably going to be still close to $500 million. Q4 is probably $15 million to $20 million higher than Q3. Part of it is because of the 53rd week and some seasonal stuff, but really no change to the total guidance for G&A.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Hey, Jim, we're still doing some more work on that. You think about, we haven't had it in all the restaurants and we're talking about 1.5% of sales. So, you think about the number of tokens we have for that, it's going to take us a little bit of time to get that work.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah, Jim. Two things. One, in regards to Thanksgiving, which already happened, we had record Thanksgivings in our Fine Dining brands, our reservation brands, and our holiday bookings are strong. Jim Sanderson Analyst, Northcoast Research Partners LLC Q All right.

Darden Restaurants, Inc. (DRI) Q2 2026 Earnings Call 18-Dec-2025 Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Sure.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Hey, Jim (sic) [John] (01:12:14), thanks. I'll try to get those answers and maybe Raj can jump into. On the immigration front, on our team members, we really haven't seen anything material on any restaurants turning all of their team members for those reasons. As we mentioned, we've got record retention. So, there might be a restaurant or two that had a few folks, but it's not something that we're too worried about. In regards to the packer situation, we can't comment on what's going on and why there might be some supply constraints. I don't think it's necessarily driven by labor, although one supplier did close one of their plants.

I don't know if that was a labor issue or not. They didn't comment on why. And then Raj can talk about the sales impact for us.

Rajesh Vennam Senior Vice President & Chief Financial Officer, Darden Restaurants, Inc. A Yeah. From a regional difference, John, I'd say for the quarter, when we look at second quarter, Midwest was our strongest growth and then I think we had – we saw actually softness in sales in New England area and then Pacific Northwest. Other than that, most others were pretty close to the median. Even Florida and Texas, which were lagging, were actually still below the company average, but they were a little bit closer to the company average than they were a quarter ago.

Ricardo Cardenas President, Chief Executive Officer & Director, Darden Restaurants, Inc. A Yeah. Christine, competitively, I don't want to get into too much detail about our plans, especially for each brand. We're disciplined and we remain committed to our marketing filters. And as you all remember, the marketing filters, does the message build brand equity? Is it simple to execute and not a deep discount. And so, we're going to continue to pull the right levers like we did with Never-Ending Pasta Bowl, Oktoberfest at Yard House, the three-course menu at Ruth's Chris, Wagyu & Wine at The Capital Grille. Those are all things that elevate everything we talk about without a deep discount. And you look at our promotional calendar last year for the back half, I wouldn't anticipate it's going to be significantly different than that.

Now, on the lighter portion menu and marketing, yes, right now we have no plans to do it. If that changes, we'll have to find the right way to communicate it. But it'll have to be something that we feel like we've got a great way to communicate it, to explain what it is for consumers that don't really know that section of the menu. But I think that there's a better way to do that, which is just let the consumer tell their friends. And so, right now, we don't have plans to do it, but if that changes, it's because Olive Garden came up with a great way to talk about it.

Courtney AquillaVice President-Finance & Investor Relations, Darden Restaurants, Inc. That concludes our call. I want to remind you that we plan to release third quarter results on Thursday, March 19th, before the market opens, with a conference call to follow. Thank you for participating on today's call and happy holidays, everyone.