Darden Restaurants Earnings Lift Sales Outlook
Darden Restaurants earnings showed Q2 same-restaurant gains at Olive Garden and LongHorn that lifted the FY2026 sales outlook and spurred repositioning.
KEY TAKEAWAYS
- Blended same-restaurant sales rose 4.3%, led by Olive Garden +4.7% and LongHorn +5.9%.
- Total sales climbed 7.3% to $3.1 billion and Darden raised its FY2026 sales outlook.
- Beef-driven commodity inflation ran about 5.5%, pressuring margins despite pricing 130 basis points below inflation.
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Darden Restaurants earnings showed a strong fiscal quarter, and on Dec. 18, 2025, the company raised its FY2026 sales outlook after reporting broad same-restaurant growth at Olive Garden and LongHorn, citing resilient dining demand.
Quarter Results and Segment Performance
Darden reported total sales of $3.1 billion in fiscal Q2 ended Nov. 23, 2025, up 7.3% year over year, the company said in a press release. Blended same-restaurant sales rose 4.3%, outpacing an industry gain of 1.3%. The company added 30 net new restaurants, including 17 openings during the quarter.
Olive Garden same-restaurant sales increased 4.7%, generating $1.36 billion in sales, up 5.4% year over year. LongHorn Steakhouse same-restaurant sales rose 5.9% to $776 million, up 9.3% year over year. Darden’s fine-dining brands posted 0.8% same-restaurant gains with $316 million in sales, up 3.3% year over year. Other businesses recorded 3.1% same-restaurant growth and $647 million in sales, up 11.3% year over year.
Adjusted diluted earnings per share (EPS) from continuing operations was $2.08, up 2.5% year over year, missing a $2.09 consensus estimate. Net earnings totaled $237 million, with basic EPS of $2.05. Adjusted EBITDA was $466 million, and restaurant-level EBITDA margin measured 18.7%. The company operated 2,182 company-owned restaurants at quarter end.
Outlook, Costs, and Capital Returns
Darden raised its FY2026 total sales growth outlook for a second consecutive quarter. Management said beef-driven commodity inflation ran about 5.5% and was expected to remain elevated into the third quarter, with some relief in the fourth. CFO Raj Vennam said, "We priced 130 basis points below inflation as we remain committed to providing strong value to our guests," reflecting the balance between menu pricing, traffic goals, and margin protection.
The company returned $396 million to shareholders in the quarter, including $174 million in dividends and $222 million in share repurchases, and declared a quarterly dividend. Management said robust free cash flow supports the 3.2% dividend and ongoing capital returns. Sustained same-restaurant gains, new openings, and cash returns underpinned the decision to raise the sales outlook despite commodity pressures.
Management also expects an Olive Garden rollout of lighter portions to be complete in January 2026 as part of reinvestment plans aimed at sustaining traffic and guest value.
