Abstract
Darden Restaurants will post its results on December 18, 2025 Pre-Market, with investors focused on revenue growth, margins resilience, and EPS trajectory given updated guidance and consumer traffic trends.Market Forecast
Consensus for the current quarter points to revenue of $3,070.32 million, EBIT of $329.28 million, and EPS of $2.11, implying year-over-year growth of 5.89%–6.24% at the top line and approximately 3.96%–4.49% at the EBIT and EPS lines. Street models generally assume stable to slightly higher gross margin and net margin versus last year, with adjusted EPS reflecting modest expansion from operational efficiencies. Darden Restaurants’ own projections for the quarter indicate healthy demand and disciplined pricing, while cost inflation remains manageable.Olive Garden and LongHorn Steakhouse continue to anchor the portfolio with stable traffic and pricing power; management’s focus remains on balanced pricing, productivity, and unit growth to sustain mid-single-digit revenue growth. The most promising segment is Olive Garden, generating $1,301.10 million last quarter with sustained year-over-year momentum supported by value positioning and menu innovation.
Last Quarter Review
Darden Restaurants reported last quarter revenue of $3,044.70 million, a gross profit margin of 20.47%, GAAP net income attributable to shareholders of $0.26 hundred million, a net profit margin of 8.47%, and adjusted EPS of $1.97, with year-over-year growth of 12.57% on EPS and 10.44% on revenue. The company delivered EBIT of $303.90 million against a consensus of $315.59 million while slightly exceeding revenue expectations, underscoring solid top-line performance amid controlled cost pressures.Business performance was highlighted by resilient guest counts and effective pricing, while productivity initiatives supported margin stability despite wage and commodity inflation. By segment, Olive Garden contributed $1,301.10 million, LongHorn Steakhouse delivered $776.40 million, and other concepts produced $680.70 million; the mix reflected portfolio strength concentrated in value-oriented casual dining brands.
Current Quarter Outlook
Main business trajectory: Olive Garden and LongHorn execution and traffic
The core brands Olive Garden and LongHorn Steakhouse remain the principal revenue drivers this quarter, with the Street expecting demand to lean on steady traffic and measured pricing. The focus is on maintaining value perception while capturing incremental average check from menu optimization and mix shifts. Given the company’s historical discipline on promotions, analysts expect a balanced approach that protects restaurant-level margins without pressuring guest counts.In-restaurant productivity and labor scheduling are integral to protecting gross margin near recent levels, given the last quarter’s gross profit margin of 20.47%. With commodity cost inflation moderating versus the peaks of prior cycles, the company has room to hold food cost as a percentage of sales flat to slightly down year over year. Store-level execution, kitchen throughput, and guest satisfaction metrics are key to sustaining mid-single-digit revenue growth while guarding net margin near the recent 8.47%.
Management’s development cadence remains measured, supporting unit growth without overwhelming local markets. Expansion prioritizes strong trade areas for both Olive Garden and LongHorn to reinforce brand equity and market share. Analysts expect new units to contribute a manageable portion of the quarter’s revenue growth while same-restaurant sales and pricing contribute the majority.
Most promising business: Olive Garden scale and value positioning
Olive Garden’s $1,301.10 million quarterly revenue base provides a strong platform for consistent growth, aided by brand recognition and value-oriented offerings. The brand benefits from menu innovation that keeps check growth healthy without diluting value perception, and from operational efficiencies that translate into reliable four-wall margins. With consumer spending still cautious, value-led concepts tend to hold traffic better, positioning Olive Garden to outperform many casual dining peers.The outlook assumes stable to mildly positive traffic at Olive Garden as marketing emphasizes everyday value, family occasions, and digital ordering convenience. Off-premise sales remain an incremental support to comps, with efficiencies in order flow and packaging limiting incremental cost drag. Franchise dynamics are limited for Darden’s model, so corporate control over menu and service standards can sharpen consistency across the system, a point often cited as a competitive advantage.
Given the brand’s scale, small improvements in labor efficiency and food cost can compound meaningfully at the P&L level. Analysts expect Olive Garden to remain the portfolio’s largest profit contributor, with the capacity to buffer variability in other concepts. The brand’s consistent pricing power provides flexibility should commodity costs surprise to the upside later in the fiscal year.
Key stock price drivers this quarter: margins, traffic mix, and guidance cadence
Share performance will hinge on the relationship between traffic and pricing, as the market gauges whether mid-single-digit same-restaurant sales are sustainable without elevated discounting. If gross margin remains around the low-20% area and net margin holds near the recent 8.47% while EPS trends toward $2.11, investors are likely to view the print as in line to modestly favorable. Any deviation from expected labor and commodity cost trajectories could alter margin math quickly, especially if promotional intensity increases.The second determinant is guidance and commentary around the balance of the fiscal year. Investors will scrutinize commentary on consumer elasticity, check management, and potential weather or calendar impacts on traffic. The pace and quality of unit growth, particularly for LongHorn Steakhouse, will also be monitored for signals on capital deployment efficiency and returns.
Lastly, capital allocation remains a focal point, including buybacks and dividend policy. The company’s cash generation has historically supported returns to shareholders without constraining growth investments. The market tends to reward clarity on capital return while preserving balance sheet flexibility, especially in a rate environment that keeps financing costs persistent.
Analyst Opinions
Across recent analyst commentary, opinions skew constructive, with a majority leaning bullish on the quarter’s setup given stable demand at core brands and improved cost predictability. The positive stance highlights the company’s disciplined pricing, balanced promotions, and visibility into commodity and labor costs that support margin stability and mid-single-digit sales growth. Analysts also cite the reliability of Olive Garden’s value proposition and LongHorn’s continued expansion as pillars of the investment case.Several institutions emphasize that last quarter’s slight EBIT miss relative to consensus was offset by clean revenue execution and solid EPS, framing the current quarter’s expectations as attainable. The bullish camp underscores that EPS of $2.11 on revenue of $3,070.32 million appears reasonable given recent trends in pricing and traffic, with EBIT modeled at $329.28 million implying conservative operating leverage. While the minority bears note sensitivity to consumer discretionary swings and promotional pressures across casual dining, the prevailing view expects Darden Restaurants to manage through with operational discipline.
Market participants will pay close attention to commentary on same-restaurant sales cadence and price/traffic mix, but the consensus remains that Darden Restaurants is positioned to meet or slightly exceed current projections if cost controls hold. On balance, the majority of analysts maintain positive ratings and constructive targets into the print, citing resilient brand equity and measured growth execution as supportive of shareholder returns.
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