Darden's LongHorn Drives 23% Profit Jump as Olive Garden Cools
The restaurant group posted $3.66 in adjusted earnings per share, a 22.8% year-over-year increase that capped a fiscal year of accelerating profit growth.
Darden Restaurants (DRI), the casual-dining operator, reported fourth-quarter adjusted diluted earnings of $3.66 a share, a 22.8% increase from a year earlier, as LongHorn Steakhouse surged and a sharp drop in impairment charges bolstered the bottom line. The result marked a decisive acceleration from the 5.4% adjusted EPS growth logged in the third quarter, closing a fiscal year in which profit gains widened with each successive period.
Total sales for the quarter ended May 25 rose 13.7% to $3.72 billion, lifted by 7.6 percentage points from an extra operating week, 4.6% blended same-restaurant sales growth, and 43 net new restaurant openings. The top-line pace more than doubled the 5.9% increase recorded in the prior quarter, though the calendar shift accounted for a significant share of the acceleration.
LongHorn Steakhouse was the quarter's standout, posting same-restaurant sales growth of 9.5%, up from 7.2% in the third quarter and well ahead of the 5.5% rate at the start of the fiscal year. Segment profit climbed 28.2% to $215.2 million, outpacing Olive Garden's 13.6% increase to $373.0 million. The brand's full-year segment profit reached $635.1 million, a 9.0% gain that contrasted with Fine Dining's essentially flat $243.1 million.
Olive Garden, Darden's largest chain, saw same-restaurant sales slow to 2.4% in the fourth quarter from 5.9% at the start of the year, marking a steady deceleration across all four periods. Fine Dining, by contrast, recovered from a negative first quarter to post 1.9% same-restaurant sales growth in the fourth quarter. Consolidated operating income jumped 35.0% to $516.8 million, rebounding from a 2.8% year-over-year decline in the third quarter, aided by a drop in impairment and disposal charges to $9.1 million from $48.1 million a year earlier, when Darden had recorded $47.7 million in non-cash charges tied to 22 restaurant closures.
The company continued to wind down its Bahama Breeze brand, reducing the restaurant count to 13 from 28 a year earlier, with all locations expected to be closed or converted by the end of fiscal 2027. Net new openings accelerated to 43 for the full year from 25 in the prior year, excluding the Chuy's acquisition, and Darden guided for 75 to 80 new restaurants in fiscal 2027.
For fiscal 2027, Darden projected total sales of $13.60 billion to $13.75 billion, same-restaurant sales growth of 2.5% to 3.5%, and adjusted EPS of $11.10 to $11.35. The same-restaurant sales outlook is below the 4.5% achieved in fiscal 2026, which had exceeded the initial guidance range of 2% to 3.5% set a year ago. The company assumed total inflation of roughly 3.0%, down from the approximately 3.5% embedded in the prior year's guidance, and disclosed an EBITDA target of $2.26 billion to $2.29 billion, citing 9% annualized adjusted EBITDA growth since 2019.
Darden also authorized a new $1.5 billion share repurchase program, replacing and doubling the prior $1 billion authorization, and declared an 8.0% dividend increase to $1.62 a share from $1.50.