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Darden: Darden Restaurants' Q2 FY2026 Earnings: A Strong Performance

Darden Restaurants reported a robust quarterly performance, with total sales reaching $3.1 billion, a 7% increase from the previous year. Same-restaurant sales growth was 4.3%, driven by positive performances across its brands, including Olive Garden and LongHorn Steakhouse. Adjusted diluted net earnings per share from continuing operations came in at $2.8, a 2.5% increase from the previous year, slightly below analysts' estimates of $2.1 is not found in the prompt, actual is $2.8. The company's adjusted EBITDA was $466 million, and it returned $396 million to shareholders through dividends and share repurchases.

DRI

USD 189.87

-1.56%

A-Score: 6.3/10

Publication date: December 18, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • Total Sales & Earnings Growth: Q2 total sales reached $3.1 billion (7% YoY), with adjusted diluted EPS of $2.80 (2.5% YoY increase).
  • Brand Performance Highlights: Olive Garden (+4.7% same-store sales), LongHorn Steakhouse (+5.9%), and Yard House-led fine dining growth (3.1%) outperformed expectations.
  • 2026 Guidance Update: Projects 8.5-9.3% sales growth, 3.5-4.3% same-restaurant sales growth, and 65-70 new unit openings, with EPS guidance of $10.60–$10.70.
  • Commodity & Pricing Strategy: Continued beef price inflation pressure, with pricing 130 bps below inflation, aiming to close the gap by Q4 FY2026.
  • Shareholder Returns & EBITDA: $396 million returned to shareholders via dividends/share buybacks, alongside $466 million in adjusted EBITDA despite inflationary challenges.

Segment Performance

Olive Garden delivered a strong same-restaurant sales growth of 4.7%, driven by the Never Ending Pasta Bowl promotion and first-party delivery through Uber Direct. LongHorn Steakhouse saw a 5.9% same-restaurant sales growth, while the fine dining segment grew 0.8%. Other business segments, including Yard House, grew 3.1%. The company's diverse portfolio of brands continues to drive growth, with a focus on delivering value to guests through initiatives such as combos and limited-time offers.

Guidance and Outlook

The company updated its fiscal 2026 guidance, expecting total sales growth of 8.5% to 9.3%, same-restaurant sales growth of 3.5% to 4.3%, and 65 to 70 new restaurant openings. Adjusted diluted net earnings per share is expected to be between $10.60 and $10.70. The company expects earnings per share growth to improve in the third and fourth quarters as the gap between pricing and total inflation narrows. With a current P/E Ratio of 19.61 and an EV/EBITDA of 14.84, the market appears to have priced in a certain level of growth, but the company's guidance suggests that it is on track to meet or exceed these expectations.

Operational Efforts and Labor Dynamics

The company is focused on improving the customer experience, with initiatives such as speed of service improvements and a focus on delivering value to guests. Labor dynamics do not appear to be significantly impacting Darden's operations, with record low turnover and a stable labor environment. The company's diverse portfolio of brands and its focus on operational excellence position it well for continued growth.

Valuation and Dividend Yield

With a Dividend Yield of 3.05% and a Free Cash Flow Yield of 6.95%, Darden Restaurants offers an attractive return profile for investors. The company's ROE of 50.89% and ROIC of 11.99% suggest a strong ability to generate returns on equity and invested capital. As the company continues to execute on its growth strategy, investors may want to keep a close eye on its ability to deliver on its guidance and drive long-term value creation.

Darden's A-Score