Darden Restaurants Inc, the owner of Olive Garden and LongHorn Steakhouse, on Thursday raised its full-year sales forecast for the second consecutive quarter after posting stronger-than-expected revenue and earnings, though rising commodity costs continue to weigh on profits.
For the second quarter, total sales increased 7.3% to $3.1 billion, driven by a 4.3% same-restaurant sales (SRS) gain and revenue from 30 net new restaurants. Reported diluted net earnings per share from continuing operations came in at $2.03, while adjusted EPS rose 2.5% to $2.08, slightly above analyst expectations.
“The second quarter exceeded our top-line expectations as every segment delivered positive same-restaurant sales,” Darden CEO Rick Cardenas said. “Our restaurant teams did a great job of being brilliant with the basics, driving record, or near-record, guest satisfaction scores across all our brands. Despite facing significant commodity headwinds, we leveraged our four competitive advantages to provide strong value for our guests and we made appropriate investments in the business to ensure long-term success.”
Darden’s flagship Olive Garden brand performed particularly well, with SRS up 4.7% and segment profit growing 7% on expanded margins of 21.8%. Traffic resilience was seen across all segments, including Fine Dining, which posted a modest 0.8% SRS increase after prior weakness.
However, profitability challenges emerged in other units. LongHorn Steakhouse’s SRS rose 5.9%, but segment profit fell 6.7%, reflecting nearly 300 basis points of margin compression amid high beef costs. Fine Dining profits dropped 13% despite a 3.3% rise in sales, with margins contracting to 14.8% from 17.6% a year earlier.
Looking ahead, Darden raised its FY2026 guidance for SRS to a range of 3.5% to 4.3% and total sales to $8.5 billion–$9.3 billion, up from prior ranges of 2.5%–3.5% and $7.5 billion–$8.5 billion, respectively. Adjusted EPS guidance was maintained at $10.50–$10.70, signaling that higher revenue is largely offsetting cost pressures.
Total inflation is expected to reach roughly 3.5% for the year.
Shares of Darden were up 1.1% on Thursday.