Darden Restaurants (NYSE:DRI) executives told investors the company delivered a “strong quarter” in fiscal second-quarter 2026, with sales exceeding expectations and positive same-restaurant sales across each operating segment. Management said beef costs were a notable headwind, but the company continued to price below inflation as it emphasized value and long-term sales momentum.
Quarter performance and industry backdrop
During the quarter, Darden said total sales were $3.1 billion, up 7% year over year. The company attributed the increase to same-restaurant sales growth of 4.3%, 30 net new restaurants, and the October acquisition of Chuy’s. Adjusted diluted EPS from continuing operations was $2.08, up 2.5% from last year, and adjusted EBITDA was $466 million.
Executives also pointed to operational execution, citing record or near-record guest satisfaction scores across brands. Darden opened 17 new restaurants during the quarter and said it was on pace to exceed planned openings for the year, noting openings came faster than expected and collectively added 40 additional operating weeks versus the company’s plan for the quarter.
Brand results: Olive Garden, LongHorn, and other segments
Olive Garden posted same-restaurant sales growth of 4.7%, which management attributed to the Never Ending Pasta Bowl promotion, first-party delivery, and operational execution that drove “all-time high guest satisfaction scores.” The company kept the starting price for Never Ending Pasta Bowl at $13.99 for the fourth consecutive year. Executives said guest “preference was strong” and refill rates reached a record high.
First-party delivery through Uber Direct represented 4% of Olive Garden sales in the quarter, and management said approximately half of that volume was incremental. Darden described delivery customers as “younger” and “more affluent,” with higher check averages than dine-in guests and higher order frequency. The company said it did not market Uber Direct during the second quarter, prioritizing marketing spend behind Never Ending Pasta Bowl instead.
Olive Garden also continued rolling out a “lighters portion” menu section featuring seven existing dishes in smaller portions at lower prices. Management said the initiative has improved internal measures of affordability and value perception and has been associated with increased frequency among guests who use the lighter portions menu. About 40% of restaurants offered it during the quarter, with another 20% added early in the third quarter; a system-wide rollout is planned for January. Management said the lighter portions offering caused roughly 20–30 basis points of mix impact in the second quarter, which it expects to increase modestly as the rollout expands, but indicated delivery performance is helping offset investments.
LongHorn Steakhouse delivered same-restaurant sales growth of 5.9%. Management emphasized the brand’s execution and quality focus, citing an all-time high “Steak’s World Correctly” score and record-low team member turnover for the quarter. The company noted beef inflation pressure at LongHorn and said it priced approximately 320 basis points below inflation there during the quarter.
Other business segment same-restaurant sales rose 3.1%, led by strong performance at Yard House. Management highlighted Yard House’s Oktoberfest event, including limited-time offerings and a $5 refillable beer stein that sold out within weeks. Yard House also began rolling out first-party delivery through Uber Direct, with management characterizing initial results as encouraging and indicating it plans to expand the rollout in the third quarter.
Fine dining segment same-restaurant sales grew 0.8%, driven by Ruth’s Chris Steak House and improving trends at The Capital Grille. Darden said Ruth’s Chris benefited from a limited-time three-course $55 menu that offered price certainty to guests, while The Capital Grille’s Wagyu and Wine event—pairing a Dave Phinney wine with a Wagyu burger for $35—generated strong guest preference and helped build quarter-long momentum.
Margins, commodities, and pricing strategy
Management said commodity headwinds, particularly beef, were stronger than anticipated. Darden’s CFO Raj Vennam said near-record beef costs persisted longer than expected, are likely to remain elevated into the third quarter, and should see some relief in the fourth quarter.
For the quarter, Darden said food and beverage expenses were 90 basis points higher year over year due primarily to elevated beef costs, with total commodity inflation of about 5.5%. Restaurant labor was 10 basis points higher, with labor inflation of 3.3%. Restaurant expenses rose 10 basis points, which management attributed to Uber Direct fees and brand mix, including the addition of Chuy’s. Restaurant-level EBITDA margin was 18.7%.
On pricing, Vennam said Darden priced about 130 basis points below inflation in the quarter. He said the gap is expected to narrow in the third quarter and that pricing should “catch up” to inflation by the fourth quarter, driven by modest pricing actions and expectations for inflation to ease. He reiterated management’s bias to minimize pricing, even if it results in near-term margin pressure, in order to protect guests and support long-term performance.
Discussing beef specifically, Vennam said prices peaked in Darden’s fiscal second quarter and were above normal seasonal trends due to supply constraints tied to “packer cutbacks” and halted Mexican cattle imports due to a screw worm outbreak. He said the company has seen “retail demand destruction” accelerate, noting an estimate that November steak demand volume was down about 14%. He added that prices had begun to improve in recent weeks and Darden had roughly 45% coverage for the back half of the year, with additional coverage being added.
Updated fiscal 2026 outlook and other notes
Darden updated its fiscal 2026 guidance to reflect year-to-date performance and the commodity environment. The company now expects:
- Total sales growth: 8.5% to 9.3%
- Same-restaurant sales growth: 3.5% to 4.3%
- New restaurant openings: 65 to 70
- Total capital spending: $750 million to $775 million
- Total inflation: approximately 3.5%, including commodities inflation of 4% to 5%
- Adjusted diluted EPS: $10.50 to $10.70 (including approximately $0.20 related to a 53rd week)
Vennam said the company expects EPS growth to sequentially improve in the third and fourth quarters as pricing and inflation converge, and forecast mid-single-digit EPS growth in the third quarter versus last year’s third quarter.
In Q&A, management discussed consumer trends, saying guests remain resilient but cautious. Executives said the company saw increased visits from middle- to higher-income groups, with the largest growth from higher-income households, while there was some pullback among households earning less than $50,000 in the casual brands. The company also noted strong traffic growth among guests aged 55 and older.
The company also addressed operational initiatives around improving speed of service, calling it a longer-term effort aimed at enhancing guest experience, with potential benefits to table turns and peak-time traffic as execution improves.
Near the end of prepared remarks, CEO Rick Cardenas also acknowledged the passing of Darden’s first CEO, Joe Lee, calling him a “visionary leader” and highlighting his emphasis on taking care of team members to better serve guests.
About Darden Restaurants (NYSE:DRI)
Darden Restaurants, Inc is a multi-brand, full-service restaurant company headquartered in Orlando, Florida. The company owns and operates a portfolio of casual and fine-dining concepts that together serve millions of guests through company-owned and franchised locations. Its well-known brands include Olive Garden and LongHorn Steakhouse, alongside other dining concepts that span Italian, American, steakhouse and upscale casual formats.
Darden’s restaurants provide a range of guest-facing services including dine-in, takeout, delivery and catering, and feature menus tailored to each brand’s positioning—Italian-American fare at Olive Garden, steaks and grilled items at LongHorn, and more premium steakhouse and chef-driven offerings at its upscale concepts.
