Darden’s fiscal first quarter 2023 earnings were impacted by high commodity costs, though its executives predict inflation will lessen in the remainder of the year.
Orlando, Florida, U.S.A.-based Darden, which operates LongHorn Steakhouse, Olive Garden, The Capital Grille, and several other restaurant chains, reported its net earnings per share dropped to USD 1.56 (EUR 1.56) in Q1 2023 (ending 28 August, 2022), compared to USD 1.76 (EUR 1.76) per share for the same quarter in 2022. Its sales rose 6.1 percent to USD 2.4 billion (EUR 2.4 billion).
Total inflation was around 9.5 percent and total pricing was around 6.5 percent, Darden Senior Vice President, Chief Financial Officer, and Treasurer Rajesh Vennam said on an earnings call.
The company’s food and beverage expenses were 280 basis points higher in the quarter, driven by commodities inflation of 15 percent, Vennam said.
Darden’s labor costs were also 50 basis points above last year, driven by hourly wage inflation of over 9 percent. Total labor inflation across the industry in the U.S. was 7.5 percent. Darden’s restaurant expenses were 10 basis points above last year, driven by higher repairs and maintenance expenses, “due to supply chain challenges and utilities inflation of 16 percent,” Vennam said.
Darden's marketing spend was also up 20 basis points, as the company upped its testing of both digital and television marketing.
Despite the increased costs, the company “expects total inflation and our gap between pricing and inflation to have peaked in the first quarter,” according to Vennam.
"We also expect inflation to... "
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