Darden is retaining a positive financial outlook for the upcoming holiday season, despite high inflation taking a bite out of its net earnings.
The Orlando, Florida, U.S.A.-based operator of Capital Grille, LongHorn Steakhouse, Olive Garden, and several other restaurant chains said in an earnings report issued on 16 December its sales increased 9.4 percent in its fiscal Q2 2023 to USD 2.5 billion (EUR 2.4 billion).
The company achieved 7.3 percent same-restaurant sales growth and opened 35 net new restaurants, Darden Chief Financial Officer Rajesh Vennam said.
Darden surpassed USD 10 billion (EUR 9.4 billion) in sales on a trailing 52-week basis for the first time in company history, its president and CEO, Ricardo Cardenas said on an earnings call.
Cardenas said he is is optimistic Darden will outperform expectations for the holiday season.
“The holidays are the busiest time of the year for our restaurant teams, and they have enjoyed welcoming even more guests back into their restaurants this season," Cardenas said. “[Many of our restaurants] realized all-time daily sales record on Thanksgiving Day, and bookings for this holiday season are encouraging."
However, Vennam said the restaurant industry continues to battle higher food and labor costs. The company's expenses were 240 basis points higher in the quarter, driven by commodities inflation of around 13 percent, “which significantly outpaced our pricing,” Vennam said.
“As we expected, chicken, dairy, and grains continue to be categories experiencing the highest levels of inflation," Vennam said. "Produce especially was much higher than expected due to poor growing conditions and weather-related events in the quarter.”
The company’s scale and vendor partnerships have helped minimize the impact of inflation and higher prices relative to the general market, Vennam said.
For its fiscal-year 2023, Darden expects its total sales to reach USD 10.45 billion (EUR 9.8 billion) and predicts same-restaurant sales growth of 5 percent to 6.5 percent. The company also plans to open 55 to 60 new restaurants.
Vennam said the company expects to experience inflation of around 7 percent and commodity inflation bewteen 8 percent and 9 percent for the full fiscal year.
Photo courtesy of Darden
