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what it is
Darden runs 2,156 casual-dining restaurants, led by Olive Garden and LongHorn Steakhouse.
how it gets paid
Last year Darden Restaurants made $12.1B in revenue. Olive Garden was the main engine at $5.25B, or 43% of sales.
why it's growing
Revenue grew 6.0% last year. Revenue was $6.1B in the latest quarter, up 98% vs. prior year.
what just happened
Darden missed estimates as EPS came in at $2.08 versus $2.25 expected.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
45/100 earnings predictability — expect surprises
21.0x trailing p/e — priced about right
3.1% dividend yield — cash in your pocket every quarter
31.0% return on capital — every dollar works hard here
xvary composite: 60/100 — average
What they do
Darden runs 2,156 casual-dining restaurants, led by Olive Garden and LongHorn Steakhouse.
Olive Garden has 935 units. LongHorn has 591. That 344-unit gap keeps one brand from carrying the whole bill. Same-store sales, meaning sales at open stores, rose 4.7% at Olive Garden and 5.9% at LongHorn. You own 187,384 employees across 2,156 locations.
How they make money
$12.1B
annual revenue · their business grew +6.0% last year
Olive Garden
$5.25B
+4.7%
LongHorn Steakhouse
$3.31B
+5.9%
Cheddar's Scratch Kitchen
$1.02B
+7.3%
Fine dining and other brands
$2.52B
+7.3%
The products that matter
Italian casual dining chain
Olive Garden
largest brand · anchor of the $12.1B revenue base
it's the largest brand in the portfolio and a big reason Darden can spread purchasing and advertising costs across a $12.1B system. that's still the center of gravity.
core brand
Steakhouse chain
LongHorn Steakhouse
+5.9% same-store sales
LongHorn posted 5.9% same-store sales growth in the latest quarter. that matters because strong steakhouse traffic helps offset weaker pockets elsewhere and keeps the growth case from resting on one banner.
growth driver
Fine dining restaurant group
Fine Dining Group
+0.8% same-store sales
Fine Dining grew 0.8% after nine consecutive quarters of negative comparisons. that's improvement, but it is still a stabilization story, not proof the turnaround is done.
turnaround watch
Key numbers
$243
18-month target
That is 21% above $200.9. The upside case depends on margin control.
3.1%
dividend yield
You get paid while waiting. That is richer than a 1% cash rate.
31.0%
return on capital
Profit on money invested runs at 31.0%. Most chains would kill for half that.
17.3%
operating margin
A 17.3% margin leaves room, but beef cost spikes can still chew it up.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 75 / 100
- long-term debt $2.1B (8% of capital)
- net profit margin 9.9% — keeps 10 cents of every dollar in revenue
- return on equity 46% — $0.46 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in DRI 3 years ago → it's now worth $14,990.
The index would have given you $13,880.
source: institutional data · total return
What just happened
missed estimates
Darden missed estimates as EPS came in at $2.08 versus $2.25 expected.
Revenue was $6.1B in the latest quarter, up 98% vs. prior year. Gross margin was 18.8%, so costs still did the damage.
$6.1B
revenue
$2.08
eps
18.8%
gross margin
EPS miss
The $2.08 print missed $2.25 by 7.56%. Revenue at $6.1B did not offset the gap.
-
total sales increased 7.3%, vs. prior year, in line with our $3.1 billion estimate, but $27.2 million better than the consensus.
-
same-store sales were strong for both longhorn steakhouse (+5.9%), and olive garden (+4.7%), and the fine dining segment posted a 0.8% gain, after nine-consecutive quarters of negative comparisons.
-
the operating margin declined 40 basis points vs. prior year to 15.0%, hurt by higher beef costs.looking ahead, we expect beef prices to remain high due to the u.s. cattle heard being at its smallest size since 1951. even so, menu price increases, coupled with declining costs from the recent chuy’s acquisition, should help to increase margins.
-
a 53rd week in this fiscal year versus fiscal 2025 should also add about $0.20 a share to earnings.
-
new store openings remain a key factor in the company’s growth strategy.darden has opened 39 net new restaurants through the first six months of the year and now expects to open 65-70 stores this year, up from its prior guidance of 65 restaurants. we are looking for between 20-25 openings at olive garden, 2530 at longhorn steakhouse, and 15-23 at its other formats. darden has now increased its capital expenditure guidance to $750 million to $775 million, from its previous $700 million to $750 million range.
source: company earnings report, 2026
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What could go wrong
the #1 risk is beef inflation outrunning menu pricing at LongHorn and the broader portfolio.
med
beef inflation outrunning menu pricing
Operating margin already fell 40 basis points to 15.0% because beef costs moved higher. If cattle supply stays tight, Darden either raises prices harder or absorbs the pressure.
This hits the center of the thesis because the company only keeps 9.2% of revenue as net profit.
med
same-store sales cooling at Olive Garden and LongHorn
The latest quarter was healthy: LongHorn up 5.9% and Olive Garden up 4.7%. The risk is what happens next if consumers trade down, visit less often, or stop accepting higher menu prices.
At 21.0x trailing earnings, the stock can live with average demand. It does not want negative comps at the two banners carrying the story.
med
unit growth getting more expensive
Darden opened 39 net new restaurants in the first six months and plans 65–70 for the year. Capex is now $750M–$775M, up from the prior $700M–$750M range.
More stores lift sales. They also test whether a 28.0% return on capital can stay that high as the base gets larger.
med
margin recovery leaning on acquisition savings
Management expects declining costs from the recent Chuy's acquisition to help margins from here. That support matters if it shows up. It matters less if beef inflation absorbs it first.
If cost savings fail to offset inflation, investors are left with a business adding units without turning that growth into cleaner earnings.
Food inflation already pushed operating margin down to 15.0%, and a business earning 9.2% net margins does not have a wide cushion if commodity and labor costs stay elevated.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
operating margin after the beef-cost spike
The next report needs to show whether 15.0% was a blip or the start of a tougher cost cycle.
metric
Olive Garden and LongHorn same-store sales
Last quarter came in at 4.7% and 5.9%. If those numbers fade, the clean revenue story fades with them.
trend
unit growth versus capex
Management plans 65–70 openings with $750M–$775M in capex. You want to see growth show up without return on capital sliding.
risk
calendar help versus real earnings growth
About $0.20 of this year's EPS comes from a 53rd week. Helpful, yes. Permanent, no.
Analyst rankings
short-term outlook
average
momentum score 3. in human-speak, analysts see a stock acting normal, not one forcing a re-rating.
risk profile
average
stability score 3. You are in the middle — safer than the market's messier names, but not a bunker.
chart momentum
average
technical score 3. The chart looks orderly, not urgent.
earnings predictability
45 / 100
earnings are less predictable here than you might expect from a big restaurant chain. Comps and margins can still move the quarter more than the brand familiarity suggests.
source: institutional data
Institutional activity
409 buyers vs. 491 sellers in 3q2025. total institutional holdings: 0.1B shares.
source: institutional data
Price targets
3-5 year target range
$162
$324
$201
current price
$243
target midpoint · +21% from current · 3-5yr high: $370 (+85% · 18% ann'l return)
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