Cover Page
Cover Page - shares | 3 Months Ended | |
Aug. 27, 2023 | Sep. 15, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Aug. 27, 2023 | |
Document Transition Report | false | |
Entity File Number | 1-13666 | |
Entity Registrant Name | DARDEN RESTAURANTS, INC. | |
Entity Incorporation, State or Country Code | FL | |
Entity Tax Identification Number | 59-3305930 | |
Entity Address, Address Line One | 1000 Darden Center Drive | |
Entity Address, City or Town | Orlando, | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 32837 | |
City Area Code | 407 | |
Local Phone Number | 245-4000 | |
Title of 12(b) Security | Common Stock, without par value | |
Trading Symbol | DRI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 120,314,697 | |
Entity Central Index Key | 0000940944 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-26 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Sales | $ 2,730.6 | $ 2,446.1 |
Costs and expenses: | ||
Restaurant labor | 875.3 | 793.8 |
Marketing expenses | 38.6 | 30.3 |
General and administrative expenses | 153.3 | 88.3 |
Depreciation and amortization | 109.8 | 95.6 |
Impairments and disposal of assets, net | 3.1 | (4.9) |
Total operating costs and expenses | 2,477.7 | 2,201.9 |
Operating income | 252.9 | 244.2 |
Interest, net | 29.7 | 19.8 |
Earnings before income taxes | 223.2 | 224.4 |
Income tax expense | 28.4 | 30.8 |
Earnings from continuing operations | 194.8 | 193.6 |
Losses from discontinued operations, net of tax benefit of $0.1 and $0.0, respectively | (0.3) | (0.6) |
Net earnings | $ 194.5 | $ 193 |
Basic net earnings per share: | ||
Earnings from continuing operations (in dollars per share) | $ 1.61 | $ 1.58 |
Losses from discontinued operations (in dollars per share) | 0 | (0.01) |
Net earnings (in dollars per share) | 1.61 | 1.57 |
Diluted net earnings per share: | ||
Earnings from continuing operations (in dollars per share) | 1.60 | 1.56 |
Losses from discontinued operations (in dollars per share) | (0.01) | 0 |
Net earnings (in dollars per share) | $ 1.59 | $ 1.56 |
Average number of common shares outstanding: | ||
Basic (in shares) | 120.9 | 122.9 |
Diluted (in shares) | 122 | 123.9 |
Food and beverage | ||
Costs and expenses: | ||
Food and beverage costs and restaurant expenses | $ 851 | $ 795.3 |
Restaurant expenses | ||
Costs and expenses: | ||
Food and beverage costs and restaurant expenses | $ 446.6 | $ 403.5 |
CONSOLIDATED STATEMENTS OF EA_2
CONSOLIDATED STATEMENTS OF EARNINGS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Income Statement [Abstract] | ||
Tax benefit of discontinued operations | $ 0.1 | $ 0 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 194.5 | $ 193 |
Foreign currency adjustment | 0 | 0 |
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $5.4 and $0.6, respectively | 12.6 | 2.2 |
Net unamortized gain (loss) arising during the period, including amortization of unrecognized net actuarial gain (loss), net of taxes of $0.0 and $0.1, respectively, related to pension and other post-employment benefits | 0.2 | 0.1 |
Other comprehensive income | 12.8 | 2.3 |
Total comprehensive income | $ 207.3 | $ 195.3 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, tax | $ 5.4 | $ 0.6 |
Amortization of unrecognized net actuarial gain (loss), tax | $ 0 | $ 0.1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Aug. 27, 2023 | May 28, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 192.1 | $ 367.8 |
Receivables, net | 59.2 | 80.2 |
Inventories | 287 | 287.9 |
Prepaid income taxes | 98.8 | 107.3 |
Prepaid expenses and other current assets | 198.6 | 154.5 |
Total current assets | 835.7 | 997.7 |
Land, buildings and equipment, net of accumulated depreciation and amortization of $3,506.2 and $3,422.0, respectively | 3,991.7 | 3,725.1 |
Operating lease right-of-use assets | 3,600.3 | 3,373.9 |
Goodwill | 1,376.9 | 1,037.4 |
Trademarks | 1,148 | 806.3 |
Other assets | 316.6 | 301.1 |
Total assets | 11,269.2 | 10,241.5 |
Current liabilities: | ||
Accounts payable | 419.6 | 426.2 |
Short-term debt | 95.4 | 0 |
Accrued payroll | 168.6 | 173 |
Accrued income taxes | 8.5 | 7.8 |
Other accrued taxes | 74.3 | 65.9 |
Unearned revenues | 541.7 | 512 |
Other current liabilities | 786.1 | 752.5 |
Total current liabilities | 2,094.2 | 1,937.4 |
Long-term debt | 1,477.1 | 884.9 |
Deferred income taxes | 231.4 | 142.2 |
Operating lease liabilities - non-current | 3,877.5 | 3,667.6 |
Other liabilities | 1,441 | 1,407.9 |
Total liabilities | 9,121.2 | 8,040 |
Stockholders’ equity: | ||
Common stock and surplus | 2,256.8 | 2,230.8 |
Retained earnings (deficit) | (124.8) | (32.5) |
Accumulated other comprehensive income (loss) | 16 | 3.2 |
Total stockholders’ equity | 2,148 | 2,201.5 |
Total liabilities and stockholders’ equity | $ 11,269.2 | $ 10,241.5 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Aug. 27, 2023 | May 28, 2023 |
Statement of Financial Position [Abstract] | ||
Land, buildings and equipment, net of accumulated depreciation and amortization | $ 3,506.2 | $ 3,422 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Millions | Total | Common Stock And Surplus | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at May. 29, 2022 | 123,900 | |||
Beginning balance at May. 29, 2022 | $ 2,198.2 | $ 2,226 | $ (25.9) | $ (1.9) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net earnings | 193 | 193 | ||
Other comprehensive income (loss) | 2.3 | 2.3 | ||
Dividends declared | (150) | (150) | ||
Stock option exercises (in shares) | 100 | |||
Stock option exercises | 3.6 | $ 3.6 | ||
Stock-based compensation | 12.1 | $ 12.1 | ||
Repurchases of common stock (in shares) | (1,700) | |||
Repurchases of common stock | (199) | $ (30.2) | (168.8) | |
Issuance of stock under Employee Stock Purchase Plan and other plans (in shares) | 200 | |||
Issuance of stock under Employee Stock Purchase Plan and other plans | 2.8 | $ 2.8 | ||
Other | 1.1 | $ 1.1 | ||
Ending balance (in shares) at Aug. 28, 2022 | 122,500 | |||
Ending balance at Aug. 28, 2022 | 2,064.1 | $ 2,215.4 | (151.7) | 0.4 |
Beginning balance (in shares) at May. 28, 2023 | 121,100 | |||
Beginning balance at May. 28, 2023 | 2,201.5 | $ 2,230.8 | (32.5) | 3.2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net earnings | 194.5 | 194.5 | ||
Other comprehensive income (loss) | 12.8 | 12.8 | ||
Dividends declared | $ (160.1) | (160.1) | ||
Stock option exercises (in shares) | 230 | 200 | ||
Stock option exercises | $ 19.4 | $ 19.4 | ||
Stock-based compensation | 20.6 | $ 20.6 | ||
Repurchases of common stock (in shares) | (900) | |||
Repurchases of common stock | (142.9) | $ (16.2) | (126.7) | |
Issuance of stock under Employee Stock Purchase Plan and other plans (in shares) | 300 | |||
Issuance of stock under Employee Stock Purchase Plan and other plans | 2.9 | $ 2.9 | ||
Other | (0.7) | $ (0.7) | ||
Ending balance (in shares) at Aug. 27, 2023 | 120,700 | |||
Ending balance at Aug. 27, 2023 | $ 2,148 | $ 2,256.8 | $ (124.8) | $ 16 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared (in dollars per share) | $ 1.31 | $ 1.21 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Cash flows—operating activities | ||
Net earnings | $ 194.5 | $ 193 |
Losses from discontinued operations, net of tax | 0.3 | 0.6 |
Adjustments to reconcile net earnings from continuing operations to cash flows: | ||
Depreciation and amortization | 109.8 | 95.6 |
Impairments and disposal of assets, net | 3.1 | (4.9) |
Stock-based compensation expense | 30.3 | 20.3 |
Change in current assets and liabilities | (59.5) | 133.5 |
Contributions to pension and postretirement plans | (0.4) | (0.5) |
Deferred income taxes | 4.2 | (9.6) |
Change in other assets and liabilities | (10.4) | (4.2) |
Other, net | (2.8) | 4 |
Net cash provided by operating activities of continuing operations | 269.1 | 427.8 |
Cash flows—investing activities | ||
Purchases of land, buildings and equipment | (150.9) | (122.8) |
Proceeds from disposal of land, buildings and equipment | 1.6 | 10.4 |
Cash used in business acquisitions, net of cash acquired | (699.9) | 0 |
Purchases of capitalized software and other assets | (5.2) | (5.8) |
Other, net | 0.2 | 0.1 |
Net cash used in investing activities of continuing operations | (854.2) | (118.1) |
Cash flows—financing activities | ||
Proceeds from issuance of common stock | 22.3 | 6.4 |
Dividends paid | (158.5) | (148.5) |
Repurchases of common stock | (142.9) | (199) |
Proceeds from issuance of short-term debt | 872.1 | 0 |
Repayments of short-term debt | (776.7) | 0 |
Proceeds from issuance of long-term debt | 600 | 0 |
Principal payments on finance leases | (5.5) | (4.3) |
Payments of debt issuance costs | (1.4) | 0 |
Net cash provided by (used in) financing activities of continuing operations | 409.4 | (345.4) |
Cash flows—discontinued operations | ||
Net cash used in operating activities of discontinued operations | 0 | (0.5) |
Net cash used in discontinued operations | 0 | (0.5) |
Decrease in cash, cash equivalents, and restricted cash | (175.7) | (36.2) |
Cash, cash equivalents, and restricted cash - beginning of period | 416.2 | 472.1 |
Cash, cash equivalents, and restricted cash - end of period | 240.5 | 435.9 |
Reconciliation of cash, cash equivalents, and restricted cash: | ||
Cash and cash equivalents | 192.1 | 377.5 |
Restricted cash included in prepaid expenses and other current assets | 48.4 | 58.4 |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | 240.5 | 435.9 |
Cash flows from changes in current assets and liabilities | ||
Receivables, net | 29.5 | 21.3 |
Inventories | 9.4 | (2.5) |
Prepaid expenses and other current assets | (40.1) | (28) |
Accounts payable | (16) | 12.6 |
Accrued payroll | (13.7) | (44.3) |
Prepaid/accrued income taxes | 20.8 | 217 |
Other accrued taxes | 7.8 | 6.3 |
Unearned revenues | (32.1) | (30.2) |
Other current liabilities | (25.1) | (18.7) |
Change in current assets and liabilities | $ (59.5) | $ 133.5 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Aug. 27, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Darden Restaurants, Inc. (we, our, Darden or the Company) owns and operates full-service dining restaurants in the United States and Canada under the trade names Olive Garden ® , LongHorn Steakhouse ® , Cheddar’s Scratch Kitchen ® , Yard House ® , Ruth’s Chris Steak House ® , The Capital Grille ® , Seasons 52 ® , Bahama Breeze ® , Eddie V’s Prime Seafood ® and The Capital Burger ® . As of August 27, 2023, through subsidiaries, we own and operate all of our restaurants in the United States and Canada, except for 2 joint venture restaurants managed by us, 4 managed locations operating under contractual agreements and 92 franchised restaurants. We also have 53 franchised restaurants in operation located in Latin America, the Caribbean, Asia, and the Middle East. We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. We operate on a 52/53-week fiscal year which ends on the last Sunday in May. Our fiscal year ending May 26, 2024 will contain 52 weeks of operation. Operating results for interim periods presented are not necessarily indicative of results that may be expected for the full fiscal year. These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023. We prepare our consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and costs and expenses during the reporting period. Actual results could differ from those estimates. We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation. |
Acquisition of Ruth_s Chris Ste
Acquisition of Ruth’s Chris Steak House | 3 Months Ended |
Aug. 27, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition of Ruth’s Chris Steak House | Acquisition of Ruth’s Chris Steak House On June 14, 2023, we acquired 100 percent of the equity interest of Ruth’s Chris Steak House (Ruth’s Chris) for $724.6 million in total consideration. We funded the acquisition with the proceeds from the issuance of a $600.0 million Term Loan (Term Loan Agreement) combined with cash on hand. The acquired operations of Ruth’s Chris included 77 company-owned locations, 74 franchisee-owned locations and 4 managed locations operating under contractual agreement. The results of Ruth’s Chris operations are included in our consolidated financial statements from the date of acquisition. The Term Loan Agreement is a senior unsecured $600 million 3-year credit agreement with Bank of America, N.A., as administrative agent, the lenders and other agents party thereto, the material terms of which are consistent with our existing revolving credit agreement. The Term Loan Agreement bears interest at a rate of: (a) Term SOFR (which is defined, for the applicable interest period, as the Term SOFR Screen Rate two U.S. Government Securities Business Days prior to the commencement of such interest period with a term equivalent to such interest period) plus a Term SOFR adjustment of 0.10 percent plus the relevant margin determined by reference to a ratings-based pricing grid (Applicable Margin); or (b) The base rate (which is defined as the highest of the BOA prime rate, the Federal Funds rate plus 0.500 percent, and the Term SOFR plus 1.00 percent) plus the relevant Applicable Margin. Assuming a “BBB” equivalent credit rating level, the Applicable Margin under the Term Loan Agreement is 1.125 percent for Term SOFR loans and 0.125 percent for base rate loans. The Term Loan Agreement matures on the third anniversary of the funding date thereunder, June 14, 2023. The assets and liabilities of Ruth’s Chris were recorded at their respective fair values as of the date of acquisition. We are in the process of confirming, through internal studies and third-party valuations, the fair value of these assets, including land, buildings and equipment, intangible assets, and income tax assets and liabilities. The fair values set forth below are based on preliminary valuations and are subject to adjustment as additional information is obtained. When the valuation process is completed, adjustments to goodwill may result. The preliminary allocation of the purchase price is as follows: Balances at (in millions) June 14, 2023 Current assets $ 45.6 Land, buildings and equipment 170.5 Operating lease right-of-use assets 291.6 Trademark 341.7 Other assets 12.0 Goodwill 339.5 Total assets acquired $ 1,200.9 Current liabilities 113.5 Deferred income taxes 79.5 Operating lease liabilities - non-current 276.3 Other liabilities 7.0 Total liabilities assumed $ 476.3 Net assets acquired $ 724.6 The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill. Of the $339.5 million recorded as goodwill, $15.2 million is deductible for tax purposes. The portion of the purchase price attributable to goodwill represents benefits expected because of the acquisition, including sales and unit growth opportunities in addition to supply-chain and support-cost synergies. The trademark has an indefinite life based on the expected use of the asset and the regulatory and economic environment within which it is being used. The trademark represents a highly respected brand with positive connotations, and we intend to cultivate and protect the use of this brand. Goodwill and indefinite-lived trademarks are not amortized but are reviewed annually for impairment or more frequently if indicators of impairment exist. Buildings and equipment will be depreciated over a period of 2 years to 30 years. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Aug. 27, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Deferred revenue liabilities from contracts with customers included on our accompanying consolidated balance sheets was comprised of the following: (in millions) August 27, 2023 May 28, 2023 Unearned revenues Deferred gift card revenue $ 563.4 $ 537.0 Deferred gift card discounts (22.4) (25.5) Other 0.7 0.5 Total $ 541.7 $ 512.0 Other liabilities Deferred franchise fees - non-current $ 4.9 $ 2.7 The following table presents a rollforward of deferred gift card revenue. Three Months Ended (in millions) August 27, 2023 August 28, 2022 Beginning balance $ 537.0 $ 521.1 Acquired deferred gift card revenue 61.8 — Activations 130.1 114.4 Redemptions and breakage (165.5) (147.0) Ending balance $ 563.4 $ 488.5 |
Additional Financial Informatio
Additional Financial Information | 3 Months Ended |
Aug. 27, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Additional Financial Information | Additional Financial Information Supplemental Balance Sheet Information The components of lease assets and liabilities on the consolidated balance sheet were as follows: (in millions) Balance Sheet Classification August 27, 2023 May 28, 2023 Operating lease right-of-use assets Operating lease right-of-use assets $ 3,600.3 $ 3,373.9 Finance lease right-of-use assets Land, buildings and equipment, net 1,006.5 958.1 Total lease assets, net $ 4,606.8 $ 4,332.0 Operating lease liabilities - current Other current liabilities $ 193.9 $ 182.5 Finance lease liabilities - current Other current liabilities 12.5 13.5 Operating lease liabilities - non-current Operating lease liabilities - non-current 3,877.5 3,667.6 Finance lease liabilities - non-current Other liabilities 1,229.0 1,172.6 Total lease liabilities $ 5,312.9 $ 5,036.2 Supplemental Cash Flow Information Cash paid for interest and income taxes were as follows: Three Months Ended (in millions) August 27, 2023 August 28, 2022 Interest, net of amounts capitalized $ 34.3 $ 21.1 Income taxes, net of refunds 2.0 (176.7) Non-cash investing and financing activities were as follows: Three Months Ended (in millions) August 27, 2023 August 28, 2022 Increase in land, buildings and equipment through accrued purchases $ 64.0 $ 75.9 Right-of-use assets obtained in exchange for new operating lease liabilities (1) 298.0 49.6 Right-of-use assets obtained in exchange for new finance lease liabilities 45.3 41.5 Net change in right-of-use assets mainly due to lease modifications resulting in reclassification of leases from operating to finance 2.1 25.3 (1) Right-of-use assets obtained in fiscal 2024 includes $291.6 million from the acquisition of Ruth’s Chris. |
Income Taxes
Income Taxes | 3 Months Ended |
Aug. 27, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective income tax rate for continuing operations for the three months ended August 27, 2023 was 12.7 percent compared to an effective income tax rate for the three months ended August 28, 2022 of 13.7 percent. The decrease in the tax rate is driven by an increase in certain tax credits, primarily attributable to Ruth’s Chris, and higher tax benefits related to option exercises partially offset by certain non-deductible acquisition related costs. Included in our remaining balance of unrecognized tax benefits is $8.4 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve months based on the outcome of examinations or as a result of the expiration of the statute of limitations for specific jurisdictions. The Inflation Reduction Act (“IRA”) was enacted on August 16, 2022. The IRA includes provisions imposing a 1 percent excise tax on share repurchases that occur after December 31, 2022 and introduces a 15 percent corporate alternative minimum tax (“CAMT”) on adjusted financial statement income. The IRA excise tax and CAMT are immaterial to our consolidated financial statements for the three months ended August 27, 2023. |
Net Earnings per Share
Net Earnings per Share | 3 Months Ended |
Aug. 27, 2023 | |
Earnings Per Share [Abstract] | |
Net Earnings per Share | Net Earnings per Share Outstanding stock options, restricted stock and equity-settled performance stock units granted by us represent the only dilutive effect reflected in diluted weighted average shares outstanding, none of which impact the numerator of the diluted net earnings per share computation. Stock options, restricted stock and equity-settled performance stock units excluded from the calculation of diluted net earnings per share because the effect would have been anti-dilutive, were as follows: Three Months Ended (in millions) August 27, August 28, Anti-dilutive stock-based compensation awards — 0.5 |
Segment Information
Segment Information | 3 Months Ended |
Aug. 27, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, Ruth’s Chris, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s, and The Capital Burger in North America as operating segments. The brands operate principally in the U.S. within full-service dining. We aggregate our operating segments into reportable segments based on a combination of the size, economic characteristics and sub-segment of full-service dining within which each brand operates. We have four reportable segments: (1) Olive Garden, (2) LongHorn Steakhouse, (3) Fine Dining and (4) Other Business. The Olive Garden segment includes the results of our company-owned Olive Garden restaurants in the U.S. and Canada. The LongHorn Steakhouse segment includes the results of our company-owned LongHorn Steakhouse restaurants in the U.S. The Fine Dining segment aggregates our premium brands that operate within the fine-dining sub-segment of full-service dining and includes the results of our company-owned Ruth’s Chris, The Capital Grille and Eddie V’s restaurants in the U.S. The Other Business segment aggregates our remaining brands and includes the results of our company-owned Cheddar’s Scratch Kitchen, Yard House, Seasons 52, Bahama Breeze and The Capital Burger restaurants in the U.S. and results from our franchise operations. External sales are derived principally from food and beverage sales. We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our reportable segments are predominantly in the U.S. There were no material transactions among reportable segments. Our management uses segment profit as the measure for assessing performance of our segments. Segment profit includes revenues and expenses directly attributable to restaurant-level results of operations (sometimes referred to as restaurant-level earnings). These expenses include food and beverage costs, restaurant labor costs, restaurant expenses and marketing expenses (collectively “restaurant and marketing expenses”). Non-cash lease-related expenses included in restaurant expenses (which is a component of segment profit) and lease-related depreciation and amortization are reported at the corporate level as these are expenses for which our operating segments are not being evaluated. Additionally, our lease-related right-of-use assets are not managed or evaluated at the operating segment level, but rather at the corporate level. The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP. (in millions) Olive Garden LongHorn Steakhouse Fine Dining 1 Other Business Corporate Consolidated For the three months ended August 27, 2023 Sales $ 1,227.9 $ 669.8 $ 273.5 $ 559.4 $ — $ 2,730.6 Restaurant and marketing expenses 965.6 552.4 233.8 475.1 (15.4) 2,211.5 Segment profit $ 262.3 $ 117.4 $ 39.7 $ 84.3 $ 15.4 $ 519.1 Depreciation and amortization $ 39.6 $ 18.2 $ 15.6 $ 25.1 $ 11.3 $ 109.8 Impairments and disposal of assets, net 0.2 — — — 2.9 3.1 Purchases of land, buildings and equipment 65.8 34.5 23.5 26.6 0.5 150.9 1 Includes Ruth’s Chris results from the date of acquisition forward. (in millions) Olive Garden LongHorn Steakhouse Fine Dining Other Business Corporate Consolidated For the three months ended August 28, 2022 Sales $ 1,130.7 $ 604.6 $ 183.4 $ 527.4 $ — $ 2,446.1 Restaurant and marketing expenses 914.6 512.6 153.4 455.1 (12.8) 2,022.9 Segment profit $ 216.1 $ 92.0 $ 30.0 $ 72.3 $ 12.8 $ 423.2 Depreciation and amortization $ 35.8 $ 16.8 $ 8.9 $ 24.3 $ 9.8 $ 95.6 Impairments and disposal of assets, net — — — — (4.9) (4.9) Purchases of land, buildings and equipment 56.1 28.0 11.3 25.6 1.8 122.8 A reconciliation of segment profit to earnings from continuing operations before income taxes is below. Three Months Ended (in millions) August 27, 2023 August 28, 2022 Segment profit $ 519.1 $ 423.2 Less general and administrative expenses (153.3) (88.3) Less depreciation and amortization (109.8) (95.6) Less impairments and disposal of assets, net (3.1) 4.9 Less interest, net (29.7) (19.8) Earnings before income taxes $ 223.2 $ 224.4 |
Impairments and Disposal of Ass
Impairments and Disposal of Assets, Net | 3 Months Ended |
Aug. 27, 2023 | |
Asset Impairment Charges [Abstract] | |
Impairments and Disposal of Assets, Net | Impairments and Disposal of Assets, Net Impairments and disposal of assets, net, in our accompanying consolidated statements of earnings were comprised of the following: Three Months Ended (in millions) August 27, 2023 August 28, 2022 Restaurant impairments $ 0.3 $ — Disposal (gains) losses 4.9 (4.9) Other (2.1) — Impairments and disposal of assets, net $ 3.1 $ (4.9) Restaurant impairments and disposal (gains) losses for the quarter ended August 27, 2023 were related to the decision to close four locations. Disposal (gains) losses for the quarter ended August 28, 2022 were related to the sale of properties. Other impacts for the quarter ended August 27, 2023 related to right-of-use asset adjustments on early lease terminations. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Aug. 27, 2023 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Accumulated Other Comprehensive Income (Loss) (AOCI) The components of AOCI, net of tax, for the quarter ended August 27, 2023 were as follows: (in millions) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Derivatives Benefit Plan Funding Position Accumulated Other Comprehensive Income (Loss) Balance at May 28, 2023 $ 4.5 $ 3.9 $ (5.2) $ 3.2 Gain (loss) — 12.5 — 12.5 Reclassification realized in net earnings — 0.1 0.2 0.3 Balance at August 27, 2023 $ 4.5 $ 16.5 $ (5.0) $ 16.0 The components of AOCI, net of tax, for the quarter ended August 28, 2022 were as follows: (in millions) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Derivatives Benefit Plan Funding Position Accumulated Other Comprehensive Income (Loss) Balances at May 29, 2022 $ 4.8 $ (0.4) $ (6.3) $ (1.9) Gain (loss) — 1.5 — 1.5 Reclassification realized in net earnings — 0.7 0.1 0.8 Balance at August 28, 2022 $ 4.8 $ 1.8 $ (6.2) $ 0.4 The following table presents the amounts and line items in our consolidated statements of earnings where adjustments reclassified from AOCI into net earnings were recorded. Amount Reclassified from AOCI into Net Earnings Three Months Ended (in millions) AOCI Components Location of Gain (Loss) Recognized in Earnings August 27, August 28, Derivatives Commodity contracts (1) $ (1.9) $ 0.1 Equity contracts (2) 1.3 (0.8) Interest rate contracts (3) — — Total before tax $ (0.6) $ (0.7) Tax (expense) benefit 0.5 — Net of tax $ (0.1) $ (0.7) Benefit plan funding position Recognized net actuarial gain (loss) - other plans (4) (0.2) (0.2) Total before tax $ (0.2) $ (0.2) Tax (expense) benefit — 0.1 Net of tax $ (0.2) $ (0.1) (1) Primarily included in food and beverage costs and restaurant expenses. See Note 11 for additional details. (2) Included in general and administrative expenses. See Note 11 for additional details. (3) Included in interest, net on our consolidated statement of earnings. (4) Included in the computation of net periodic benefit costs, which is a component of general and administrative expenses. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Aug. 27, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation We grant stock options for a fixed number of shares to certain employees with an exercise price equal to the fair value of the shares at the date of grant. We also grant restricted stock, restricted stock units and performance stock units with a fair value generally determined based on our closing stock price on the date of grant. In addition, we grant cash-settled stock units (Darden stock units) which are classified as liabilities and are marked to market as of the end of each period. The weighted-average fair value of non-qualified stock options and the related assumptions used in the Black-Scholes option pricing model for options granted during the periods presented, were as follows: Three Months Ended August 27, 2023 August 28, 2022 Weighted-average fair value $ 55.56 $ 36.20 Dividend yield 3.4 % 3.8 % Expected volatility of stock 42.2 % 42.0 % Risk-free interest rate 4.0 % 2.8 % Expected option life (in years) 5.9 5.9 Weighted-average exercise price per share $ 169.02 $ 121.47 The weighted-average grant date fair value of market-based performance stock units and the related assumptions used in the Monte Carlo simulation to record stock-based compensation for units granted during the periods presented, were as follows: Three Months Ended August 27, 2023 August 28, 2022 Dividend yield (1) 0.0 % 0.0 % Expected volatility of stock 32.3 % 55.5 % Risk-free interest rate 4.5 % 2.9 % Expected life (in years) 2.9 2.8 Weighted-average grant date fair value per unit $ 217.11 $ 137.73 (1) Assumes a reinvestment of dividends. The following table presents a summary of our stock-based compensation activity for the three months ended August 27, 2023. (in millions) Stock Restricted Equity-Settled Cash-Settled Darden Outstanding beginning of period 1.62 0.28 0.36 0.81 Awards granted 0.13 0.05 0.16 0.14 Awards granted performance impact — — — — Awards exercised/vested (0.23) (0.08) (0.16) (0.15) Awards forfeited — — — (0.01) Outstanding end of period 1.52 0.25 0.36 0.79 We recognized expense from stock-based compensation as follows: Three Months Ended (in millions) August 27, August 28, Stock options $ 4.2 $ 2.6 Restricted stock/restricted stock units 4.6 2.8 Equity-settled performance stock units 10.5 5.6 Cash-settled Darden stock units 9.7 8.2 Employee stock purchase plan 0.7 0.7 Director compensation program/other 0.6 0.4 Total stock-based compensation expense $ 30.3 $ 20.3 |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Aug. 27, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments as provided by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. We use financial derivatives to manage interest rate, commodity and compensation risks inherent in our business operations. Cash flows related to derivatives are included in operating activities. By using these instruments, we expose ourselves, from time to time, to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. We minimize this credit risk by entering into transactions with high quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices, or the market price of our common stock. We minimize this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. We designate commodity contracts and equity forward contracts as cash flow hedging instruments. We have two interest rate swap agreements. One is designated as a fair value hedge of the related debt and the other is designated as a cash flow hedge of the floating rate interest payments on the Term Loan Agreement entered into June 2023 or any related refinancing of the Term Loan. Further, we entered into equity forward contracts to hedge the risk of changes in future cash flows associated with recognized, employee-directed investments in our common stock within the non-qualified deferred compensation plan. We did not elect hedge accounting with the expectation that changes in the fair value of the equity forward contracts would offset changes in the fair value of our common stock investments in the non-qualified deferred compensation plan. The notional and fair values of our derivative contracts were as follows: Fair Values (in millions, except Number of Shares Outstanding Weighted-Average Notional Values Derivative Assets (1) Derivative Liabilities (1) August 27, 2023 August 27, May 28, August 27, May 28, Equity forwards: Designated 0.3 $139.71 $ 41.3 $ — $ 2.2 $ 1.7 $ — Not designated 0.5 128.59 58.7 — 5.1 2.6 — Total equity forwards (2) $ — $ 7.3 $ 4.3 $ — Commodity contracts: Designated N/A N/A $ 22.3 $ 0.7 $ — $ 2.6 $ 5.6 Not designated N/A N/A — — — — — Total commodity contracts (3) $ 0.7 $ — $ 2.6 $ 5.6 Interest rate related Designated - Fair Value Hedge N/A N/A $ 300.0 $ — $ — $ 52.3 $ 45.4 Designated - Cash Flow Hedge N/A N/A 500.0 17.6 — — — Not designated N/A N/A — — — — Total interest rate related $ 17.6 $ — $ 52.3 $ 45.4 Total derivative contracts $ 18.3 $ 7.3 $ 59.2 $ 51.0 (1) Derivative assets and liabilities are included in receivables, net and other current liabilities, as applicable, on our consolidated balance sheets. (2) Designated and undesignated equity forwards extend through July 2027. (3) Commodity contracts extend through June 2024. The effects of derivative instruments accounted for as cash flow hedging instruments in the consolidated statements of earnings were as follows: Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Reclassified from AOCI to Earnings Three Months Ended Three Months Ended (in millions) August 27, August 28, August 27, August 28, Equity (1) $ (2.2) $ (0.5) $ 1.3 $ (0.8) Commodity (2) 1.7 2.6 (1.9) 0.1 Interest rate (3) 17.9 — — — Total $ 17.4 $ 2.1 $ (0.6) $ (0.7) (1) Location of the gain (loss) reclassified from AOCI to earnings is general and administrative expenses. (2) Location of the gain (loss) reclassified from AOCI to earnings is food and beverage costs and restaurant expenses. (3) Location of the gain (loss) reclassified from AOCI to earnings is interest, net. The effects of derivative instruments in fair value hedging relationships in the consolidated statement of earnings were as follows: Amount of Gain (Loss) Recognized in Earnings on Derivatives Amount of Gain (Loss) Recognized in Earnings on Related Hedged Item Three Months Ended Three Months Ended (in millions) August 27, August 28, August 27, August 28, Interest rate (1)(2) $ (6.9) $ (6.3) $ 6.9 $ 6.3 (1) Location of the gain (loss) recognized in earnings on derivatives and related hedged item is interest, net. (2) Hedged item in fair value hedge relationship is debt. The effects of derivatives not designated as hedging instruments in the consolidated statements of earnings were as follows: Amount of Gain (Loss) Recognized in Earnings (in millions) Three Months Ended Location of Gain (Loss) Recognized in Earnings on Derivatives August 27, 2023 August 28, 2022 Food and beverage costs and restaurant expenses $ — $ — General and administrative expenses (0.1) (1.1) Total $ (0.1) $ (1.1) |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Aug. 27, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair values of cash equivalents, receivables, net, accounts payable, short-term debt and the Term Loan approximate their carrying amounts due to their short duration or market based interest rates. The following tables summarize the fair values of financial instruments measured at fair value on a recurring basis as of August 27, 2023 and May 28, 2023 . Items Measured at Fair Value at August 27, 2023 (in millions) Fair value Quoted prices Significant Significant Derivatives: Commodities futures, swaps & options (1) $ (1.9) $ — $ (1.9) $ — Equity forwards (2) (4.3) — (4.3) $ — Interest rate swaps - fair value hedge (3) (52.3) — (52.3) — Interest rate swaps - cash flow hedge (3) 17.6 — 17.6 — Total $ (40.9) $ — $ (40.9) $ — Items Measured at Fair Value at May 28, 2023 (in millions) Fair value Quoted prices Significant Significant Derivatives: Commodities futures, swaps & options (1) $ (5.6) $ — $ (5.6) $ — Equity forwards (2) 7.3 — 7.3 — Interest rate swaps - fair value hedge (3) (45.4) — (45.4) — Total $ (43.7) $ — $ (43.7) $ — (1) The fair value of our commodities futures, swaps and options is based on closing market prices of the contracts, inclusive of the risk of nonperformance. (2) The fair value of equity forwards is based on the closing market value of Darden stock, inclusive of the risk of nonperformance. (3) The fair value of our interest rate swap agreements is based on current and expected market interest rates, inclusive of the risk of nonperformance. The carrying value and fair value of long-term debt as of August 27, 2023, was $1.48 billion and $1.45 billion, respectively. The carrying value and fair value of long-term debt as of May 28, 2023, was $884.9 million and $857.0 million, respectively. The fair value of long-term debt, classified as Level 2 in the fair value hierarchy, is determined based on market prices or, if market prices are not available, the present value of the underlying cash flows discounted at our incremental borrowing rates. The fair value of non-financial assets measured at fair value on a non-recurring basis, classified as Level 2 in the fair value hierarchy, is determined based on third-party market appraisals. As of August 27, 2023 and May 28, 2023, adjustments to the fair values of non-financial assets measured at fair value on a non-recurring basis, classified as Level 2, were not material. The fair value of non-financial assets measured at fair value on a non-recurring basis, classified as Level 3 in the fair value hierarchy, is determined based on appraisals, sales prices of comparable assets, or estimates of discounted future cash flows. As of August 27, 2023, adjustments to the fair values of non-financial assets, classified as Level 3, were not material. As of May 28, 2023, long-lived assets held and used with a carrying amount of $10.0 million, primarily related to one |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Aug. 27, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As collateral for performance on contracts and as credit guarantees to banks and insurers, we are contingently liable for guarantees of subsidiary obligations under standby letters of credit. As of August 27, 2023 and May 28, 2023, we had $79.6 million and $85.3 million, respectively, of standby letters of credit related to workers’ compensation and general liabilities accrued in our consolidated financial statements. As of August 27, 2023 and May 28, 2023, we had $16.1 million and $15.2 million, respectively, of surety bonds related to other payments. Most surety bonds are renewable annually. As of August 27, 2023 and May 28, 2023, we had $84.3 million and $82.0 million, respectively, of guarantees associated with leased properties that have been assigned to third parties. These amounts represent the maximum potential amount of future payments under the guarantees. The fair value of the maximum potential future payments discounted at our weighted-average cost of capital as of August 27, 2023 and May 28, 2023, amounted to $68.8 million and $68.4 million, respectively. In the event of default by a third party, the indemnity and default clauses in our assignment agreements govern our ability to recover from and pursue the third party for damages incurred as a result of its default. We do not hold any third-party assets as collateral related to these assignment agreements, except to the extent that the assignment allows us to repossess the building and personal property. These guarantees expire over their respective lease terms, which range from fiscal 2024 through fiscal 2034. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Aug. 27, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On September 19, 2023, the Board of Directors declared a cash dividend of $1.31 per share payable on November 1, 2023 to all shareholders of record as of the close of business on October 10, 2023. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Pay vs Performance Disclosure | ||
Net earnings | $ 194.5 | $ 193 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Aug. 27, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Aug. 27, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. We operate on a 52/53-week fiscal year which ends on the last Sunday in May. Our fiscal year ending May 26, 2024 will contain 52 weeks of operation. Operating results for interim periods presented are not necessarily indicative of results that may be expected for the full fiscal year.These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023. We prepare our consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and costs and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassification | We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation. |
Derivative Instruments and Hedging Activities | We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments as provided by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. We use financial derivatives to manage interest rate, commodity and compensation risks inherent in our business operations. Cash flows related to derivatives are included in operating activities. By using these instruments, we expose ourselves, from time to time, to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. We minimize this credit risk by entering into transactions with high quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices, or the market price of our common stock. We minimize this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. We designate commodity contracts and equity forward contracts as cash flow hedging instruments. We have two interest rate swap agreements. One is designated as a fair value hedge of the related debt and the other is designated as a cash flow hedge of the floating rate interest payments on the Term Loan Agreement entered into June 2023 or any related refinancing of the Term Loan. Further, we entered into equity forward contracts to hedge the risk of changes in future cash flows associated with recognized, employee-directed investments in our common stock within the non-qualified deferred compensation plan. We did not elect hedge accounting with the expectation that changes in the fair value of the equity forward contracts would offset changes in the fair value of our common stock investments in the non-qualified deferred compensation plan. |
Acquisition of Ruth_s Chris S_2
Acquisition of Ruth’s Chris Steak House (Tables) | 3 Months Ended |
Aug. 27, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Preliminary Allocation of the Purchase Price | The preliminary allocation of the purchase price is as follows: Balances at (in millions) June 14, 2023 Current assets $ 45.6 Land, buildings and equipment 170.5 Operating lease right-of-use assets 291.6 Trademark 341.7 Other assets 12.0 Goodwill 339.5 Total assets acquired $ 1,200.9 Current liabilities 113.5 Deferred income taxes 79.5 Operating lease liabilities - non-current 276.3 Other liabilities 7.0 Total liabilities assumed $ 476.3 Net assets acquired $ 724.6 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Aug. 27, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract with Customer | Deferred revenue liabilities from contracts with customers included on our accompanying consolidated balance sheets was comprised of the following: (in millions) August 27, 2023 May 28, 2023 Unearned revenues Deferred gift card revenue $ 563.4 $ 537.0 Deferred gift card discounts (22.4) (25.5) Other 0.7 0.5 Total $ 541.7 $ 512.0 Other liabilities Deferred franchise fees - non-current $ 4.9 $ 2.7 The following table presents a rollforward of deferred gift card revenue. Three Months Ended (in millions) August 27, 2023 August 28, 2022 Beginning balance $ 537.0 $ 521.1 Acquired deferred gift card revenue 61.8 — Activations 130.1 114.4 Redemptions and breakage (165.5) (147.0) Ending balance $ 563.4 $ 488.5 |
Additional Financial Informat_2
Additional Financial Information (Tables) | 3 Months Ended |
Aug. 27, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Supplemental Balance Sheet Information | The components of lease assets and liabilities on the consolidated balance sheet were as follows: (in millions) Balance Sheet Classification August 27, 2023 May 28, 2023 Operating lease right-of-use assets Operating lease right-of-use assets $ 3,600.3 $ 3,373.9 Finance lease right-of-use assets Land, buildings and equipment, net 1,006.5 958.1 Total lease assets, net $ 4,606.8 $ 4,332.0 Operating lease liabilities - current Other current liabilities $ 193.9 $ 182.5 Finance lease liabilities - current Other current liabilities 12.5 13.5 Operating lease liabilities - non-current Operating lease liabilities - non-current 3,877.5 3,667.6 Finance lease liabilities - non-current Other liabilities 1,229.0 1,172.6 Total lease liabilities $ 5,312.9 $ 5,036.2 |
Schedule of Supplemental Cash Flow Information | Cash paid for interest and income taxes were as follows: Three Months Ended (in millions) August 27, 2023 August 28, 2022 Interest, net of amounts capitalized $ 34.3 $ 21.1 Income taxes, net of refunds 2.0 (176.7) Non-cash investing and financing activities were as follows: Three Months Ended (in millions) August 27, 2023 August 28, 2022 Increase in land, buildings and equipment through accrued purchases $ 64.0 $ 75.9 Right-of-use assets obtained in exchange for new operating lease liabilities (1) 298.0 49.6 Right-of-use assets obtained in exchange for new finance lease liabilities 45.3 41.5 Net change in right-of-use assets mainly due to lease modifications resulting in reclassification of leases from operating to finance 2.1 25.3 (1) Right-of-use assets obtained in fiscal 2024 includes $291.6 million from the acquisition of Ruth’s Chris. |
Net Earnings per Share (Tables)
Net Earnings per Share (Tables) | 3 Months Ended |
Aug. 27, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Stock options, restricted stock and equity-settled performance stock units excluded from the calculation of diluted net earnings per share because the effect would have been anti-dilutive, were as follows: Three Months Ended (in millions) August 27, August 28, Anti-dilutive stock-based compensation awards — 0.5 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Aug. 27, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP. (in millions) Olive Garden LongHorn Steakhouse Fine Dining 1 Other Business Corporate Consolidated For the three months ended August 27, 2023 Sales $ 1,227.9 $ 669.8 $ 273.5 $ 559.4 $ — $ 2,730.6 Restaurant and marketing expenses 965.6 552.4 233.8 475.1 (15.4) 2,211.5 Segment profit $ 262.3 $ 117.4 $ 39.7 $ 84.3 $ 15.4 $ 519.1 Depreciation and amortization $ 39.6 $ 18.2 $ 15.6 $ 25.1 $ 11.3 $ 109.8 Impairments and disposal of assets, net 0.2 — — — 2.9 3.1 Purchases of land, buildings and equipment 65.8 34.5 23.5 26.6 0.5 150.9 1 Includes Ruth’s Chris results from the date of acquisition forward. (in millions) Olive Garden LongHorn Steakhouse Fine Dining Other Business Corporate Consolidated For the three months ended August 28, 2022 Sales $ 1,130.7 $ 604.6 $ 183.4 $ 527.4 $ — $ 2,446.1 Restaurant and marketing expenses 914.6 512.6 153.4 455.1 (12.8) 2,022.9 Segment profit $ 216.1 $ 92.0 $ 30.0 $ 72.3 $ 12.8 $ 423.2 Depreciation and amortization $ 35.8 $ 16.8 $ 8.9 $ 24.3 $ 9.8 $ 95.6 Impairments and disposal of assets, net — — — — (4.9) (4.9) Purchases of land, buildings and equipment 56.1 28.0 11.3 25.6 1.8 122.8 |
Schedule of Reconciliation of Operating Profit (Loss) from Segments to Consolidated | A reconciliation of segment profit to earnings from continuing operations before income taxes is below. Three Months Ended (in millions) August 27, 2023 August 28, 2022 Segment profit $ 519.1 $ 423.2 Less general and administrative expenses (153.3) (88.3) Less depreciation and amortization (109.8) (95.6) Less impairments and disposal of assets, net (3.1) 4.9 Less interest, net (29.7) (19.8) Earnings before income taxes $ 223.2 $ 224.4 |
Impairments and Disposal of A_2
Impairments and Disposal of Assets, Net (Tables) | 3 Months Ended |
Aug. 27, 2023 | |
Asset Impairment Charges [Abstract] | |
Schedule of Impairments And Disposal Of Assets | Impairments and disposal of assets, net, in our accompanying consolidated statements of earnings were comprised of the following: Three Months Ended (in millions) August 27, 2023 August 28, 2022 Restaurant impairments $ 0.3 $ — Disposal (gains) losses 4.9 (4.9) Other (2.1) — Impairments and disposal of assets, net $ 3.1 $ (4.9) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Aug. 27, 2023 | |
Stockholders' Equity Note [Abstract] | |
Schedule of AOCI | The components of AOCI, net of tax, for the quarter ended August 27, 2023 were as follows: (in millions) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Derivatives Benefit Plan Funding Position Accumulated Other Comprehensive Income (Loss) Balance at May 28, 2023 $ 4.5 $ 3.9 $ (5.2) $ 3.2 Gain (loss) — 12.5 — 12.5 Reclassification realized in net earnings — 0.1 0.2 0.3 Balance at August 27, 2023 $ 4.5 $ 16.5 $ (5.0) $ 16.0 The components of AOCI, net of tax, for the quarter ended August 28, 2022 were as follows: (in millions) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Derivatives Benefit Plan Funding Position Accumulated Other Comprehensive Income (Loss) Balances at May 29, 2022 $ 4.8 $ (0.4) $ (6.3) $ (1.9) Gain (loss) — 1.5 — 1.5 Reclassification realized in net earnings — 0.7 0.1 0.8 Balance at August 28, 2022 $ 4.8 $ 1.8 $ (6.2) $ 0.4 |
Schedule of Reclassification out of AOCI | The following table presents the amounts and line items in our consolidated statements of earnings where adjustments reclassified from AOCI into net earnings were recorded. Amount Reclassified from AOCI into Net Earnings Three Months Ended (in millions) AOCI Components Location of Gain (Loss) Recognized in Earnings August 27, August 28, Derivatives Commodity contracts (1) $ (1.9) $ 0.1 Equity contracts (2) 1.3 (0.8) Interest rate contracts (3) — — Total before tax $ (0.6) $ (0.7) Tax (expense) benefit 0.5 — Net of tax $ (0.1) $ (0.7) Benefit plan funding position Recognized net actuarial gain (loss) - other plans (4) (0.2) (0.2) Total before tax $ (0.2) $ (0.2) Tax (expense) benefit — 0.1 Net of tax $ (0.2) $ (0.1) (1) Primarily included in food and beverage costs and restaurant expenses. See Note 11 for additional details. (2) Included in general and administrative expenses. See Note 11 for additional details. (3) Included in interest, net on our consolidated statement of earnings. (4) Included in the computation of net periodic benefit costs, which is a component of general and administrative expenses. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Aug. 27, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-average fair value of non-qualified stock options and the related assumptions used in the Black-Scholes option pricing model for options granted during the periods presented, were as follows: Three Months Ended August 27, 2023 August 28, 2022 Weighted-average fair value $ 55.56 $ 36.20 Dividend yield 3.4 % 3.8 % Expected volatility of stock 42.2 % 42.0 % Risk-free interest rate 4.0 % 2.8 % Expected option life (in years) 5.9 5.9 Weighted-average exercise price per share $ 169.02 $ 121.47 The weighted-average grant date fair value of market-based performance stock units and the related assumptions used in the Monte Carlo simulation to record stock-based compensation for units granted during the periods presented, were as follows: Three Months Ended August 27, 2023 August 28, 2022 Dividend yield (1) 0.0 % 0.0 % Expected volatility of stock 32.3 % 55.5 % Risk-free interest rate 4.5 % 2.9 % Expected life (in years) 2.9 2.8 Weighted-average grant date fair value per unit $ 217.11 $ 137.73 (1) Assumes a reinvestment of dividends. |
Schedule of Stock-Based Compensation Activity | The following table presents a summary of our stock-based compensation activity for the three months ended August 27, 2023. (in millions) Stock Restricted Equity-Settled Cash-Settled Darden Outstanding beginning of period 1.62 0.28 0.36 0.81 Awards granted 0.13 0.05 0.16 0.14 Awards granted performance impact — — — — Awards exercised/vested (0.23) (0.08) (0.16) (0.15) Awards forfeited — — — (0.01) Outstanding end of period 1.52 0.25 0.36 0.79 |
Schedule of Recognized Expense From Stock-Based Compensation | We recognized expense from stock-based compensation as follows: Three Months Ended (in millions) August 27, August 28, Stock options $ 4.2 $ 2.6 Restricted stock/restricted stock units 4.6 2.8 Equity-settled performance stock units 10.5 5.6 Cash-settled Darden stock units 9.7 8.2 Employee stock purchase plan 0.7 0.7 Director compensation program/other 0.6 0.4 Total stock-based compensation expense $ 30.3 $ 20.3 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended |
Aug. 27, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Notional and Fair Values of Derivative Contracts | The notional and fair values of our derivative contracts were as follows: Fair Values (in millions, except Number of Shares Outstanding Weighted-Average Notional Values Derivative Assets (1) Derivative Liabilities (1) August 27, 2023 August 27, May 28, August 27, May 28, Equity forwards: Designated 0.3 $139.71 $ 41.3 $ — $ 2.2 $ 1.7 $ — Not designated 0.5 128.59 58.7 — 5.1 2.6 — Total equity forwards (2) $ — $ 7.3 $ 4.3 $ — Commodity contracts: Designated N/A N/A $ 22.3 $ 0.7 $ — $ 2.6 $ 5.6 Not designated N/A N/A — — — — — Total commodity contracts (3) $ 0.7 $ — $ 2.6 $ 5.6 Interest rate related Designated - Fair Value Hedge N/A N/A $ 300.0 $ — $ — $ 52.3 $ 45.4 Designated - Cash Flow Hedge N/A N/A 500.0 17.6 — — — Not designated N/A N/A — — — — Total interest rate related $ 17.6 $ — $ 52.3 $ 45.4 Total derivative contracts $ 18.3 $ 7.3 $ 59.2 $ 51.0 (1) Derivative assets and liabilities are included in receivables, net and other current liabilities, as applicable, on our consolidated balance sheets. (2) Designated and undesignated equity forwards extend through July 2027. (3) Commodity contracts extend through June 2024. |
Schedule of Effects of Derivative Instruments in Hedging Relationships | The effects of derivative instruments accounted for as cash flow hedging instruments in the consolidated statements of earnings were as follows: Amount of Gain (Loss) Recognized in AOCI Amount of Gain (Loss) Reclassified from AOCI to Earnings Three Months Ended Three Months Ended (in millions) August 27, August 28, August 27, August 28, Equity (1) $ (2.2) $ (0.5) $ 1.3 $ (0.8) Commodity (2) 1.7 2.6 (1.9) 0.1 Interest rate (3) 17.9 — — — Total $ 17.4 $ 2.1 $ (0.6) $ (0.7) (1) Location of the gain (loss) reclassified from AOCI to earnings is general and administrative expenses. (2) Location of the gain (loss) reclassified from AOCI to earnings is food and beverage costs and restaurant expenses. The effects of derivative instruments in fair value hedging relationships in the consolidated statement of earnings were as follows: Amount of Gain (Loss) Recognized in Earnings on Derivatives Amount of Gain (Loss) Recognized in Earnings on Related Hedged Item Three Months Ended Three Months Ended (in millions) August 27, August 28, August 27, August 28, Interest rate (1)(2) $ (6.9) $ (6.3) $ 6.9 $ 6.3 (1) Location of the gain (loss) recognized in earnings on derivatives and related hedged item is interest, net. (2) Hedged item in fair value hedge relationship is debt. The effects of derivatives not designated as hedging instruments in the consolidated statements of earnings were as follows: Amount of Gain (Loss) Recognized in Earnings (in millions) Three Months Ended Location of Gain (Loss) Recognized in Earnings on Derivatives August 27, 2023 August 28, 2022 Food and beverage costs and restaurant expenses $ — $ — General and administrative expenses (0.1) (1.1) Total $ (0.1) $ (1.1) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Aug. 27, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Values of Financial Instruments Measured at Fair Value on Recurring Basis | The following tables summarize the fair values of financial instruments measured at fair value on a recurring basis as of August 27, 2023 and May 28, 2023 . Items Measured at Fair Value at August 27, 2023 (in millions) Fair value Quoted prices Significant Significant Derivatives: Commodities futures, swaps & options (1) $ (1.9) $ — $ (1.9) $ — Equity forwards (2) (4.3) — (4.3) $ — Interest rate swaps - fair value hedge (3) (52.3) — (52.3) — Interest rate swaps - cash flow hedge (3) 17.6 — 17.6 — Total $ (40.9) $ — $ (40.9) $ — Items Measured at Fair Value at May 28, 2023 (in millions) Fair value Quoted prices Significant Significant Derivatives: Commodities futures, swaps & options (1) $ (5.6) $ — $ (5.6) $ — Equity forwards (2) 7.3 — 7.3 — Interest rate swaps - fair value hedge (3) (45.4) — (45.4) — Total $ (43.7) $ — $ (43.7) $ — (1) The fair value of our commodities futures, swaps and options is based on closing market prices of the contracts, inclusive of the risk of nonperformance. (2) The fair value of equity forwards is based on the closing market value of Darden stock, inclusive of the risk of nonperformance. (3) The fair value of our interest rate swap agreements is based on current and expected market interest rates, inclusive of the risk of nonperformance. |
Basis of Presentation (Details)
Basis of Presentation (Details) | Aug. 27, 2023 restaurant location |
Entity Operated Units, Joint Venture | North America | |
Summary Of Significant Accounting Policies [Line Items] | |
Number of restaurants | 2 |
Entity Operated Units, Contractual Agreements | North America | |
Summary Of Significant Accounting Policies [Line Items] | |
Number of restaurants | location | 4 |
Franchised Units | North America | |
Summary Of Significant Accounting Policies [Line Items] | |
Number of restaurants | 92 |
Franchised Units | Latin America, the Caribbean, Asia and the Middle East | |
Summary Of Significant Accounting Policies [Line Items] | |
Number of restaurants | 53 |
Acquisition of Ruth_s Chris S_3
Acquisition of Ruth’s Chris Steak House - Narrative (Details) $ in Millions | 3 Months Ended | ||||
Jun. 14, 2023 USD ($) location | May 31, 2023 USD ($) | Aug. 27, 2023 USD ($) | Aug. 28, 2022 USD ($) | May 28, 2023 USD ($) | |
Business Acquisition [Line Items] | |||||
Proceeds from issuance of long-term debt | $ 600 | $ 0 | |||
Goodwill | 1,376.9 | $ 1,037.4 | |||
Line of Credit | Unsecured Debt | |||||
Business Acquisition [Line Items] | |||||
Proceeds from issuance of long-term debt | $ 600 | ||||
Credit agreement borrowing capacity | $ 600 | ||||
Term of credit agreement | 3 years | ||||
Line of Credit | Unsecured Debt | Secured Overnight Financing Rate (SOFR) | |||||
Business Acquisition [Line Items] | |||||
Debt instrument, adjustment rate | 0.10% | ||||
Basis spread on rates | 1% | ||||
Line of Credit | Unsecured Debt | Secured Overnight Financing Rate (SOFR) | Term Loan Agreement, BBB Equivalent Credit Rating | |||||
Business Acquisition [Line Items] | |||||
Basis spread on rates | 1.125% | ||||
Line of Credit | Unsecured Debt | Fed Funds Rate | |||||
Business Acquisition [Line Items] | |||||
Basis spread on rates | 0.50% | ||||
Line of Credit | Unsecured Debt | Base Rate | Term Loan Agreement, BBB Equivalent Credit Rating | |||||
Business Acquisition [Line Items] | |||||
Basis spread on rates | 0.125% | ||||
Ruth’s Chris | |||||
Business Acquisition [Line Items] | |||||
Equity interest acquired | 10,000% | ||||
Consideration for equity interest acquired | $ 724.6 | ||||
Goodwill | 339.5 | ||||
Goodwill expected to be deductible for tax purposes | $ 15.2 | ||||
Acquisition and related integration efforts incurred expenses | $ 24.8 | ||||
Ruth’s Chris | Minimum | |||||
Business Acquisition [Line Items] | |||||
Depreciation period of buildings and equipment | 2 years | ||||
Ruth’s Chris | Maximum | |||||
Business Acquisition [Line Items] | |||||
Depreciation period of buildings and equipment | 30 years | ||||
Ruth’s Chris | Entity Operated Units | |||||
Business Acquisition [Line Items] | |||||
Number of restaurant acquired | location | 77 | ||||
Ruth’s Chris | Franchised Units | |||||
Business Acquisition [Line Items] | |||||
Number of restaurant acquired | location | 74 | ||||
Ruth’s Chris | Entity Operated Units, Contractual Agreements | |||||
Business Acquisition [Line Items] | |||||
Number of restaurant acquired | location | 4 |
Acquisition of Ruth_s Chris S_4
Acquisition of Ruth’s Chris Steak House - Schedule of Preliminary Allocation of the Purchase Price (Details) - USD ($) $ in Millions | Aug. 27, 2023 | Jun. 14, 2023 | May 28, 2023 |
Business Acquisition [Line Items] | |||
Goodwill | $ 1,376.9 | $ 1,037.4 | |
Ruth’s Chris | |||
Business Acquisition [Line Items] | |||
Current assets | $ 45.6 | ||
Land, buildings and equipment | 170.5 | ||
Operating lease right-of-use assets | 291.6 | ||
Trademark | 341.7 | ||
Other assets | 12 | ||
Goodwill | 339.5 | ||
Total assets acquired | 1,200.9 | ||
Current liabilities | 113.5 | ||
Deferred income taxes | 79.5 | ||
Operating lease liabilities - non-current | 276.3 | ||
Other liabilities | 7 | ||
Total liabilities assumed | 476.3 | ||
Net assets acquired | $ 724.6 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Deferred Revenue from Contract with Customer (Details) - USD ($) $ in Millions | Aug. 27, 2023 | May 28, 2023 | Aug. 28, 2022 | May 29, 2022 |
Unearned revenues | ||||
Total | $ 541.7 | $ 512 | ||
Other liabilities | ||||
Deferred franchise fees - non-current | 4.9 | 2.7 | ||
Gift Card | ||||
Unearned revenues | ||||
Unearned revenues | 563.4 | 537 | $ 488.5 | $ 521.1 |
Deferred gift card discounts | (22.4) | (25.5) | ||
Other | ||||
Unearned revenues | ||||
Unearned revenues | $ 0.7 | $ 0.5 |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Deferred Gift Card Revenue (Details) - Gift Card - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Change in Contract with Customer, Liability [Roll Forward] | ||
Beginning balance | $ 537 | $ 521.1 |
Acquired deferred gift card revenue | 61.8 | 0 |
Activations | 130.1 | 114.4 |
Redemptions and breakage | (165.5) | (147) |
Ending balance | $ 563.4 | $ 488.5 |
Additional Financial Informat_3
Additional Financial Information - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions | Aug. 27, 2023 | May 28, 2023 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Operating lease right-of-use assets | $ 3,600.3 | $ 3,373.9 |
Finance lease right-of-use assets | $ 1,006.5 | $ 958.1 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Carrying amount of long-lived assets held and used | Carrying amount of long-lived assets held and used |
Total lease assets, net | $ 4,606.8 | $ 4,332 |
Operating lease liabilities - current | $ 193.9 | $ 182.5 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | Other Liabilities, Current |
Finance lease liabilities - current | $ 12.5 | $ 13.5 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | Other Liabilities, Current |
Operating lease liabilities - non-current | $ 3,877.5 | $ 3,667.6 |
Finance lease liabilities - non-current | $ 1,229 | $ 1,172.6 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other liabilities | Other liabilities |
Total lease liabilities | $ 5,312.9 | $ 5,036.2 |
Additional Financial Informat_4
Additional Financial Information - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Jun. 14, 2023 | Aug. 27, 2023 | Aug. 28, 2022 | May 28, 2023 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Interest, net of amounts capitalized | $ 34.3 | $ 21.1 | ||
Income taxes, net of refunds | 2 | (176.7) | ||
Increase in land, buildings and equipment through accrued purchases | 64 | 75.9 | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | 298 | 49.6 | ||
Right-of-use assets obtained in exchange for new finance lease liabilities | 45.3 | 41.5 | ||
Net change in right-of-use assets mainly due to lease modifications resulting in reclassification of leases from operating to finance | 2.1 | 25.3 | ||
Restricted cash | $ 48.4 | $ 58.4 | $ 48.4 | |
Ruth’s Chris | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 291.6 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 12.70% | 13.70% |
Tax position, change is reasonably possible in the next twelve months | $ 8.4 |
Net Earnings per Share (Details
Net Earnings per Share (Details) - shares shares in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive stock-based compensation awards (in shares) | 0 | 0.5 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 3 Months Ended |
Aug. 27, 2023 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Segment Information - Schedule
Segment Information - Schedule of Segment Reporting (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Segment Reporting Information [Line Items] | ||
Sales | $ 2,730.6 | $ 2,446.1 |
Restaurant and marketing expenses | 2,211.5 | 2,022.9 |
Segment profit | 519.1 | 423.2 |
Depreciation and amortization | 109.8 | 95.6 |
Impairments and disposal of assets, net | 3.1 | (4.9) |
Purchases of land, buildings and equipment | 150.9 | 122.8 |
Operating Segments | Olive Garden | ||
Segment Reporting Information [Line Items] | ||
Sales | 1,227.9 | 1,130.7 |
Restaurant and marketing expenses | 965.6 | 914.6 |
Segment profit | 262.3 | 216.1 |
Depreciation and amortization | 39.6 | 35.8 |
Impairments and disposal of assets, net | 0.2 | 0 |
Purchases of land, buildings and equipment | 65.8 | 56.1 |
Operating Segments | LongHorn Steakhouse | ||
Segment Reporting Information [Line Items] | ||
Sales | 669.8 | 604.6 |
Restaurant and marketing expenses | 552.4 | 512.6 |
Segment profit | 117.4 | 92 |
Depreciation and amortization | 18.2 | 16.8 |
Impairments and disposal of assets, net | 0 | 0 |
Purchases of land, buildings and equipment | 34.5 | 28 |
Operating Segments | Fine Dining | ||
Segment Reporting Information [Line Items] | ||
Sales | 273.5 | 183.4 |
Restaurant and marketing expenses | 233.8 | 153.4 |
Segment profit | 39.7 | 30 |
Depreciation and amortization | 15.6 | 8.9 |
Impairments and disposal of assets, net | 0 | 0 |
Purchases of land, buildings and equipment | 23.5 | 11.3 |
Operating Segments | Other Business | ||
Segment Reporting Information [Line Items] | ||
Sales | 559.4 | 527.4 |
Restaurant and marketing expenses | 475.1 | 455.1 |
Segment profit | 84.3 | 72.3 |
Depreciation and amortization | 25.1 | 24.3 |
Impairments and disposal of assets, net | 0 | 0 |
Purchases of land, buildings and equipment | 26.6 | 25.6 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Sales | 0 | 0 |
Restaurant and marketing expenses | (15.4) | (12.8) |
Segment profit | 15.4 | 12.8 |
Depreciation and amortization | 11.3 | 9.8 |
Impairments and disposal of assets, net | 2.9 | (4.9) |
Purchases of land, buildings and equipment | $ 0.5 | $ 1.8 |
Segment Information - Schedul_2
Segment Information - Schedule of Reconciliation of Segment Profit to Earnings (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Segment Reporting [Abstract] | ||
Segment profit | $ 519.1 | $ 423.2 |
Less general and administrative expenses | (153.3) | (88.3) |
Less depreciation and amortization | (109.8) | (95.6) |
Less impairments and disposal of assets, net | (3.1) | 4.9 |
Less interest, net | (29.7) | (19.8) |
Earnings before income taxes | $ 223.2 | $ 224.4 |
Impairments and Disposal of A_3
Impairments and Disposal of Assets, Net - Schedule of Impairments and Disposal of Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Asset Impairment Charges [Abstract] | ||
Restaurant impairments | $ 0.3 | $ 0 |
Disposal (gains) losses | 4.9 | (4.9) |
Other | (2.1) | 0 |
Impairments and disposal of assets, net | $ 3.1 | $ (4.9) |
Impairments and Disposal of A_4
Impairments and Disposal of Assets, Net - Narrative (Details) | 3 Months Ended |
Aug. 27, 2023 location | |
Asset Impairment Charges [Abstract] | |
Number of locations closed | 4 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Components of AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | $ 2,201.5 | $ 2,198.2 |
Gain (loss) | 12.5 | 1.5 |
Reclassification realized in net earnings | 0.3 | 0.8 |
Ending balance | 2,148 | 2,064.1 |
Foreign Currency Translation Adjustment | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 4.5 | 4.8 |
Gain (loss) | 0 | 0 |
Reclassification realized in net earnings | 0 | 0 |
Ending balance | 4.5 | 4.8 |
Unrealized Gains (Losses) on Derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 3.9 | (0.4) |
Gain (loss) | 12.5 | 1.5 |
Reclassification realized in net earnings | 0.1 | 0.7 |
Ending balance | 16.5 | 1.8 |
Benefit Plan Funding Position | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (5.2) | (6.3) |
Gain (loss) | 0 | 0 |
Reclassification realized in net earnings | 0.2 | 0.1 |
Ending balance | (5) | (6.2) |
Accumulated Other Comprehensive Income (Loss) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 3.2 | (1.9) |
Ending balance | $ 16 | $ 0.4 |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Reclassification Adjustments out of AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Less general and administrative expenses | $ (153.3) | $ (88.3) |
Total before tax | 223.2 | 224.4 |
Tax (expense) benefit | (28.4) | (30.8) |
Net earnings | 194.5 | 193 |
Amount Reclassified from AOCI into Net Earnings | Derivatives | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Total before tax | (0.6) | (0.7) |
Tax (expense) benefit | 0.5 | 0 |
Net earnings | (0.1) | (0.7) |
Amount Reclassified from AOCI into Net Earnings | Derivatives | Commodity contracts | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Food and beverage costs and restaurant expenses | (1.9) | 0.1 |
Amount Reclassified from AOCI into Net Earnings | Derivatives | Equity contracts | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Restaurant labor costs and general and administrative expenses | 1.3 | (0.8) |
Amount Reclassified from AOCI into Net Earnings | Derivatives | Interest rate contracts | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Restaurant labor costs and general and administrative expenses | 0 | 0 |
Amount Reclassified from AOCI into Net Earnings | Benefit plan funding position | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Total before tax | (0.2) | (0.2) |
Tax (expense) benefit | 0 | 0.1 |
Net earnings | (0.2) | (0.1) |
Amount Reclassified from AOCI into Net Earnings | Benefit plan funding position | Other plans | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Less general and administrative expenses | $ (0.2) | $ (0.2) |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) - $ / shares | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted-average fair value (in dollars per share) | $ 55.56 | $ 36.20 |
Dividend yield | 3.40% | 3.80% |
Expected volatility of stock | 42.20% | 42% |
Risk-free interest rate | 4% | 2.80% |
Expected option life (in years) | 5 years 10 months 24 days | 5 years 10 months 24 days |
Weighted-average exercise price per share (in dollars per share) | $ 169.02 | $ 121.47 |
Equity-Settled Performance Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yield | 0% | 0% |
Expected volatility of stock | 32.30% | 55.50% |
Risk-free interest rate | 4.50% | 2.90% |
Expected option life (in years) | 2 years 10 months 24 days | 2 years 9 months 18 days |
Weighted-average exercise price per share (in dollars per share) | $ 217.11 | $ 137.73 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Stock-Based Compensation Activity (Details) shares in Thousands | 3 Months Ended |
Aug. 27, 2023 shares | |
Stock Options | |
Outstanding shares beginning of period (in shares) | 1,620 |
Awards granted (in shares) | 130 |
Awards exercised/vested (in shares) | (230) |
Awards forfeited (in shares) | 0 |
Outstanding shares end of period (in shares) | 1,520 |
Restricted Stock/ Restricted Stock Units | |
Non-Option Awards | |
Outstanding shares beginning of period (in shares) | 280 |
Awards granted (in shares) | 50 |
Awards granted performance impact (in shares) | 0 |
Awards exercised/vested (in shares) | (80) |
Awards forfeited (in shares) | 0 |
Outstanding shares end of period (in shares) | 250 |
Equity-Settled Performance Stock Units | |
Stock Options | |
Awards granted performance impact (in shares) | 0 |
Non-Option Awards | |
Outstanding shares beginning of period (in shares) | 360 |
Awards granted (in shares) | 160 |
Awards granted performance impact (in shares) | 0 |
Awards exercised/vested (in shares) | (160) |
Awards forfeited (in shares) | 0 |
Outstanding shares end of period (in shares) | 360 |
Cash-Settled Darden Stock Units | |
Non-Option Awards | |
Outstanding shares beginning of period (in shares) | 810 |
Awards granted (in shares) | 140 |
Awards granted performance impact (in shares) | 0 |
Awards exercised/vested (in shares) | (150) |
Awards forfeited (in shares) | (10) |
Outstanding shares end of period (in shares) | 790 |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of Recognized Expense From Stock-Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 30.3 | $ 20.3 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 4.2 | 2.6 |
Restricted stock/restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 4.6 | 2.8 |
Equity-settled performance stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 10.5 | 5.6 |
Cash-settled Darden stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 9.7 | 8.2 |
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 0.7 | 0.7 |
Director compensation program/other | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 0.6 | $ 0.4 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Narrative (Details) $ in Millions | 3 Months Ended |
Aug. 27, 2023 USD ($) derivative_instrument | |
Derivative [Line Items] | |
Cash flow hedge gains to be reclassified within twelve months | $ | $ 7.4 |
Interest rate contracts | |
Derivative [Line Items] | |
Number of interest rate swap agreements | 2 |
Interest rate contracts | Designated as Hedging Instruments | Fair Value Hedging | |
Derivative [Line Items] | |
Number of interest rate swap agreements | 1 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Schedule of Notional and Fair Values of Derivative Contracts Designated and Not Designated as Hedging Instruments (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | May 28, 2023 | |
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 18.3 | $ 7.3 |
Derivative liabilities | 59.2 | 51 |
Equity forwards: | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 0 | 7.3 |
Derivative liabilities | $ 4.3 | 0 |
Equity forwards: | Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Number of shares outstanding (in shares) | 0.3 | |
Weighted-average per share forward rates (in dollars per share) | $ 139.71 | |
Notional Values | $ 41.3 | |
Derivative assets | 0 | 2.2 |
Derivative liabilities | $ 1.7 | 0 |
Equity forwards: | Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Number of shares outstanding (in shares) | 0.5 | |
Weighted-average per share forward rates (in dollars per share) | $ 128.59 | |
Notional Values | $ 58.7 | |
Derivative assets | 0 | 5.1 |
Derivative liabilities | 2.6 | 0 |
Commodity contracts | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 0.7 | 0 |
Derivative liabilities | 2.6 | 5.6 |
Commodity contracts | Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Notional Values | 22.3 | |
Derivative assets | 0.7 | 0 |
Derivative liabilities | 2.6 | 5.6 |
Commodity contracts | Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Notional Values | 0 | |
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Interest rate contracts | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 17.6 | 0 |
Derivative liabilities | 52.3 | 45.4 |
Interest rate contracts | Designated as Hedging Instruments | Fair Value Hedging | ||
Derivatives, Fair Value [Line Items] | ||
Notional Values | 300 | |
Derivative assets | 0 | 0 |
Derivative liabilities | 52.3 | 45.4 |
Interest rate contracts | Designated as Hedging Instruments | Cash Flow Hedging | ||
Derivatives, Fair Value [Line Items] | ||
Notional Values | 500 | |
Derivative assets | 17.6 | 0 |
Derivative liabilities | 0 | 0 |
Interest rate contracts | Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 0 | 0 |
Derivative liabilities | $ 0 | $ 0 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities - Schedule of Effects of Derivative Instruments in Cash Flow Hedging Relationships (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in AOCI | $ 17.4 | $ 2.1 |
Amount of Gain (Loss) Reclassified from AOCI to Earnings | (0.6) | (0.7) |
Equity forwards: | General and Administrative Expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in AOCI | (2.2) | (0.5) |
Amount of Gain (Loss) Reclassified from AOCI to Earnings | 1.3 | (0.8) |
Commodity contracts | Food and beverage costs and restaurant expenses | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in AOCI | 1.7 | 2.6 |
Amount of Gain (Loss) Reclassified from AOCI to Earnings | (1.9) | 0.1 |
Interest rate contracts | Interest, Net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in AOCI | 17.9 | 0 |
Amount of Gain (Loss) Reclassified from AOCI to Earnings | $ 0 | $ 0 |
Derivative Instruments and He_6
Derivative Instruments and Hedging Activities - Schedule of Effects of Derivative Instruments in Fair Value Hedging Relationships (Details) - Interest rate contracts - Interest, Net - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | $ (6.9) | $ (6.3) |
Amount of Gain (Loss) Recognized in Earnings on Related Hedged Item | $ 6.9 | $ 6.3 |
Derivative Instruments and He_7
Derivative Instruments and Hedging Activities - Schedule of Effects of Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 27, 2023 | Aug. 28, 2022 | |
Derivative [Line Items] | ||
Amount of Gain (Loss) Recognized in Earnings | $ (0.1) | $ (1.1) |
Food and beverage costs and restaurant expenses | ||
Derivative [Line Items] | ||
Amount of Gain (Loss) Recognized in Earnings | 0 | 0 |
General and administrative expenses | ||
Derivative [Line Items] | ||
Amount of Gain (Loss) Recognized in Earnings | $ (0.1) | $ (1.1) |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Financial Instruments Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Aug. 27, 2023 | May 28, 2023 |
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Total | $ (40.9) | $ (43.7) |
Commodities futures, swaps & options | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | (1.9) | (5.6) |
Equity forwards | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | (4.3) | 7.3 |
Interest rate swaps - cash flow hedge | Designated as Hedging Instruments | Fair Value Hedging | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | (52.3) | (45.4) |
Interest rate swaps - cash flow hedge | Designated as Hedging Instruments | Cash Flow Hedging | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 17.6 | |
Quoted prices in active market for identical assets (liabilities) (Level 1) | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Total | 0 | 0 |
Quoted prices in active market for identical assets (liabilities) (Level 1) | Commodities futures, swaps & options | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Quoted prices in active market for identical assets (liabilities) (Level 1) | Equity forwards | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Quoted prices in active market for identical assets (liabilities) (Level 1) | Interest rate swaps - cash flow hedge | Designated as Hedging Instruments | Fair Value Hedging | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Quoted prices in active market for identical assets (liabilities) (Level 1) | Interest rate swaps - cash flow hedge | Designated as Hedging Instruments | Cash Flow Hedging | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 0 | |
Significant other observable inputs (Level 2) | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Total | (40.9) | (43.7) |
Significant other observable inputs (Level 2) | Commodities futures, swaps & options | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | (1.9) | (5.6) |
Significant other observable inputs (Level 2) | Equity forwards | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | (4.3) | 7.3 |
Significant other observable inputs (Level 2) | Interest rate swaps - cash flow hedge | Designated as Hedging Instruments | Fair Value Hedging | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | (52.3) | (45.4) |
Significant other observable inputs (Level 2) | Interest rate swaps - cash flow hedge | Designated as Hedging Instruments | Cash Flow Hedging | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 17.6 | |
Significant unobservable inputs (Level 3) | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Total | 0 | 0 |
Significant unobservable inputs (Level 3) | Commodities futures, swaps & options | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Significant unobservable inputs (Level 3) | Equity forwards | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Significant unobservable inputs (Level 3) | Interest rate swaps - cash flow hedge | Designated as Hedging Instruments | Fair Value Hedging | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | 0 | $ 0 |
Significant unobservable inputs (Level 3) | Interest rate swaps - cash flow hedge | Designated as Hedging Instruments | Cash Flow Hedging | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Derivatives | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ in Millions | May 28, 2023 USD ($) restaurant | Aug. 27, 2023 USD ($) |
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Carrying value of long-term debt | $ 884.9 | $ 1,477.1 |
Fair value of long-term debt | 857 | 1,450 |
Carrying amount of long-lived assets held and used | 3,725.1 | $ 3,991.7 |
Significant unobservable inputs (Level 3) | Underperforming Restaurants | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Carrying amount of long-lived assets held and used | $ 10 | |
Number of underperforming restaurants | restaurant | 1 | |
Assets held-for-sale, long-lived, fair value | $ 8.4 | |
Asset impairment | $ 1.6 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Aug. 27, 2023 | May 28, 2023 |
Workers Compensation and General Liabilities Accrued | ||
Loss Contingencies [Line Items] | ||
Standby letters of credit | $ 79.6 | $ 85.3 |
Surety Bonds and Other Payments | ||
Loss Contingencies [Line Items] | ||
Standby letters of credit | 16.1 | 15.2 |
Property Lease Guarantee | ||
Loss Contingencies [Line Items] | ||
Loss contingency, estimate of possible loss | 84.3 | 82 |
Fair value of potential payments discounted at pre-tax cost of capital related to guarantee obligations | $ 68.8 | $ 68.4 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | 3 Months Ended | ||
Sep. 19, 2023 | Aug. 27, 2023 | Aug. 28, 2022 | |
Subsequent Event [Line Items] | |||
Dividends declared (in dollars per share) | $ 1.31 | $ 1.21 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Dividends declared (in dollars per share) | $ 1.31 |