Darden Restaurants (DRI) 23 Sep 222023 Q1 Earnings call transcript

Company Profile

Participants

Kevin Kalicak	IR
Rick Cardenas	President & CEO
Raj Vennam	SVP, CFO & Treasurer
Brian Mullan	Deutsche Bank
Jeffrey Bernstein	Barclays
John Glass	Morgan Stanley
Jared Garber	Goldman Sachs
Chris O'Cull	Stifel
Dennis Geiger	UBS
David Tarantino	Baird
Peter Saleh	BTIG
Brian Bittner	Oppenheimer
Andrew Charles	Cowen
Lauren Silberman	Credit Suisse
Jeff Farmer	Gordon Haskett
Jon Tower	Citi
Eric Gonzalez	KeyBanc
Andrew Strelzik	BMO
David Palmer	Evercore ISI
Sara Senatore	Bank of America
Danilo Gargiulo	Bernstein
Brian Vaccaro	Raymond James
John Ivankoe	JPMorgan
Chris Carril	RBC Capital Markets
Nick Setyan	Wedbush Securities

Call transcript

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Operator

Please standby, we are about to begin. Welcome to the Darden Fiscal Year 2023 First Quarter Earnings Conference Call.

Your lines have been placed on listen-only until the question-and-answer session. [Operator Instructions] This conference is being recorded. [Operator Instructions] I will now turn the call over to Mr. Kalicak. Kevin you. Thank

begin. You may

Kevin Kalicak

Jake. participating Good thank you, everyone, morning, today's call. for on you Thank and

Joining are Raj Vennam, me CEO; CFO. and today Rick Cardenas, President Darden's and

company's statements this As Reform Litigation that XXXX.These to will made could reminder, subject of in during its are and this from Those a and risks include with in the Private comments results morning Securities projections. are Act forward-looking distributed was in risks as statements Securities and to press our differ Exchange which expectations filings cause materially the defined the call and release, described uncertainties Commission. actual

include simultaneously broadcasting reconciliations of non-GAAP measurements are of which Relations measurements, are this call, these section presentation. the included is presentation posted our website We Today's certain presentation the darden.com. Investor a and in at in during and discussion

XXXX plan call. earnings the opens, followed fiscal Looking by XX, ahead, Friday, release before conference second we December market quarter a to on

During comparison on discussing today's This will call, any remarks details performance share forward fiscal and focus results. and some provide the on morning, moving quarter to as will Raj XXXX. Rick our brief financial when of quarter first quarter first the our reference to pre-COVID a

turn over will the Now, I to Rick. call

Rick Cardenas

morning, Thanks, Kevin, and everyone. good

This way As industry environment. proud our I'm the continues was solid press normal see also to where the you saw first began and release, to are what to macroeconomic from the restaurant a quarter performing. seasonal be inflationary of in our we had uncertain a we return challenging teams patterns. quarter

our to on data significant culture. advantages and atmosphere, four our philosophy, operating our strengthening and level, service and focused results-oriented strategic and of while we food, remain leveraging Darden brands Our executing rigorous planning extensive in Back-to-Basics on at insights, scale, concentrate the continue competitive anchored

has our bring new to life levels. with members lot as returned at our our continue of a brands every team level, execute teams people high to to staffing normal and restaurant day, a even Our

ability to These to steaks brilliant scores creating for Steakhouse trained are new our learning the are restaurants, we be standards. open environments new strengthens focused focus team LongHorn team history. all-time our are helps investments which they reinforce further execute significance our basics remain our strong grilled added to proposition. takes with our measures in employment brands. is Olive fully members satisfaction creating near ongoing strong team's Garden ensure on members highest driving their across We and great advantage. in Further, on and at our This or Our at value scale highs, correctly guest satisfaction the at as

we new the quarter, successfully and remain open restaurants on to XX year. and track staffed new opened restaurants nine to fiscal this During we XX

Darden's sales quarter. off-premise continue total of and at Garden, these the and for benefited during Go Go sales. the also in XX% Kitchen. investments XX% platform sales digital Steakhouse To XX% XX% To sales LongHorn to our transactions accounted Scratch XX% total Digital at accounted sales Olive and during Cheddar's at for of We all quarter invest from of

and Our and off-premise that benefits created dining we friction our to have our in-restaurant continue technology occasions. for and that both in investments guests will technology reduces invest an infrastructure operators,

mitigate scale the heightened leveraging are We also our help to impact inflation. of

suppliers $XX,XXX cost households offset and have remains an pressure, with excellent the our possible. well, Olive a the more less direct those job particularly Cheddar's Garden to we or and guests. minimize than year. as a exposure to making increases extent During consumers for Inflation to headwind these of experience working supply team commodities continued the chain cost quarter, significant to did in

for to made pandemic, talk our their income across are more while strength you our conversely, brands the below this strategy guests heard consumers, we have are of and search are softness our business behavior higher environment, portfolio, seeing height from with Looking seeing Even or us to these about the Since we at guest we emerged entire with committed equilibrium competitors. the in normal price households. trends.

During seasonal patterns year. experience a historical which quarter, last return saw we we to not the did

As we have marketing discussed finding brand's strategies. inform will in our equilibrium recent calls, that

our be with As any plans, the introduced we execute filters. any very activity we be back. bringing selective in activity following evaluated we promotional And will promotional should

First, brand bringing the advantages life. brand's equity it by elevate to needs competitive to

execute. to it should Second, be simple

deep not will a deliver have to to teams operations, not consistently done it be jeopardize allows We will we our simplify And guest finally, which work all discount. exceptional at the experiences.

value on are that drives doing way sales growth. profitable guests, to that but our We providing great focused in a

with food. example, progressed an Italian Olive and never scratch ending their the going elevate focused they craveable spots advertising never the I pleased first strategic why those now That on continue sauces course abundant anything is television do their Garden's this to the executing that against teams As they're our priorities equity. progress unique from ending made that from is made am forward are core advantage feature brand during competitive quarter. should to

all month, working, those company leadership the which us engage every provide action hold our held a listen return to our people is to our and leaders -- sales, to all closest and partner managing earn powerful is conferences, we grow enabling general in the opportunity brands strategy capital to role invaluable. them These and influential the while continuing to invest and Our with and interact across most restaurants. to share annual restaurant increase shareholders. in our way for to X,XXX with to market manager us our Last

leaders and we philosophy order advantages brands focused our executing and In delight to higher we we win, priorities on nourish motivated aligned to Our serve. and operational Back-to-Basics pursuit their must everyone of purpose winning. restaurants continue four our in operating stay continue to competitive to working our to leveraging return their as

guests, communities and the Our our members we operate. team where

hunger. for member refrigerated banks food fighting communities by mobile Once support the in communities and to of food highest distribution need. again year, Feeding pantry the add ways, helping One is is this XX trucks our with programs Darden we America serve

truck food year. XX have addition since different of a last received With these banks of trucks, new January the

our philanthropic serve be nourishing team our our our course, giving delighting guests. of and for for everything I communities. and behalf want do members without Of leadership not our team Directors, and possible restaurant thank of XXX,XXX Board the have teams to On passion our to guests you our would

to turn will I over Now, Raj. it

Raj Vennam

yet from a to in staffing driven We're net be efficient challenging shares, XXX record returning the basis Good lapping in standards which levels of by paid was we $X.X driven dividends In Rick. X.X%, and quarter first continuing than new spending the costs quarter. from $XXX year, million the growth we of demand, sales, pricing last total sales year billion, same-restaurant first earnings our total cash below and almost Total $XXX was other was higher our as performance to strong We the business teams more operations absolute our to you, effectively inflation quarter recovered into X.X% support pandemic. X.X% by the X.X% that and Thank manage the had was below pleased first for and sales resurgence drive per efforts and total restaurants. approximately a EBITDA shareholders million, everyone. many the million with in center reintroduced Total first were $X.XX. impacts results net and be of last continue and points morning, had Diluted environment. navigate $XXX a from the labor quarter, million repurchased to share and were of with quarter addition this in inflation. roughly $XXX of and XX restaurant

We inflation first to inflation pricing and peaked expect our in and total the between gap quarter. have

of see year year, then And narrow moderate in both and have quarter while our pricing inflation the the throughout in reverts ready second the below help expectations. inflation pressured aspects higher first year and inflation put expect fourth and in the also last both level margins and drove into Consistent while communicated should inflation back pricing well gap action, have call, pricing the of significant -- in of to the expected the risk third the what and I'm plans we P&L remainder our We the we commodities inflation targeted to than with which first below June quarter. all quarter will year. for the if we our half our to of the in we sorry, gap preserve

second versus last we quarter, did and the expect in As than to look half. the in grow less then decline first back to the they year we quarter margins

above repairs expense Marketing points was primarily inflation driven of and Total XXX of points expense due Now on the utilities factors. details of basis inflation year, expenses marketing. both inflation was looking over inflation XX and to commodities XX challenges XX%. Restaurant by last and and food chain to by driven X% beverage was above higher, expenses elevated points by increased basis last points digital year, was testing were driven basis last year, as productivity. below P&L spend two higher and driven XX of we labor restaurant basis the wage XXX higher television of year's supply were hourly G&A last by maintenance XX%. Restaurant last basis points year, compared labor wrapping just at X.X%.

this this to and as on the we $X deferred due expense our this million expense, offset plans way lower tax favorability the is largely on line. compensation mark-to-market was hedge First, by reminder, about a --

Second, points while incentive of basis last in equity both line last eligible basis compensation with income less below year. pre-COVID individuals were year, accrual, levels. than our Operating expense was and but above XXX margin XX related to our points XX% significantly retirement plan

ended was operations effective of quarter continuing tax million. XX.X%, earnings the $XXX rate for quarter the from we with and Our

segments. Now at looking our

was range, X.X% the X% in were weekly in sales outperformed industry seeing period. our pre-COVID the seasonal and to June at not softness. were mid-X% we promotional segments average July activity experience seasonal sales as return reduction and mentioned, level compared significant approximately despite And the above year, our were last began in typical last same-restaurant that Olive X% XXX% a year August. sales. Sales on was and couponing of in benchmarks time patterns. All respective the did evident they sales for we in versus both This sales of when were range. Rick low to and monthly Same-restaurant their traffic normal Garden

sales levels X.X% XXX% last above pre-COVID X.X% year, in historical last were marketing and average our were sales level. activities. XXX% segment we at average pre-COVID promotional weekly when and in of over above considering were and the sales Sales were the And retaining pre-COVID LongHorn are pre-COVID Dining when year, pre-COVID Olive Fine of at about levels. to our above historically the indicating average marketing weekly past, Garden, talked trends we As activities traffic. look believe XX% drove traffic of we double-digit we're that the flat traffic weekly

high were sales segments inflated weekly Our last and above other XXX% pre-COVID pressured to margin levels. year, segment of and last having the X.X% segments. of fully of above profit sales on the year, returned last Despite many higher year the last not levels below the year's had average sales for our when costs all inflation segment earnings business, wrapping were all

guidance fiscal financial to press for We all our per in morning's in this culminating outlook year. for release, Turning reiterated the $X.XX and XXXX. net earnings share between $X our aspects diluted of

at looking of the range. sales our in above second continued sales seen strength quarter-to-date the outlook same-restaurant annual our with sales we've trends Finally, end high quarter,

last be manage with close our up ability flat strength business model XX%, second for expect be to the In we'll through EPS our also what open with underlying And that, year, it year. to effectively questions. continues we're unpredictable team's to commodities We below confident pressuring inflation to to of it. in slightly the an and quarter

Operator

Instructions] We'll Deutsche Brian go Mullan ahead. with with begin [Operator Please Bank.

Brian Mullan

at Rick, in the the the continued with Thank and lower with you remarks, seeing exposure Olive income referenced Garden. Cheddar's Hey. you. softness consumers some prepared most

hear the to stable or were you more would comment, is to to just all than degree thoughts be pressure three Just ago feel helpful It incrementally to does consumer when crosscurrents. you now? be right you'd the able given it your they months feeling we more that from heard

Rick Cardenas

The $XX,XXX Hey, a below consumer maybe the Thanks worse bit question. feeling before, at but little prices the than gas are for Brian. is helping.

at consumer up $XX,XXX below, So spends income. actually, person prices that group income money gas their big And consumer than of portion make more on think that above if and gas per about them. other year a any a you

were XX%. little XX% clarify said as actually XX% remarks, bit down, So see prices sales the I Go came a going were gas gas what sales with feeling prepared we'll prices started off-premise. They -- Go that digital that To they forward. one if thing I were And but I of I'm better, other in mentioned To happens can sorry,

So sorry that. about

Brian Mullan

Okay. follow-up on marketing. question Thanks. then a And just

how did elaborate bring it that. bit here, from you'll how touch driving the organization. than have it if three maybe could there from to approach would is ago restaurant you maybe or were capability measure just -- how maybe back will it on sure back. You you you're forward ROI, if for But it make bring approach you you goal I little the years know you this do But on perspective is a you going did as profit anything or dollars different you from four how bring a back? if to

Rick Cardenas

to going Yeah. it I'm on bringing back. we're detail not get into if

for elevate doing prepared brand the Garden, not a it to deep if year in at in discount. say they the should or be Olive it we've at execute be and did so remarks, last which promotional and when been I equity should introduce As simple activity,

of kind getting anything to that goal knew -- and started point, was that or do sales we items don't supply have the and that there to time profitable promotions lot when discounted growth we else the measure have deep The getting usually LongHorn we before even their to with through price things anything is Our we learned activity in restaurant, of it. involved and ways COVID promotional chain, through limited we in offer training a drive is ROI. sales reduce work do we

of costs And so there. lot a were there

future discount. in communication but to things methods our make more complicated, of talk potential has about deep and be said, focus be the I it to about as as equities and the kind don't complicated brand and promote, we not we think so way a is And restaurant, on products going much it our more that

Operator

with will We'll Barclays. now move which from our question, Bernstein come next to Jeffrey

Jeffrey Bernstein

a earnings much. I know on expectation the significant actual guidance first was unchanged, something expectation internal did quarter. very questions. for you in whether end more the just near-term macro. comp but about One, terms compare easing Two you XXXX, Thank results. think I'm savings. lower wondering your just and Great. I'm how or it for would comp of in the wondering likely fiscal cost slowing seem the just as reacceleration And we're the more more to inflation like missing a or

of relative sense the quarter to trying Just a first get for the year? to the rest

Raj Vennam

is Hi, Jeff. Raj. This

we're and So in actual really our expectations we're We're think back internal when -- our on told we our our estimate, plan line just and about internal basically basically the board with expectations. plan. that

you at As might overall, then not there on line a little But there big sales we the as and again, slightly a actually look Yes, bit miss specifically but volatility. was of the quarter, some guys And profitability as side? ahead. in think. is was quarter-to-quarter,

changed see one things quarter we the And that how the retention trended, the in actually started if was we to similar traffic how the was QX you pretty way the QX. the we was As seasonality to the it in started or really started, pre-COVID, that to about year versus at business. return look of normal and as thought

some there's extent, year-over-year late lot noise helped you're reopening Olive Yard when of and, at those in look or So reopened last California June because wrapping and of a Garden that about especially June the on you if to of middle you levels. year that think House, the

that we lot pretty the it there's was actually, had to with lens, the is at why QX. like in at And a pre-COVID. I that's But we So said, look I versus consistent performance year-over-year. when QX it of way look best think noise through

Jeffrey Bernstein

just up, follow the comps. And Understood. to then

the were That said roughly in you mentioned I that July, X%. you X% year. September, the August, the seems ran acceleration a full or you you like I running for above significant June roughly guided to you're in and versus think and think X% you running

as saw you gas on versus it's such So of know compares easing can July, all think I'm basis didn't you why if a helping. reacceleration mentioned, that maybe share multi-year you I maybe, June just or you is just wondering any price the terms thoughts Rick, in and a sharp if

thoughts trying rest the to get your the and you. assumption year. directional Thank Just reacceleration your on the for of

Raj Vennam

Yeah.

a pre-COVID? would, that's to years to actually just if look you're that when you at two movement you know to it go it's August, I while think I it lens, reference think I again, But look at but And point it versus ago, of find through in or we're that pre-COVID. because three you Is at. versus the to higher, look baseline was big back going general, that year-over-year between a of I an increase really it's month-to-month wasn't actually there the consistent, it's -- got hard fairly Yes. the and pre-COVID.

pretty a lens, look If that through doesn't our you huge cadence at reasonable. actually it look looks there's It like acceleration.

promotional our estimate when related the that, might the a part you some things month-to-month little we Now, the at versus But see where be be is unique estimate activity a and that pre-COVID. retention are into fairly going little we business. that, different. exclude specific it's take different in pre-COVID on might of that in actually And consideration there be may that's wrapping because the And been we -- essentially activity look general, of on retention promotional the brand when to you we consistent assumes wrap that bit and forward. as we for the it, how that

Operator

Stanley. come next to move from Morgan our will now which question, We'll John Glass,

John Glass

same pressure you Rick, good presumably first in industry. on all, can just consumer. the of the talk is low-end the competitive the Thanks intensity intensity, promotional about very much, and Everyone seeing morning.

competitors repair competitive margins. activity reducing heard some seeing versus I just promotional their you talk are about more your of activity, of So to

you How lot going industry now? on what's crosscurrents of do perceive from here. intensity there's a standpoint right a competitive in the So

Rick Cardenas

Yeah.

significantly there, We activity. there significant out that same doing they aren't all you than seeing point. there's lot one of an Other a did out couple it, out COVID lot of the are brand promotional at a an a you in another price promotion these mentioned before doing a eat eat can at than But all much higher there margins pre-COVID. promotion challenged competitors. There's you think brand point can I price

for ability to they traffic the drive be discounted promotions to so do And that significant not may something them do.

promotions they might about it pre-COVID versus down, do significant food costs little and them you points. that bit to start talking make some out Now, But margins way there harder see come if might the a deep price discounting. for

John Glass

That's great. you pressure. about you your consumer, your look, those particularly Do return now, you consumers probably view so do, talked then much dining you about low-end How this dining? Olive own and think right restaurants target do those intend matter And being really no Garden the to to stimulate at under on you it visits? do as or like, doesn't their as recapturing they're out outlook change what to not

Rick Cardenas

Yeah.

I read change of reduction it seeing of think a into We're not a huge, the bit seeing we're let's huge from that in things. little that consumer. huge. in but that consumer, is, a couple not One behavior

guests. span of at what guests what focus capture Olive to we a lot is continue change from so loyal a one our to earn especially segment of to population. And we want We on don't income the to levels. want doing, been visit our loyal more And Garden we've just do to

from drive $XX,XXX consumers help And above $XX,XXX it's Olive of not our up $XX,XXX. existing they whether income a majority. we guests, portion Remember, at we going make loyalty below but is that more are do said so a Garden, anything or to

$XXX,XXX still above consumer, a that well. And doing our especially so, are above that, very is and majority consumers of

Operator

from Garber Instructions] now [Operator Goldman Sachs. a question Jared take with We'll

Jared Garber

about three Raj, next the for maybe I wanted the here commodity months months. for from ask to you inflation Thank six outlook Great. to and the question. the

quarter back I based, think year. I the recent seems higher some guide bit commentary. have is you half in a than like And said the expecting inflation second some there's been the risk guess, what we it maybe on of

can how inflation contracting easing, wanted what on of then the in costs start you're a I you're So, some some environment and seen forward, think easing to and beef, expecting maybe some maybe particularly of get seeing when just the there. we've we sense inflationary on

wanted planning throughout just get to to of I So, through how the for that sense year. flow you're Thanks. a

Raj Vennam

Yes, Jared.

I year a example we of inflation, had I when all, think, is talk at to that purchased of really take about commodities I'll first last And want for what we you contract. inflation great great we remind us, function what a price. one chicken is, the

the down I this happen the all as was we were call know, The some buying it's you two, But that's breast it's I level, we expected, do moving pricing $X.XX, fast as a as far So, at the we chicken it's said as had of But quite mean think almost of, direction. as We're for guided. of not $X.XX. huge boneless of the things definitely are come and range on volatility think lot. what that change range price -- to we thought. mid-$X the we've we costs. that I down with off. months I probably it, our think as half, these in X%. three year over to we much the that And directionally, not at some back market. movement in the given ago, as of seeing right? beginning in we're right the we X.X%, fact, $X.XX, closer the elevated inflation around come wrap to expected commodities in the consistent a get maybe And year, not week, to had looking But are as but we we

to QX, get close to And probably that digit flat QX, get to we deflationary And into to we in more look quarter-to-quarter, do slightly as year-over-year. expect, range. mid-single we so, we be as as at more

it coverage here. saw amount coverage from of in morning, our we think slides it's still hard to is our showed too the coverage, have -- get far we as out. thing this you other I in The can really And

next over months, to we And months. I when it's at only -- fact, next three it's XX% over that, the but six in the look coverage. just have after you XX% then XX% that's think coverage closer

still get we want and don't it's that lock up forward are to a we again, -- and are especially -- higher, And if hard have ends little that. so, things the coming being still we when to down, to not ourselves premiums earlier, it comments be optionality. But bit have in in my as with said pricing headroom to deal I high, able

Jared Garber

Thanks.

Operator

move ahead, O'Cull now We'll please. Chris Stifel. with Go to

Chris O'Cull

I hoping the The if Good guys. for the rest above of X% comps you Thanks. pre-COVID quarter. for morning, quarter, Raj, was But, variation? pretty imply could the relative just would level second X% that said steady set quarter-to-date. you the the to were range us comps much are to

Raj Vennam

So, the much you earlier, -- is at to I quarter, like pre-COVID -- But like that, go say right. if again, have yes, from want I promotional -- to at When of variation numbers. understand there variation into the that's the sure exactly much have base. I if look make back, was the is look question take case, within consideration some, month-to-month to you know I the mentioning think, a as because you I I there that activity

pre-COVID when we that's we we that, it, and look and promotions the say at -- a enough that not taking versus big look but of seeing it's a Yeah, of promotional meaningful are I from change. consistent September fairly out impact the how trend it's not when we are tease really little at activity we to -- But better call out pre-COVID, So bit look at impact to-date? or it you the now. then to that's

Chris O'Cull

or from what even September. or wrapping different out COVID to comparisons have to you September, I November October, Okay. figure trying was much you're year to if relative in last relative pre-COVID are just in

Raj Vennam

there's I only don't think think think believe to but so. is But holiday if a I in thing the change. any November, of. that's I'm I can Yeah. shift trying there don't

Chris O'Cull

a year, your the more this we Okay. you do I For And brands example, but then impacted. have might following to all assuming normal how if be most think be of pattern fine brands which the the season, on performance the year-over-year I holiday dining's sure is normal following basis? expect wasn't a assuming would -- holiday impacted seasonal might is accelerate holiday a

Raj Vennam

impact into unique quarter And know were last we that Actually, just that got Omicron third factor really sales into the to there's be -- month anything to leading December holiday before in cause of by year holiday for time different wrap basically January. on them on It where to would last from this But wrap and at record was side to comp started you, I because COVID. December that outperformer think kick year, a kind the we want was us. the that we remind to of was when last the week season segments, of don't obviously that, that be an year, holidays, was I our outside we the look the a Omicron that. late expect I of

Operator

move our now next Dennis to come Geiger We'll will from question. with UBS. That

Dennis Geiger

commentary and Great. the appreciate the Thanks I for on details question. the pricing.

kind to thoughts, the of inflation. as speak up go-forward what how your response with obviously, spoke impacts far how and Just wondering if you seen could pricing as that to customer you that the to marrying you've to-date

Raj Vennam

say, I'd flow-through would the Yeah. we generally, what consistent pricing is expect. with

at the sense some what I might last out point income, two-year. there's erosion our a price meaningful you pricing then about taken. others was on on compares levels I'll on just not think, bit fact than of the competitors. haven't in we general we're that fact and CPI we Rick seeing, to lot over X.X% think, enough quarter, And pricing, two-year be just a it that but full-service you think mentioned you basis, less as a close that And say our you, has the seeing because we the that in pushback -- that earlier, pricing fact, and lower you look is And be roughly not that that when little it's a is when mind of XX% but there the to us for FSR look add-ons? Yes, the a I the gives X.X%. And to at of a pricing may industry taken of X%.

Dennis Geiger

to I'm still the traffic that. the elevated? there, you Go To if Appreciate you dining you. and speak stays And benefits could Where wondering Thank room that Right. have dining runway kind if then just stands? of within room levels What currently. may

Raj Vennam

that past, across But there the brand? minimis the differential I think The de a room levels dining you portfolio, Well, through the said difference take look Is we've at when in And as off-premise. we is profitability wouldn't huge off-premise to if portfolio. quarters looking difference margin in the changes brand Yes. between mix the not versus in there's of now from is look that row, some at we we you're level. profitability at consistent that changes, the And -- seeing two I if are again, a what might much. have margin the impact not -- different. say

have we'll But see to plays So, in to I time. don't margin materially on out expect over change that the how mix. based the change

Operator

question. with Baird Please David go our ahead. Tarantino has next

David Tarantino

on I morning. a just clarify to trends. made comments want couple the underlying sales of Good Raj, Hi. you

to of you have that clarify it like wanted promotional did It prior first Garden we slowdown, quarter a So, viewing that way comps. to performance my just I question activity really the aren't differently, kind look did like and calculate the the but you're then you viewing quarter. relative sounds but is for maybe to what specific first you just pre-COVID. were It to seeing how would multiyear Olive the

quarter? how when So adjustments all guess, Olive for of brand are sort the the making you you're of in you make performance that viewing the Garden specifically, first I

Raj Vennam

strategy. way with David. tell their that the Look, we XX-ish keeping which Garden our pleased quarter, at XX%, And look guest retention, it, that very has was retention I'll done count team as Olive first QX in low-XXs, is Yeah, we you, in in range. guest work with at look call that were basically Garden we're in Olive actually the count it the they and

point place. weeks it there's all second you like was. year-over-year, what quarter. promotion out Garden a the But a retention And that the three-year, feel in And we X.X actually -- a when where QX out, big being was fact, from QX make you of for the So we consistent. of point on pretty little out trying that's pretty those Garden's is or in -- dynamics, a to I and are one, we're been are has a nine to that noise TRPs -- noise also when close -- QX before they're think nine think we're at weeks well. when what take there had we consistent. take which couponing. COVID, Was of is And within thing confusion there had as traffic of details, Olive we comparing to the I other us is of why lot a understanding that think bit And of to look great then and that, that, I don't point the performance exclude take business eight the buy QX high then, launch quarter the Olive Olive actually at was is one so we had I'll Garden --

David Tarantino

number, think you X%, Great. mistaken. year, the last versus said quarter-to-date if around then That's on you pre-COVID I were doing not I'm helpful. And comps

So, a if would imply you what that acceleration recent of way. X% it didn't versus sound viewing that north it we've quarters. versus pretty in number, And seen it you're like big were

math reconcile in inflection? could us maybe So comments that an I for guess, haven't seen your you that you

Raj Vennam

David. Yeah,

from traffic, the quarter look got think I years couple the between second pricing think into difference first a the to when things. Then of yeah, to you consideration three at I I we take over I quarter. is a But step impact -- mean not from from out ago, promotions a we when take of does pre-COVID. increase versus it's huge bit change. mentioning three an was years there the little earlier, One, it like

year. at So ago, that's first June we of did the other you're promotional the as part three September, in this I we missing same or think quarter years and level have Garden -- not is Olive of the that like activity did August

that how it. plays look we factor another into at that's So

Operator

Saleh Now BTIG. to moving question a Peter from with

Peter Saleh

that you all at Garden count the just that Thanks. the with earlier. guest to of come pair color. back Great. to guys consistency commentary just conversation Appreciate made the I wanted Olive kind around and

there some last Rick, understand, check So mentioned at I management that trying had think quarter, you just Cheddar's. was to

with or of I $XX,XXX some weakness think this you're slowdown talking the about quarter, under consumer income.

two it Just right what trying declines the to trying Is in Garden. of on Just traffic that how now check context is manifesting brands. in itself more guest to Olive these management? or that's it indicated understand just understand Raj retention count at

Rick Cardenas

consumer years. I the both in outperformed year, getting margins last done Olive really reiterate, our as shared to want quarter industry we've All team their they They has been within to the check more on it's not pre-COVID proud and has questions in done Garden consumers traffic. the traffic lot as we've $XX,XXX. in Olive been done some prepared has just that of over because to of remarks, and we're hasn't Peter. sales significant. Thanks, worried traffic move improve seen over That significant a work management $XX,XXX Dan our of doesn't Yes, below the Hey. and bit. great. have mean We're a about What from it And that. operation, And time, they've little Garden. over a this I right. we're at below at simplify this said, portfolio, couple the

the lower. at media So, and much we a our maybe of a performance for Cheddar's. at the seen bit check is There's Olive Cheddar's. a at management, lot Garden performance But lot reasons little haven't

Peter Saleh

Understood.

on full XX up indicated expense points. you just had be the maybe think And that the then marketing helpful. Very about previously, would year, Okay. I guys for basis

year that I track given maybe increase take you Are far guys this in for think up will XX points. quarter? slightly so do you in trends a the the just up you maybe think on still first the modest it about first or quarter, was basis

Raj Vennam

might some XX don't think we some it points at points, XX to at this we basis But do quarter, to is and basically look plans, we're the quarters you But I do actually, what expect -- Peter, might still as our but think it I that's basis quarter quarter see has for points, basis to to vary. first year. at within the with anything XX XX points, basis that trends.

Peter Saleh

much. very you Thank

Operator

We Oppenheimer. Brian will with from Bittner hear now

Brian Bittner

[Technical some clearly because about be how to you're confusion may Difficulty] talking in Thanks. think pre-COVID (ph) trends I there relative

Kevin Kalicak

clear Brian, line? your your line is breaking Can you up.

Brian Bittner

Can me? you Hello? hear

Operator

ahead. We hear Go you better now.

Brian Bittner

Okay.

have hear about to impacts I Because the you're me, clearly, I trend pre-COVID. promotions you you okay. excluding to I to promotions, So just want your analyst you we out as when address, think talking confusion can relative in trends to I -- underlying do think we how there's speak it’s apples and some of strip it of to no speak kind oranges like way models. our versus to

from if this instance, hold for the trend basis in it points XQ, X% of for like pre-COVID near first you quarter. the were in suggest So anywhere would XXX acceleration comp you where

figure makes intact, I we something And the you're lot that keep happening kind so think trend more forward positive leading than should sense. multi-stack conversely business that's come we're or if trend down on one-year what of to that expect is there's out in trying to recently moving a to that

Raj Vennam

have look three I we this last just consistently for that able us bit in I a that happened should But time, six over at back that. I six you pre-COVID Olive looking think And the of get or from the call the mean, I QX to point it there's basically be eight we're what for to I year. for and to four the we of absolute don't the coming number, visibility full or XX% larger some Garden, weeks, it how and and and when of at much And doesn't you come I at in even But sense. environment where it's weeks -- XX%, look it it say was, XX% that uncertainty what week Brian. months, there's movement and be what understand That saw should lens. for make to look that's then new basically if week. from. of was QX, the that's really around at think like you just Yeah, through say to last weeks XX%, the promotions, at number, to example. you're But little so consistent. a period look said, over pretty If QX we at it

actually pretty week-to-week, -- an that's level. QX some where it's consistent quarter So to into volatility, absolute but at that's the Month-to-month, come play. really there is QX from promotions

Brian Bittner

in in its the what with Garden quarter other held out a Olive all its know the the back guess I it consumer whereas versus steady. under noise going the other again does relative brands Olive is really materially ‘XX brands? business just Garden, And promotions, brands? And us. and how versus look $XX,XXX stripping bigger did pre-COVID, and performance obviously the the happy the exposed other it return factor to to is quarter and that question Olive segments to also, Garden have percentage first And of But versus at Okay. seasonality you on I trend great versus the before, slow you in were to or

Rick Cardenas

Yeah, Brian.

consistent seasonal the of and as take we Cheddar's. So was Olive first summer brands, difference difference, time the seasonality said. at -- in with different it difference the LongHorn something buy was quarter pattern very The not three the one In pre-COVID other than two so first year have Raj the pattern or the one, Garden. the Olive had the of a with first in Garden Olive did It Garden did in that quarter. we XXXX, kind was

was QX had you very But compare. when the it think, a I point So consistent X swing from to across about, that QX. seasonality was we

it's they fairly Olive Garden not majority. income, at and are LongHorn. consistent. are higher the $XX,XXX anywhere But They're a than the Cheddar's near bit little As

you but so we're higher is not not And an exact than to number, but going LongHorn, give it significantly higher. it's

Brian Bittner

you. Thank Okay.

Rick Cardenas

Sure.

Operator

question. Andrew ahead. Cowen the Go has next Charles with

Andrew Charles

you. Thank Great.

bit the strongest fiscal in here? low for the quarters fiscal backdrop, the fiscal seasonal and seasonally Olive Garden seasonality benefit reiterated of at XQ, strongest gives like seasonality the though, within return quarter the could XQ confidence of on that end, that the you what consumer shaky fiscal see in the the XQ particularly weigh you'll business as the Given guidance is -- a industry revenue

Rick Cardenas

backdrop have lower, bit see that higher versus see flows you about versus bit is. quarter-to-quarter. the in only see think my about It today, talk seasonal return the The it's a the have might seasonality, When dramatically, something you'll might we going when Well, and bit different consumer a where that's based little the just a some But little basically it's to January are patterns. and is February. there -- of we Yeah. pre-COVID. that same month-to-month, be guess -- on to still changes Omicron we'll if difference necessary we year, on wrap depending not consumer last is you little

down more If COVID, that more X%, So QX X% about year where on last it's really talk consumer the as But little same somewhere on it goes us. that first as it decline positive better a it we a we to the not quarter, in -- as change for total economy the inflation X%, impacts the are. in food it's that sorry, the returning count. impact the a count. basically offsets guest we're worse, basis. in down assuming in I'm might if way stays help And because call costs about guest normal seasonality, a versus should based -- said gets a impact X% inflation if around go in on we economy, it's

Andrew Charles

Thank you.

Operator

And with Lauren ahead, Suisse Go question. the has please. next Silberman Credit

Lauren Silberman

Garden. quick have a Thank on you I follow-up much. very Olive

fiscal headwinds So trends and expect be that the promotions. quarter, the like you'd three-year the clear, digit discounting the outsized of first and excluding were in year? it rest positive mid-single impact to the promotions, what all in reduction seems the for the given closer were is To

Rick Cardenas

than trends in because three-year to on ago were three be years in say would we that positive even now. more would sales we sales, positive right I

XX% we traffic. the And we to said the Raj a and we've But the all the in side, mentioned media traffic other is by something that activity driven that. and to of wanted what and in things. all traffic the done and it coupons from did in to the in marketing the we've to quarter, mostly before expected probably is some that in the around impact do, we pre-COVID, past the fourth quarter that On were low-XXs was that first spending we marketing see that's miss the to and traffic and

sales same total mix were we and count the were of kind higher be so guest marketing higher would And if in we before. be would

Lauren Silberman

Understood. to across And we and the fully be on environment? that -- ask Any to as about case seems then just enter increasingly why It's be I still down the industry. especially might occasions haven't on-premise traffic closures. perspective wanted recovered, challenging despite which what still consumer an

Rick Cardenas

Yeah.

I off-premise lot lot think a a of places. couple better a experience of The is across things.

have people from before. casual did So, they than dining ways other to get their food

to a lead some consumers want could that still eat. as so that little bit room especially And traffic, go dining to there less are don't to out

that think there are is While over, a COVID some of lot people don't.

closures independents with even urban closures, the in of restaurant so in markets. lot a And happen

still markets doing have and some are suburban the so of many well they as closures. And didn't

to mentioning basically that it us to back on dining same then don't So being charge, we're what levels because okay traffic. you're Raj pre-COVID full, delivery we margins our with is. for be was have brands more up. versus off-premise the above earlier, wherever on-premise, -- want the are LongHorn is all see fill Not rooms levels. in to We them starting and pre-COVID but

making rooms dining doing full, investing over our is feel what investing we teams, to coming aren't we're teams on then good news we improvement, brands to got experience better our years, our as last the food, simplification, our guests an do and even do, easier for in it going come they are focusing in back. been they have to back, have few to as things of our some so the going we to continue good do all what about see they're capacity. that and we And continue do. The to as And we've if back

Go. our in in That's that just in of To the aren't back of opportunity long pre-COVID So, brands our offset being gives rooms run to because brands to levels. most dining grow by our us some more

Lauren Silberman

much. you Thank very

Operator

Farmer to Gordon Moving with Jeff Haskett.

Jeff Farmer

Thanks.

couple of Just quick a follow-ups.

for the you update full we saw you G&A on where the can in So, see dollars what QX? us year considering

Raj Vennam

Jeff. Yeah,

were that to COVID. for I probably I year, close $XXX full where is think the still think we we're which before million,

offset three million and so inflation costs corporate of savings growth or all other the help got. $XX So, over restructuring of we years things, that

So, $XXX year. that I for this point, our is would at to estimate closer full the say, million

Jeff Farmer

you couple there of significant then timeframe February that any mentions provide period? sales that were you this. magnitude as time January-February the saw Omicron there headwinds, approach can But And Okay. we when that on and headwind January most of potentially you is saw over a about the color

Raj Vennam

Yeah.

million about back, in go $XXX I talked about million to think you that if impacting call sales that by year, -- $XX we million it, $XXX range. last

the really as the tailwind at look you front. it that's on So sales year-over-year

Jeff Farmer

that. Appreciate you. Okay. Thank

Operator

to with ahead, now Tower please. move Go Citi. We'll Jon

Jon Tower

taking the for Thanks Great. questions.

Just two for me.

answering more past level and the First, about only Pasta earlier again, on Ending coming mean example, profitable at Olive if some comments questions see of at the that they're Rick, the your show Never thinking to may prepared promotions we for so profitable. Does in back Garden? up of remarks Darden, historical I'm that promos but like priced a that's

Rick Cardenas

do before. reasons. our they that Yeah, But Jon. we few competitive We're today, equity as anything times not going and be more plans were discuss we've than said should emphasize brand our profitable a to for

Jon Tower

Garden higher out in that showing for or Just households just that growth about could brands guess you Are say, that $XX,XXX. brands? in seeing that's within curious for how just in idea those I comment you up in the subsegment call, the is a suss then up check over at And across business about if little the you're the you another strength either Okay. more higher traffic following growth? earlier or seeing, Olive talk the it bit. Can example, that income

Rick Cardenas

Yeah, Jon.

a work. first out. ways of a Even people in markets business they've they're our to the there's back yet of Seasons the One in kind hadn't a I hadn't really Fine But got Fine at That's the Yard is well. how well Dining and difference back in work. lot House, that significant mix other doing sales is that has few had you've and though got doing Garden, the gone urban to and to consumer our you've of quarter, tease going really well brands people and think in higher. had. so changed little is versus look a Many doing the the now much reopened consumer. urban Fine We And Olive that XX Dining because our bit very at tightening segment, of suburban Dining markets other with markets. our

about a are their and strong, so and LongHorn caters strong think to And sales bit still LongHorn. higher traffic consumer little still pre-COVID. is versus

some of the of there's see there's we really as Fine price So a brands, lot no the ways to take pushback. seeing And ability it. we're Dining in

that benefit broad-based of that because of for of the So us run is we the spectrum a a think consumer. kind we have brands that portfolio

okay. the so is, then And still doing population we when other flips as isn't are of well, segment way, the it one the segment other okay. then And if we're

the we've good news others. brands the a little that is one being And so by segment bit right And now, hurt that. there's by more that's of just got aren't inflation than population impacted

Jon Tower

you. Thank

Operator

on Moving please. Eric to Gonzalez KeyBanc. Go ahead, with

Eric Gonzalez

thanks. morning. Hey, Good

the the things Just It see outlook. were guidance your all that that XX exceed maybe last guidance. first fell at XXXX the XX of margin the quarter about was bps bps about below full pre-COVID implies levels. will if year commented in in to was Raj, But of first I reiterate the where XX.X% you you encouraging of one XXXX. the look where you quarter, in or components quarter, that

more levers still to margin a can you bit can exceed how you throughout on back you And do margin the store-level progress pull and some those second, color bring for year? you it pre-COVID full is, that question year the what of up? to So the pricing levels to the expect of the outside give expect us

Raj Vennam

Eric. Yeah,

at difference. four the Let's of the better, always we to do we level that level. talk walls. reason there's more If say, because The manage into lot G&A give investment that margins the into profit operating we us about put or EBITDA flexibility is costs a

full because are Where the end the don't focus an EBIT as we margin, at much are margin. portfolio, walls we the Where P&L? for whole are for we of EBITDA us, total four where we from from it's right? on day, the the as an So the

you at with at If you XX lens, and about, was year, XX EBITDA, through you first points let look expect to year. than as better be year, level the for restaurant-level look embedded that's we higher look guidance recall by our The we and then that pre-COVID. most when to basis on the call in -- do of we so still pre-COVID quarter is margins that. that second be going quarter at had that than full if first through Yes, full it basis pre-COVID? start it, me it last the profit And the have what's points the improvement cadence versus

decline So quarter. that's year-over-year saw why in you the a first

higher went pricing we last still we still was expect of back versus between of bit shrinking that as the in half, little to guidance. And inflation. And then decline as be gap get and in we but second We again, than last part what's a into quarter, to that year. narrow this our expect And to pre-COVID. but planful year. the year, this the That's is embedded ahead

that -- this expect play expect at way. out to it point, we we so And

Eric Gonzalez

That's very helpful. Thank you.

Operator

Andrew question And next from come Strelzik will BMO. with our

Andrew Strelzik

for you having question that taking Good all noted I'm the prices you back. chicken value inflation, I the noted breast back know and but come the to prices beef asking amid Thanks having pricing this discussion. And and mentioned Great. I -- back question. come wanted -- you come having morning. to

casual perspective promoting throughout pull feel in end So environment, go that if brands? about a from risk, see group? we're home, thoughts away if we how I food like we back. we really you And maybe value to were costs a you but from your I your used into of scenario. maybe up for more value I that do -- home. levers, where position commodity a dining at to do the maybe we into How curious about think as know think you go on don't know deflationary do just do guess about kind talk if food you offside a you

Rick Cardenas

the that we our costs June reduce what in all have Olive going value. call cost quality. we're -- equities. ending our it's doesn't abundant because about at scenario a even estimate to LongHorn, remember, about never day Cheddar's, more food I've food It we continue do investments food. And is that than on If Italian more of in they At and anticipate about about price. And at quality We pure we our think even a to to its have any talk we it brands was inflation our at brands in our are in don't expect deflate have it be (ph) Garden, craveable about the go they we today food, to based even of That said have or already, And is thing. the the our value -- Yeah. kind we and assuming don't value said, first talk to talk down, other brands, they're to the our service, where go on and talk from have whichever the down competitors communication, messaging that our same made changing going assuming quarter. I'm that play. ones we've in every in improvement to are

So that's talks value digitally, be if their Cheddar's more in about it equity. because will

marketing So strategy. going happening we're on on to market what's our cost. not change food based going based to our with We're

Andrew Strelzik

missed then Great. if helpful. apologize this. I Okay. I And That's

just You mentioned application levels. Thank But update in of staffing normal can give you. us and turnover to terms of seeing on an what being back kind flow? you you're

Rick Cardenas

Yeah.

significant applicant increase a country. in the get to continue flow We across

et And to how their that We've figure to applicants for we've of out going down to schedule in interviews they're year. allows a it interviewing many cetera., have scheduled. interviews, We're had automatically lot all talent places. that maybe because to slow new have and system. so a a management got system doing over We managers, is

we've a really got So good flow. applicant

quite we few we this said, opened As quarter. a restaurants

with All of go. fully them to were staffed ready people great

pre-COVID our team levels. retention. the is better pre-COVID than not levels. our member above back industry, industry to Our also manager and retention our to average, pretty manager well is And to much It's close retention well but quite levels closer it's turnover, the pre-COVID

conferences a And going And our think improve conferences retention. retention most that's of So month. our we're trying manager/managing had to those we we levels get us for are focused. we'll continue our We teams on team and train pre-COVID talking to partner last new general as we levels. that mentioned, back members key about and ensuring forward, our to focus

Operator

David That to come Evercore We'll question. Palmer from will now ISI. our move next with

David Palmer

Thanks. Good morning.

Go traffic mix you more X maybe than was pre-COVID. I room think up be said you inverse that, Olive I mid-teens XX%. dining the that. then, something To that that's since maybe X% think traffic points And at the down like Garden down is all versus said of the or would if Raj,

COVID. can much you that's how look against pre-COVID a versus confirm the room So right. traffic invest simply efficient LTOs can coupons that just with an a dining reset about versus wondering maybe at TV you've not you that gap not was fashion you of I'm worth got spend or But not advertising, in is profitable in traffic and if that type chasing opportunity because with ROI healthy and good

Raj Vennam

David. Yes,

The numbers invested go Absolutely. we've your three that's saying think where That's But that's let in a going much sustainable dining actually over to start yes, opportunity does go -- me the last in underpricing room? are manner right. an present and we're inflation. accurate. so back I about that into the to -- it we by years,

look same you Olive where combined it's If where -- at at look timeframe, is CPI for -- restaurant Garden's years, has XX.X%. combined XX%. the years been three you the CPI When pricing at was three over full full-service

to industry argue, competitors. same and the I underpriced, So we've extent the underpriced maybe actually, significantly not actually our would significantly

it's the time. just some going we're let's but way our drive not guests magic, way back, the people that take one we build it that, or to to visit one takes time. tomorrow. Rick in durable So guest. that time. sustainable, And a think today extra that back happen of believe a is loyal And to getting would really It's over see that mentioned from argue this to our of guest, we fruit It's going I is to get starting

Rick Cardenas

to I which And David, is just one thing, you want add what said.

have is running Some possible, had work do week to do profitable doing really in isn't when in as had rooms to like, never profitable. when a that we that might to so that traffic, guests restaurant there. one times of at were ask those We And we of not drive five a thing dining coupons Olive had the We traffic a coupons. have Garden, as were we if right? been to very we they're when There of these any lot right? lot just ourselves, were we'd right full

are loyal know consistent doesn't They that with need all discounts what so And can experience. serve we off and come of a get we to They they're going a those get. them. guest to better in,

So we'd everything way. strategy Raj and said, It's number part I agree checks, of like but discounting. the of reduced small minimal, very, with, our it a -- that we've to significantly is keep such very to

David Palmer

market, see up dramatically they've roughed that best-in-class your obviously has said gotten The maybe that there, back sort think lows. striking thin you of opening that the know you pretty of peers and have highs. satisfaction tough think levels brands are I promotion but mean we're very we I strategy, operators, go don't satisfaction said that in other industry they have so kind -- what and levels to near because ask comment you've check, budgets. a the customer if I your given that's I by the because are finding you and marketing I'd to comments, is reason customer labor the gap there shifted were talking about near I

that customer Thanks. this to the thinking about return set a might degree, there gap on point. if So some be might you be at

Rick Cardenas

ever believe that they've XX, you Cheddar's the At the We in cooking right at if part at correctly satisfaction. mentioned of stakes us high. as LongHorn overall ratings Garden, LongHorn. at their close They've but really They've at or I highs, got as got at their at not record, talked satisfaction. highest because that tell record brands, they've same having high would for We've is or Olive Olive owned highest the high I dissatisfaction at steak David. them. thing a we've satisfaction other Garden and record highest, big the the we the Yeah, are been specifically had. about is a satisfaction is they're near our lowest at got being time grow Seasons

really consumer So we've -- satisfaction, bucked on the the just trend category. in seen we haven't not actually

satisfaction satisfaction decline. the look customer on a over If it's few or consumer last at you years, been

guest and to add consistent. We've Ours have or the team last five last XX time. more a to to our is to few work not. value there And done in restaurants on even that the continue got think continue the years years we've to it's experience of over plate every group we what of core improve that long of members be been our and one a because

but of Our are staffed of same kind restaurants got that that understaffed, in had pockets restaurants those the fully we pockets general. before COVID. are are We've

that And that have improve helped last loyalty we got so guest we've the done believe because great members. years things we've satisfaction few over the

we we're would if that turn reason more what So have going on -- much it aren't really But to versus of others and front? as even we gives that more execute do say, to media I well that us the delight don't part confidence do the people. that even marketing some Perhaps. on is we

David Palmer

Thanks.

Operator

Senatore. ahead. with And Please Bank America, go of Sara

Sara Senatore

you. Thank

that made your inflation the or pricing expect that your food and away narrow. your point gap Just and pricing you has you between but please. from home that own follow-ups, gap you collective your One, been two inflation -- also to gap input wide, your quite said

Cheddar's that earnings bit is it was sense you the with of Fine the So segment? how of importance narrow keep having sense presumably to a But guess different which wide pre-COVID, narrow. LongHorn can just one at Dining So margin? I like my that in for and guess with I there right Other? that question about particular. across is overall like also very but CPI as Is do same segments, give time, the power, sort I guess, gap the specific you there then structural overall about on gap big Garden, gap, versus just to any means And second you then the as -- as or will my think we your normalized segment ratio margin, support little question. -- that, get seeing look think the of by -- collective perhaps what a about the you'd and Olive margins think like Thanks. what's Just the earnings among in kind is are guidance a of should changes a

Raj Vennam

a That's Okay, lot. Sara.

So let get then the and I'll the with first, margins. start gap into pricing me

going total the is approximately that gap largest is the inflation This we But quarter-to-quarter But the at X% the specifically we're we're necessarily -- year basis But of was is first making What were happen we'll we or points year. for food it going and reflecting year, comment the of to we a about continue targeting our gap a is in saying the for the to we that, highest XX that the the the about what shrink talking basis a anticipate really movement inflation over in No. shrink. we're points inflation. we're targeting at levels. And don't our year, said is just are continuing lot? being as Maybe -- So quarter. pricing. a X% approximately beginning gap to there from Sure. the is lot. XXX movement? by not to home It's is away restaurant more about what's year-over-year -- This to will the that. the function but CPI full-service and commodities I those said

and remain that wide. it we wide relative our to when even narrow still a in So And the the that as might time, here the is to implied down, over expect full-service little is you look gap they and gap that the will reverse inflation bit quarter. fourth CPI come at to competitors. But one to quarter actually that pretty relative also point in

thing So side. that's on pricing the the

last As will far as year. be points higher the erosion that to last will versus still however, pre-COVID. margins XX our implies, than less XX year; for be versus still guidance pre-COVID, margins our year It implies basis full they call than it,

versus implies. -- the somewhere that is points what on However, pre-COVID XXX basis to close still

is As react I ability our that individual to of the benefit portfolio different think differently the far as to segments, situations.

to. to extent, really to think target And don't segment, -- have we the because into would little is a we consumer we in it is well, the from need by put we high invest where us on so the there a places about the get want And a that boxes the if bit specific margin doing end more maybe and way corner. we

And number, and play portfolio so, we're thinking evaluate to the continue that kind this get long the by term to based year it environment. to of but really we on

we so to more And want that just front. be on nimble

Sara Senatore

you. Thank Okay.

Operator

to Gargiulo Now, with question we'll Danilo a move from Bernstein.

Danilo Gargiulo

Thank you. Good morning.

kind for particular, kind the sales, looking softness to I'd better to for, it's of expense if you're traffic, you're marketing a the the a what So are in as for? like accelerate that of percent looking first question, of bit markets not additional understand on that markers in

Rick Cardenas

points -- we're We're specific last that year. see increase our One sure basis make to a a in XX the I marketing? our to say this going marketing we're to when year, more to continue quite at feel be There's to and will. few. now markers best we looking points marketing media to is we're to is Yeah. What to basis which going right XX are some would above that on, significantly And ROI. it's we turnover back time is level. other reasonable digital testing turn to that like drives one going

on going But experience we're to are. individual guest say this great. competitors markers still we're media. don't want happens, to there's one just this when is We know -- that Our marker let going no turn the to our what

Danilo Gargiulo

follow-up then on And the growth. you. Thank unit

Dining on net of a a So, basis, Fine we there reduction X noticed units. -- that was reduction a of

a in don't to reduction wondering, your run? going forward of quarterly composition was is in that expect So, portfolio the longer kind terms reduction a the of I'm the be of a or there you plan going just of kind different

Rick Cardenas

But restaurant and our other we versus Fine catch had Burgers we yeah, close have Capital there. we closure. but Yeah. of had there's Dining, we Capital of it in Dining the yeah into had one segment Fine we in One, opened A But things. total before, couple a fire -- temporarily. and one Burger to restaurants -- only three and moved

in are we consistent June. So, going our across the openings year total with be what to said

Operator

We'll now from hear James. Raymond Brian Vaccaro with

Brian Vaccaro

guest less follow stat to the issue, levels strong. morning, you. wanted I of are an just Good thank and labor are And up your you metrics environment. and on staffing said

an retention, seems So maybe be for a teams seems of challenge like the and rebuilding of on in companies the less -- lot is outside you. significant of industry. restaurant a culture But this training, and for issue it to

labor a talk about little where you've could bit challenges, opportunities areas So, what front? you are still And what to you some how improve see on navigating you're changes adjustments or these the made?

Rick Cardenas

On the staffing front. or front labor the

trainer trying a So a higher a to is fill we than higher more leads employment turnover back restaurants to things. -- hire great build that little yes, of our and But One, when because when hires to continuing we've used certified do, normally than We're up we to it up we have got a when were proposition. bit we training. ranks. our be, our couple lot

COVID happened. Some when the of industry left them

to we're of into training, just make get do we the is they staffed. short to at really We're Darden of So hire not onboarded the all did the should restaurant just they're we're short and they wolves staffing. going sure fortunate COVID. they go what we're we The thrown a because going before -- to of kind not that when somebody, through training, going that thing ensure we like

our So most industries, we members. in turnover days. happens the the have -- team our train time to a to spend In first XX of like industry, service lot many

on And and time somebody training so lot when days, of there's within the leave XX you cost. a they spend

to back to lot pre-COVID the pre-COVID days. money back going our hiring on will focusing is we're our on can training in retention get just be and of if that And them and our so people efforts levels close first to right we save that the P&L. XX levels, to So to a leave the don't standards, they

Brian Vaccaro

That's hourly guess, helpful think quarter. with X.X%, up the expect inflation wage a I'm to in moderate color. what next around to quarters? curious up And, said X% hourly I levels inflation staffing you Raj, little I degree over you recovered, this over do few

Raj Vennam

Brian. Yeah,

We be expect for the full year around to X%.

was last that year with last as in a if look -- little some So started we quarter. that moderation again, had at we you implied, has back year. But there's you bit cadence, first right, the X% over the got look through of at the go a step-up to we year. you're half Yeah, in there

levels, we So those that, be wrap don't as yeah. on we at expect it to

Brian Vaccaro

bps margins to All Garden sort running context second. to right. I Olive post-COVID of COGS margins a multi-quarter time gears the about in higher guess, path I world of shifting And are Thank not me, world? one maybe settling you sustaining a post-COVID line that ask for I item last out big that from and ultimately us where COGS a XX-plus for Thank I ask realize or out you months And higher a of pre-COVID to over through see do the need getting first the piece, And, maybe I dynamics a specific, you. but just if or couple margins a it below walk that levels. wanted in achieve hundred guess, to here? is then out for store just in remind play you.

Rick Cardenas

Yeah. I'll on Garden, had Raj over brand think start some you at maybe about any it this line Hey, Darden and Brian. then to the quarter. highest if items. Olive Garden of inflation Olive turn But

was lot There Olive a inflation chicken. cheese. lot inflation in sells and a chicken wheat had in Garden of You inflation. of

And menu. basically is Garden's that Olive so

And have margin saw the continue a you portfolio that pricing. so Garden, Olive pressure squeeze Garden of bit more way a but that's to little at we been allowed price why to a Olive they've

move of was our would we so, cost to towards where the it over before. years, back sales And expect,

it get want LongHorn. We of did cost marketing that expect But more did Olive to cost And to shift -- some sales back reasonable margin some in color going But made COVID line more It's going items. the at we to a sales. food add to on different year. at not Raj, level It's so Garden. cost from normal. becomes few to We some would investments over we a our to years. in happen next spending few one during to as years the more of over happen you any cost if

Raj Vennam

in obviously, higher. margin I expect be perspective Yeah. the say, we a would just cost to near on term, the line food from items,

be lower to than everything else pre-COVID. expect, We but

improvements, the better than is at, pre-COVID you are look restaurant is productivity restaurant and better labor pre-COVID Marketing then of than better because If better expenses pre-COVID. than G&A pre-COVID. is than

So the are we've with these deflationary of investments as that fund makes actually said, inflation items kind gets evaluate all or we'll fund time. are the normalizes as deal to inflation and helping But the commodities that into other line made plate. kind room front, some what of then, helping higher -- over time, more to us this some over and balance on continue back the sense gives Rick of

Brian Vaccaro

you very much. Thank

Operator

with from hear we'll John JPMorgan. Ivankoe Now

John Ivankoe

that the drive may what technology that off-premise the influence elaborate is point call, more guess, Rick, If it the side or potentially both I up. efficiencies employee-facing opportunities of could you, could in you. Thank increase near bit, was of there seeing, potentially could have means, I'm off-premise the just think both on- that little you, the any mention could you're that over this more in brands initiatives mean on kind you that some side at on of I investments that making the guess, technology I customer-facing and Could terms Hi. elaborate and bit term you a are little the medium I particularly sales? on from forward? experience. work very Rick, this a There beginning so that a think was apologize if I that?

Rick Cardenas

we've will great we'll where on few saying, We've that in a member and the also test we're the on To the And that to improving the a managers of job. does experience. things guest and to we've some because Sure, IT a We've got spending do in off-premise to some want make the their make efforts that's years that of Go experience team that was. easier now to John. I got the lot them But last it team things guest been experience restaurant start by are work the help business working continue the experience. our experience. lot got off-premise the investments for over for the the team on manager

if guests. So, manager with our our more team can they better time better is team, be trained the spend job then easier, and with can spend their time

job things And we're we're going be face. spending things easier. doing the time their some some at that on on but focusing managers' overtly their to energy so also make and restaurant, guest-facing And still not in

And somebody those across the there a we it does of that, do more somebody across benefit easier? the can are check is that their in get working How restaurant in And the restaurant do bit So we to some easier? to and of a in how we're wait can on little leverages it pay test move list bit scale check and other IT a so brand things does brands, and dimensions. they still restaurants. the one our little How it spend all one easier? on little for that kind

John Ivankoe

you. Thank

Operator

with have Capital Markets. we Carril Next, Chris RBC

Chris Carril

morning. Good Thanks. Great.

specifically Just point off-premise impacts about levels the then about potentially from as mix the to? of steady following or XX year, Can that comparing that And you Garden maybe balance does pre-COVID on how off-premise. roughly versus pre-COVID check levels versus you're guidance talk those stays sales up here? mix we're in that swing mix the assume thinking Olive your off-premise

Raj Vennam

XX%, That but I I XX%, is were to change are little the Off-premise beverages, we more that. running there close so mean, think pre-COVID differently. a doesn't that X% bit than Yeah, less mix, really Chris. There other add-ons. check

a look difference. you at So big when not overall, it's

an in. is the check mix we but resurgence some at could catering, on that that other has But is something this is it's one -- again, average. huge seen have The that that point, thing not impact

off-premise bit of less when pretty Olive you fact, of To at look In at a last Go, different but total Garden two it up ended was mix but individual our catering mix. just at over stayed quarters, while total XX%, of a little there's consistent sales, the being XX% more and

we've So check. that's change on really the really noticed the only major the impact but on mix off-premise, no

Chris Carril

Got it.

Raj Vennam

really we of decline given our not change as -- we've a a quarters, come there assuming been to where expected big this mean then or -- a don't change guidance, a big there, of dine-in. not to extent at we're the is look again, belief in little And bit. think But there's two I over lot the with guidance. we we that I last kind that's -- in But some offset off-premise is that down

Rick Cardenas

thing. And last one

quarter generally of lot a experience, parties. because get highest Just you you third so off-premise the right, a a is lot of catering, know,

may it our what after expect would Go. in what would than higher might we say third happens be quarter in is, So, To because I is QX, -- it is you QX of what but normally

Chris Carril

that? just Got outlook, total you like anything the any to to inflation be you kind returning hours, think of I helpful. then or labor shifts costs, mentioned, year. in about what's your wage it. measures That's But expect for just productivity inflation And X% of any labor inclusive

Raj Vennam

already year. -- The Yeah. because we in somewhere productivity year X% year-over-year is labor last the all last total got that X.X% to

So, year-over-year productivity. we don't improvement see in significant a

X% that last well, X.X% the In mentioning, elevated fact, were all indirect manager year. salary labor at wrapping we from it, stuff. first But includes we're labor looking total was on quarter, and I as as productivity for is that the how to

Chris Carril

it. Got

Okay. much. Thanks so

Operator

hear Nick Setyan with Wedbush from Now, we'll Securities.

Nick Setyan

just for the month-to-month you. or clarification. would by driven and Thank It the largely year could Garden a expected really full you it across And if it's you. Olive Garden to quarter, versus tell be pricing helpful what brands? what at was then Thank just volatility very be Was similar in it the Olive us the is was LongHorn. the --

Raj Vennam

first. start our month-to-month all the The pretty with me much Let brands. latter was volatility across actually

I Olive kind That -- between we quarter-to-quarter and mid-Xs think I Darden quarter. said, was, had of pretty Garden portfolio. for delta month-to-month was like -- during June I mean, the consistent the

the segment wasn't one month-to-month. a huge one there brand So that was or volatility driving

side, years, pricing look is I but And get I the over you XX%. has when Darden's mentioned at been Olive already XX.X%. On that to Garden's also three want don't brand, pricing a pricing basically specifically to XX%,

Olive being our pretty Garden to big about such Darden much What portfolio. Garden within a be. say part Olive we going it's represents of what So is

Nick Setyan

you. Thank

Operator

Ladies and to gentlemen, your I'll question-and-answer back turn session. additional call this conclude remarks. any for will Kevin the over closing or

Kevin Kalicak

December market results the I'd Thanks, all to Friday, XX, call. release the follow. Jake. quarter like for on conference Thank That we opens to call concludes you, to you with second our participating in remind before call. plan today's

Operator

does Thank again, ladies and for participation. gentlemen, you conclude your once this your conference. And

disconnect. You may now

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