Darden Restaurants (DRI) 15 Dec 232024 Q2 Earnings call transcript

Company Profile

Participants

Kevin Kalicak	executive
Ricardo Cardenas	executive
Rajesh Vennam	executive
Jon Tower	analyst
Christopher Carril	analyst
Brian Bittner	analyst
Eric Gonzalez	analyst
Andrew Charles	analyst
Brian Harbour	analyst
Jeffrey Bernstein	analyst
Joshua Long	analyst
Peter Saleh	analyst
David Palmer	analyst
Sara Senatore	analyst
Dennis Geiger	analyst
Andrew Barish	analyst
Gregory Francfort	analyst
Andrew Strelzik	analyst
John Ivankoe	analyst
Brian Vaccaro	analyst
Nick Setyan	analyst
Danilo Gargiulo	analyst

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and welcome to the Darden Fiscal Year 2024 Second Quarter Earnings Call. [Operator Instructions]. This conference is being recorded.

If you have any objections, please disconnect at this time. I'll now turn the call over to Mr. Kalicak. Kevin you. Thank

begin. You may

Kevin Kalicak

Kevin. 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

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

We Relations are which Investor section call, of this our darden.com. a simultaneously presentation website during the is posted in at broadcasting

and in are these Today's discussion reconciliations and of that presentation included measurements, measurements include presentation. non-GAAP certain

we plan followed market the earnings fiscal XX, XXXX call. release opens, March Thursday, to Xrd on Looking quarter before by conference a ahead,

to as XXXX. the discussing During when second any call, performance quarter reference second quarter today's to pre-COVID of comparison a fiscal

all Olive Additionally, casual Darden, results excluding refer call and benchmark, dining Box today's specifically during Black LongHorn Scratch to Kitchen. Intelligence's Steakhouse Cheddar's to Garden, references industry

same-restaurant During quarter, and industry sales X.X%. industry guest counts decreased our decreased X.X% same-restaurant fiscal second

and share remarks some morning, financial This will Rick provide on Raj the details and update brief financial to XXXX outlook. quarter, an will results our on our fiscal

to over Rick. the call Now I'll turn

Ricardo Cardenas

which outperformed in were the have benchmark during share reopenings. adjusted increase of We and everyone. sales our diluted XX $X.XX. opened XX an quarter. industry morning, I'm restaurants which X year-to-date, and this Kevin, the earnings good were of Fiscal quarter, you, per we states, were X.X% same-restaurant net with traffic. XX billion, Thank sales restaurants pleased opened for $X.X Total and results

X of anchored basics operating on are consistently being and service strategic enables our competitive in And We and stick scale, to atmosphere. our our results-oriented data with and high on a driven back-to-basics rigorous This at philosophy a brands executing brands the relentlessly to our significant focused planning level. insights, extensive focus advantages continue culture. perform by to strategy, our food, brilliant

strong Our our across all internal metrics satisfaction guest brands. remain of

Garden, In XX Steakhouse, in during key all-time Technomics among also brands Cheddar's overall measurement ranked reached X Bahama for highs the tool, food, Seasons including atmosphere Scratch and major satisfaction Breeze casual Kitchen, within guest quarter. Olive the and fact, House, X LongHorn LongHorn Yard value. categories industry tracking #X service, of dining

all-time fact their adherence which they established strong strategy an stakes LongHorn's read ] score. also correctly that driving continued high execution in can seen is [ the to be

all X ever. was During offered offered course, guest the stronger it's quarter, every on it Olive any teams any a Garden whether higher point this as possible Guest last marketing never of making demand even our refill possible. experiences first outstanding job delivering This performance driven the achieving iconic a at great every is ensuring It our promotion guest which also time offered This a price by like limited same highest focus value. did satisfies any day. is filters. or was offer year, ran year, rate and never never our activity our was restaurant the an refill,

busiest softness the it's brand time surpassed and Olive the seeing. during not deep record. and Capital a I'm And the equity, each history, their are teams quarter are Fine Garden at time that the the simple all that daily execute, our some On in XX for new second billion bookings a best. sales Dining XX-week on elevates strong basis. to it's Also, The with encouraged first excited share of at are the restaurant Ruth's Chris, to and year $X setting they It for we holiday Grille, by to ADVs opportunity of embrace at experienced just Thanksgiving quarter, brands the our perform Seasons discount. holidays sales our The their in did while teams, trailing a and at we during we Day,

provide a brief with me the has of the in the how proud I'm Even midst really integration, let entire Now update [indiscernible]. team focused on remained of experience. the guest

overall and on From top systems During changes achieved to quarter, all by the an complete track tracking are tool. the the Technomics end integration year. Chris full-service well signing among the perspective, Ruth's fiscal industry we top box are rating within brands things major the of score progressing

moved and corporate the During office team we restaurant them have their here. quarter, support are excited support Ruth's our to Chris closed into the former we center,

supply centers, October, gather learnings and to chain improve the distribution and restaurants transition us distribution we restaurants system to January one This allows XX and remaining In we plan phased while transition March. to restaurants, capturing to successfully company-operated the between synergies. our approach other of for our transitioned the

to the changes that operational We impact any possible. much ensure the with deliberate minimize of are as timing as we

We after deploy building end with are year, end the track of completing goal by the out Valentine's the beginning systems to Day on calendar of of proprietary integration people our all the management by year. systems the and fiscal our point-of-sale system

made quarter. announced the at we total impact third call, As decisions restaurants part last of will strategic our company-owned have the some on that in sales investments we

we First, delivery. third-party stopped

happy we will I making. possible and between can't but team never progress wherever Integration partnership team. lunch are Ruth's easy, the tremendous closing with is we I be Day. most restaurants on about a the process integration been our enough Chris and it has Second, the we and eliminated say am Christmas collaborative

I'm in with reached far. fiscal pleased performance point thus and the halfway year, our our have We

long us brands future. term focused managing on our power Darden the the and the All for business remain of for positions the of well

of delight We and serve. also in we work our shared to pursuit purpose continue everyone to nourish

we is ways the through team our members our their program. of for scholarship and core this One next do families

families the Last lasting awards nearly awarded to program of our scholarships and both XXX which year. at lives education of or a post-secondary next team the worth year, core our $X,XXX excited program, Darden for restaurant we second the on creates children our to we center. members' scholarships and team offering month for support that members scholarship children Applications I'm are opened each The last of impact team. a dependents

Finally, of our and of wonderful your help focus as teams have holiday special I On season. guests are to time to all a to earlier, wish the I'm holidays our for said commitment the create XXX,XXX than our year senior team leadership proud teams. busiest everything memories. the restaurant I that I families for day. continue our every behalf you our the team of of and Board so do delight and thank Directors, want you more members and holiday

Raj. I turn Now it will over to

Rajesh Vennam

morning, good and Rick, you, Thank everyone.

great than We of same-restaurant new driven company-owned same-restaurant labor generated driven the job $X.X billion take XX growth lower-than-anticipated Ruth's quarter, of and restaurant, sales again growth a restaurant strong by did addition this X.X% total teams house XX restaurant Chris margin sales last X.X%. in for managing businesses expenses. growth meaningful and restaurants was year of resulting quarter, Darden level positive and their management the sales Our This by higher second margin growth. commodities total and legacy

quarter and the counts the points. outpaced same-restaurant Our XXX basis exceeded by same-restaurant industry for guest the by basis sales XXX industry points,

generated increase from $X.XX diluted Our earnings net year's in XX% in continuing earnings and capital focus returned of $XXX reported repurchases. of managing approximately quarter, business adjusted share of million per share. an million through $XXX second dividends per EBITDA of our the million $XXX $XXX We million shareholders controlling operations and to share the of on and costs adjusted in last from resulted

compared analysis quarter expectations. basis last and Total for our leverage. to at slightly year. than points driven were looking margin beverage prior adjusted commodities Food expenses better by the and to flat was Now inflation year our better, pricing XXX

XX While beef track basis inflation to favorability. expenses categories than with driven inflation than at Restaurant basis seeing workers' XX with as our and year, and most consistent last labor points in last by equal line brands due points expectations. lower Restaurant in to productivity expenses our at better favorable higher utilities. are some continues improvements expectations, pricing primarily points expense other Marketing our basis XX year, compensation deflation were were roughly were X%. was

as year. wrapping is basis factors driven basis last assets. sale million quarter were was second of to are unfavorability was expense points Interest gain communicated. G&A wrapping primarily growth G&A period in our the the to consistent last unfavorable expenses EBITDA year to strong as and we incentive This which the $XXX due the year Ruth's in sales XXX points higher is incentive second the last expenses XX quarter accrual previously to compensation unfavorable restaurant we typically quarter due sales year. resulted percent a and basis than EPS what in of of for XX increase million, a the low higher Impairments last expense basis with last increased versus debt in on expense the by were need restaurant-level a XX funding acquisition year. related points All $X financing of Chris short-term XX.X%, these points as to the from year. of peak for and

sales, the basis last continuing points adjusted were for X.X% than of better quarter, year. operations XX earnings And from

points sales margin counts industry contributed Looking productivity, at same-restaurant XXX never-ending by at of X.X%, pricing industry. outperforming the sales above strength growth, X.X%, X.X%, drove quarter, higher improved segments. points increase LongHorn, At of driven for same-restaurant sales basis XXX the points. labor same-restaurant by by XXX XXX Olive basis The profit by total total This to our points. related industry inflation possible X.X% along Garden. Garden sales driven with the basis growth basis benchmark by growth segment the of Olive increased the flat increased outperforming sales guest of to

challenged basis Fine LongHorn business and and XXX whole other quarter. segment of menu offset year. the addition the company-owned and segment EVs increased Segment combined Total at capital brands sales managed profit Ruth's additional dining margin than with sales were the by Chris year-over-year. margin fine mostly same-restaurant Same-restaurant profit location in was points XX.X% continues Dining revenue. This segment productivity segment. increased Other sales for last in the Chris improved be restaurants. strong as a category year. of slightly at last favorable resulted of labor lower mix the franchised This drove X.X% Ruth's to sales as with The margin leverage, negative both above growth negative, was Pricing this

However, this driven royalty the additional points than year, above XXX margin pricing by XX and Segment profit related industry was inflation. better of XX.X% still revenues was basis points last benchmark. the basis to

capital Now fiscal to X%, billion, spending $XX.X of approximately our We same-restaurant including our outstanding XX reflect approximately restaurants, and diluted excludes pretax for X.X%, financial XX. of and inflation to inflation in our guidance now XXX of annual to X.X% the turning million; the sales growth of of XXXX. integration-related An earnings an $XXX XX% to average sales This and commodities transaction back updated year-to-date share net of to X% $XX expectations $X. approximately It per of total the We've year. for half results outlook to total to X%. costs. for XX expect million adjusted XX shares new increase our tax results million to XX.X% diluted $X. approximately year. approximately outlook of rate of effective

growth function rate anticipate price a to pricing quarter. we for at EPS year. fourth Looking with the first quarter, to the to growth we expect the the growth the to fourth primarily we the rate quarter quarters, significantly in relatively year. have quarter to what and expect in be to inflation and at shared, third This similar we communicated equal inflation and rate expect third previously we be of pricing third the quarter consistent is and the fourth We the below lowest be beginning of the the cadence EPS

teams businesses your continue be remain adhering and their confident we'll questions. with wrap delivering We results. business and that, to model. our in to And pleased So take strong up, very with we're our strategy, our to disciplined the how strength in we managing are of

Operator

from Citi. first Our Instructions] from question is Tower coming [Operator Jon

Jon Tower

traffic quarter. get your the exceptionally a quarter. bit as little if, to perhaps quarter. consumer Great. weakened know, It a never obviously, maybe driving your through And seems as starting second moved third has seem backdrop here well, obviously, And throughout work to I I fiscal ending thoughts. guess fiscal relative basis curious we've off, possible on into the the

for Garden either we're the I'm never about at balance promotions of year Olive But the has any So traditionally or year the type across other know and balance for alter thinking given to of the does weakness starting how possible you're of the timing. see category, that brands your the once a 'XX? I curious the broadly of with ending promotions thinking been fiscal

Ricardo Cardenas

for for balance of thanks of our We're expected really our seen be. to is altering We're the Nothing along we that brands. have year. performance we with where the plans Jon, the question. pleased the right

don't And doing so anticipate anything we different.

Operator

is Carril Next from coming from RBC question Chris Markets. Capital

Christopher Carril

you So just for it comment what on drove in and can perhaps toward outlook, revenue range. bit, maybe changed sales I the But end the little early a little a thus XQ, a and the here? maybe know conservative more on bit narrower year? the but you're lower outlook the the little outlook comp a far is change more the of it's anything in that warrants there -- just seeing

Rajesh Vennam

All right, Chris.

expect offset mentioned inflation the we time bit, by we're little tough, things level. that lower to a that's and a seen for -- terribly high lower check why provided end seeing. we bad of is our environment sales Let's little to We've if was at increasing down a which while we a being the obviously, just softness earnings sales some original to And consumer go the you there's the really our our perspective, us, if should guidance start our went the year, guidance, we outlook. halfway back bit. background we thought dynamic not little but that's with range From slow inflation fiscal improve through guidance a

check traffic is to In the by It's assumption, fact, about year. traffic that points. at our slightly you're down underlying really looking negative basis still coming it implies full if XX flat for

in so from about by of basis the midpoint And talking the we're the started points grand XX year. things, we scheme moving where

December, X full look Now really as in quarter-to-date the question we -- into only quarter. to weeks we're the around

seeing as mentioned we're holidays so still remarks, And think our in Rick his strong of the us. we're reservation prepared holiday by are brands. at in I front encouraged And bookings

so And everything contemplates our know. we guidance

Christopher Carril

Raj, a your brand Got here pricing some Any pricing. mention else did it. at about you're But going you add And insight in thinking Maybe then I anything there guess about there? forward? is around on remarks detail could pricing, you perhaps level? how prepared incremental

Rajesh Vennam

start our Sure, pricing. Chris. I'll say let's with

year year, beginning the the I at talks from about is on And mentioned X.X% think the the X% carryover X%. we of year. our last guidance pricing full about actions to

year, additional year. that, not point, haven't there's a more actions at you pricing lot or fiscal Olive fiscal at you example, least this in can to and any the near So tell -- of can we imagine, taken term. we this I any for take at action don't Garden, this don't expect --

closer you And X% quarter. fourth the to the likely so as quarter into moderate and assumption have check look we Check Xs going growth here. into kind is growth. at to the That's third mid in of in that

Operator

is from Oppenheimer. question from Next coming Brian Bittner

Brian Bittner

you third-party yours thoughts and further you Rick, in incremental you're direction, to seem I that's Ruth. about represent the competitor delivery that point, on a has of on a decided seems QSR you Olive this taking wanted Garden. profitable bearing to incremental opposite to long away it updated that given ask at like third-party customer, Recently, in your against way delivery. from morning particularly And third-party delivery price would systems been transaction, at this could jump said a the be very

table the why profit can off of on be still this just to us So you opportunity? seems refresh and opportunity

Ricardo Cardenas

us. Brian, yes, it's table off the for still

we've that quite investments have it teams to-go we the execute what all consumer, to for we and than few those the last execution and price business experience don't in does is to that And better the a years do eliminated the in it. we while. of few can we and even how looking continue And profitable And make is significantly restaurants for the mentioned, it's to growth our delivery ones As over third-party restaurant, that. we're Chris. it our for had it our existing made a performance different not restaurants sales also profit. Ruth's the the isn't and We've about it at but

out third-party feel see we not as had consumer Even the decision the our to price, to our confident if really cover that delivery. would stay necessarily So more price to price delivery. for that, of about still we our

So out to our in steadfast as of third-party resolve stay we're delivery. now, still of

Brian Bittner

that as you color any follow-up, could price per think your you in Raj, remarks do anticipate XQ? below ears that And if in bit. will my what prepared on in be inflation [ curious little significantly I'm you you just said significantly my versus costs ] price give were a

Rajesh Vennam

at pretty in in higher. bit the I'd a somewhere because little range expect quarter, Brian, inflation we expect the we're XXX quarter Yes, fourth price point the fourth basis to XXX in we to and looking say low be do

Just X% tailwind of from first half a Chicken and wrap [ chicken function on the of half. think into that really we inflation, sales, going the the the year I deflation. benefited have don't back ], about is our

Operator

next Gonzalez Your Capital coming from Markets. KeyBanc is from Eric today question

Eric Gonzalez

other negative My years. growth business in is was few the on a segment. Same-store the time sales the segment question in first for

give So if division. within a about Cheddar's. can wondering us I'm I sense what's know you happening includes that

out anything wondering something if I'm worth with regards division. consumer, calling the low-income if that to there's there's So about else

Rajesh Vennam

Yes.

to segment, the it Let turn over Rick consumer and maybe me the with to talk general. start I'll other about in

line the we sales, much look when performance the negative XX So at we're and as a overall a points basis line had bottom they as let's our as start look still the as above business actually top restaurant by segment, you they were when industry pretty -- because at other with happy total same segment.

exactly things don't We related, and of are our all that's the into don't dynamics, especially details, is brands, some -- weather that stuff. get want Southeast a year-over-year want there one patio to get primarily into those. bone on but to at Now I there

But north point very the XXX traffic to at gap. at when basis quarter, other industry at actually the way, positive of segment, we gap by was the look for strong it the

So really quarter. income other you this was Even about And franchise we last profitable from was feel than good more Ruth's, segment segment when that. year. exclude the also then profit higher their

talk So I'd let I'll in And all, good then that's pretty consumer. Rick outcome. a say all about

Ricardo Cardenas

for, had performance I is to all segment and with really And Profitable and the they our sales segments. we all of other Eric. pleased growth just Yes, growth. reiterate, we're shoot want of our profitable sales what

have the on consumer grew. but a to comp, talked but continues check, overall, a still might both more But that the about been bit for we Some our as in we've seen consumer little still couple quarters. negative we've appear resilient, selective of and

last quarters old, this to XX shifting pre-COVID And are under but drop $XX,XXX was shift And we're last to demographic under under dining years or segment. $XX,XXX. getting a is a frequency to was but years mix, change those And us grown moving interestingly shows QX demographics lunch. higher closer is. had above at below incomes pre-COVID to biggest data moving Our segments, normal gradually back than from prior old, pre-COVID levels. our year -- bit gets over, . I back their little Fine over in below thing, in like our more of and the and will and incomes still levels with last which a mix XX most pronounced feel what has our we're all bigger pre-COVID those $XXX,XXX, sorry, we say across household year, Dining still their to I'm

that little a bit gives too. there, of So a check mix you

for appeal their believe deal I'm Thanks what for well to of before, on experiences does to mean again, us? and prepared confident what does with. will they consumers. said do and create team to to our to promise, operators -- we we We brands positioned deliver we've for our the what which mean brand have? members breadth that outstanding but guests. What and the that and day So exceptional value continue that that for can our every portfolio, we're have our

Eric Gonzalez

fine it we a as lapse, And maybe out the part in it you topic to follow-up, we're abnormal talk helpful. as smaller to Can while really that comment the woods of relates and business? start about the -- the on of whether seasonality the dining are divisions. and when the -- in of on back the should half we comps see post-COVID positive That's

Rajesh Vennam

Yes.

dining bit. summer year, normalizing. was seasonality fine trends a And of about from months into little we in if last we about So perspective, the some recall, fall talked the exuberance you continued there that talked kind a

so mentioned And November. positive quarter, we where the as are with actually in we in at his look record And ended prepared -- with Thanksgiving same-restaurant about quarter as remarks Rick sales this we sales.

record of brands had dining All our fine Thanksgiving sales. reservation brands and

improvement. So November an was

it's also you look segment, done year-over-year general, at If most seeing alcohol. in check Dining by is really Fine negative where the we're and mix

was we I'll pre-COVID, -- preference higher. it Now exactly alcohol that tell for that with lot consistent today just you where was a year are the last

year-over-year, so And drag. that's a pretty big

think fine really points. the In mix I noticed. that's is XXX fact, almost we've And basis our one things negative dining of

some of last are Now fiscal both holidays. see And this into the as to is, going bookings last and our private reservations mentioned, to Rick then into in holidays half, should we as events in we dynamic make strong abate and year. we see because point encouraged started that I'll QX get

Operator

Charles Next question Andrew coming Cowen. TD from today from is

Andrew Charles

for encouraged impact focused lean back leave Garden does member more into so never the eClub Club it as obviously, in the members growth? or was avenue for Rick, week Olive just the discounting, early half this quarter? it possible an -- extra you of million access be won't for that earning in early this recognizing the Or to profitable access year, quarter immaterial on is $XX of the you're an to database

Ricardo Cardenas

for delighted else a was wasn't something they right? but access, it our huge get. that no can that So users, eClub it something one Andrew, early Yes, impact got

having of to continue to to give them to to being talk find ways benefits part eClub of so discount. without we'll And necessarily them the

to first we'll was there for it. the We're [indiscernible] results other to what one tries that's so of at the look encouraged to And continue use at. but look continue And ways by that we

Andrew Charles

curious Raj, the then we labor And just down as back of inflation think and COGS the that between guidance, the how year? with half does break about

Rajesh Vennam

that I'd X.X% we're bit saw is as the means fact lower, stuff, which the said, not being from to highest terms QX labor prices as in COGS just at of being necessarily inflation. full looking wrapping to up. what it's XX X% a absolute contracts Yes. saw X%, X%. quarter, say the back going that on are moderation to we wrap year-over-year. QX first closer in of seeing From the on It's the food basically a quarter of annual labor year for little inflation. on second approximately and a perspective, all around basis our front, we're total slight we you points a about Again, function X%,

projecting back that not for closer to assuming some, this -- to we'd at it's that for we're are We extent But welcome moderation, there it's X% the would significant the but is half further point, -- that. labor. be

Operator

Morgan Harbour Brian Next question from today coming is from Stanley.

Brian Harbour

to Garden on as your is check about in seeing brand, more specific comment it brands? just Raj, Is Or than Olive Garden little lower what is you versus something you're well? expected. not it Olive that bit maybe previously any a

Rajesh Vennam

of first kind negative mix our of talked in think about talked in brands. bit casual basis Look, I alcohol. points a mostly a where at and what driven general the it's little saw -- We're we by we seeing about of Yes. we've about XX quarter continuation

basis basis about used is think you're But X% be, is as big, it not mid-single XX check check in growth to closer so environment mid-single-digit you about digit, you're that about from growth, in as points, XX not points the as XX a to a we deal." say, it talking normal is be when big talking would check perspective. a when would So big "Oh, growth, when

similar mix as fiscal bigger from of another level the also, we at that to but anticipate right the beginning I've earlier, I we as thought to place as which with year again, abate, more necessarily traffic we the into months now, the check that's we year. And drag the should on can what's six is -- said, That's focus extent a dining, happening But our the be. QX, into But traffic factor we levels get year. the fine is didn't say great that the going of said is into traffic. to

Brian Harbour

just food you've more cost Yes, items of lead maybe recently? on makes sense. in Okay. that kind the well. any side able favorable to there Were specific of some is expected? it just you And come that there than benefits to question as been kind also a scale Or

Rajesh Vennam

Yes, pretty remarks, came except a in my much I better categories as I we think thought. beef said all in bit little than

-- are from the was further be up a a contract And the then for we seafood that just be something that the We -- can we're with. to in deflationary. other now produce items, negotiate did bit rest than better we we is year, back for little continues deal for and half, of locked chicken for basically XX% to low that's single-digit which inflation thought. And going

months of year, team on the given to go what we our produce contracts the but in back was a and months and or had, be our ago some thought ago. the Going us X was we into some just based environment X to challenges favorable thought from partners with to the we market, negotiate able that there going was

Operator

Jeffrey Your next is coming Bernstein question from Barclays. from

Jeffrey Bernstein

I'm wondering to if I earlier you second seem expected. things competitive an as think going the Rick, change just could promotional you no to about in your question behavior half plans, dining. that mentioned talk was be broader there Great. casual across

uptick sales with continue of be trends, kind in seeing concerned incrementally are to in that softening some commodities discounting conjunction traffic promotions especially of think if ease. to I industry there an and drive may are the some

casual just terms So talk across about, then I beyond broader in of follow-up. one your And dining what had outlook? just can you're you that again, plans, seeing

Ricardo Cardenas

we we're see Even what television profitable in competitive with growth. we're, an But increase same as said, we advertising points, industry a the QX, basis the top seeing and last you by XXX discount. in by on exceeded quarter. we on basis as I as activity Jeff, point quarter exceeded focused gap sales the year. second in increase sometimes of at -- last the the XXX is I'm We had second in was quarter This XXX sorry, which saw well.

what doing intensity, with little XXX from like also margin competitive competitive by by a feel last we segment bit we -- year. we're in profit the even of our is increase working, an basis improved way, points So

which about our talked guests strategy, And our so stick any and we're to many providing value to everyday continue times activity. to our we've marketing going use filters, evaluate to to

Jeffrey Bernstein

And 'XX were to which through opening Understood. if past higher, the actually lower. plans, unusual, the change the be was in halfway then, fiscal few the tweak there I Raj, it years, a was openings to guidance, like going somewhat feel tweaked year

So maybe is. I'm could the what about driver you of if talk wondering that

to on of of any have some for about openings better the assume permitting I great. think maybe you of terms can maybe I I seeing uptick that's CapEx lower the build would construction in as color plans provide uptick talk and But heard you're costs, improvement to reason kind anything your that just accelerating and as it in the industry? or broader unit you're of estate speed availability, or real think pertains be that the well.

Rajesh Vennam

Jeff. Sure,

X thought so in we line in frankly, the be a the thought a with actuals we holidays, the to open terms burned based the time I that some in for think was more start in the would built about able rosy some before that last of were last -- on and me year. years little the little Let terms having uptick restaurants probably bit And conservative comment of holidays. X years. the were our was got who around the We after projections team we openings the

a And so that time better. line is getting bit little

us and that's what's So a more, up. helping deliver bit little that's showing really

focus is cost our effectively. Look, to want but to continuing grow,

going are the balancing X. focus We to on

by our And in uptick working And about so [ that, and ROs that we're towards the yes, CapEx, CapEx to ]. -- point driven your that. understand the and teams is

Operator

Joshua from Next from question Long is today Stephens. coming

Joshua Long

LongHorn a are back second you've side, been there the lot but are well. the approach and any areas with you think particular particularly into you kind to consistency year, trends segment strengthened Olive segment pulls. up? the majority and just particular profit of if curious the driving a on holistic as business. really Just the the that of to Garden know approach impressed there pushes touches to this areas of the and/or could But the Impressive been trends. the putting see about that profitability half of on basics When dig you've margin given I

Rajesh Vennam

was in profit unfavorability this is the a X Yes. biggest I'd in big COGS coming segment really from say last look, the years. which the growth year

that's So to as really kind we're of basis. get drive helping moderate, starting on commodities food better year-over-year a costs

one that's profit of segment So growth. of drivers the

in about very in the strong. versus year, half. first inflation to talked you profits, difference helped. more it do think versus the We a last pricing inflation. That pricing overall segment also got bit we also quarter was I We if have of little as look But fourth at

we level, Darden were over the think XX%. I at

was the in some the more And so things. bit are there back to of in than -- more we felt on had all But we general, the like get we right -- of first focused half are half. our segments, all a little teams opportunity our probably

is talked and that managing P&L. at our year on better, rally focused we we on and things that's the costs of team our control One the the around throughout focusing and our of can controlling showing beginning the teams what about

progress and I our very be teams And would we'll so pick to In one have happy disciplined. general, there's on. no the made, specific we're thing with continue

Operator

Saleh is today question Peter Next BTIG. from coming from

Peter Saleh

And to want just conversation that out are more been the units? individual where than then just seeing independents? from coming are you've the over willingness How Are Are construction in? in more are you broadly, expected you us formation costs. Could Or seeing that on development seeing you back just same construction did to you of the to line? several guys build lower an and they I give coming kind Are of come costs around seeing you it update the a more there? trajectory? is is past more quarters? Great. more of in what restaurant

Rajesh Vennam

the obviously deals, have me average. we in let with costs on the on line and Yes, are some one-offs cost. thought in at general We development Costs start here unique where where costs over we the of than couple based thought. more But the in we year, have higher years. openings this coming on into experience had going the into embedded we some had are last

at is more call, projected have line kind last said that are we're I would may point with to has peaked, so and in starting -- the bids what too, this receive of say And inflation we believe budgets. project our that our are this we we --

a that's thing. good so And

is. building hard there's where say seeing I rate standpoint, on independent of data the to from us interest excitement for an restaurants, environment that lot that From independents the a it's actually think we're new given

impacting So And developers also gone extent, what some hear. in that's up. costs we the some financing to have from fact,

the build as these earlier of build get the in effectively it. overall to going about guys still better restaurants we're we're do macro I to it -- cost going the the we're I overall, we're would with my our we're thinking going it do. focus. prior restaurants. But to our comments cost-effectively. how So about That's do but today, -- -- want happy to macro opening I growth, We cost know we're and development, you number And say, than mentioned

Operator

David Next question from Evercore is coming ISI. from Palmer

David Palmer

question A productivity. on labor

versus X% a little maybe cost the labor quarter. the in in over done You It job over up a up guys there. like little was first unit a bit looks per quarter that great X%,

you both was think roughly said in X% quarters. wage increase I

down that of percent of drivers labor what So the hearing few productivity? maybe if in are could a clarify hours that if I'm you fiscal some XQ right, is so, and

Ricardo Cardenas

We're few history it to team This we've members different. last quicker. years. discipline than had we've no had the getting over up more of to David, is productivity those improvement training a speed get yes, still in we've lower had because in and year of turnover investing enhancements. We're

existing training also on our spending more productive. We even are team members dollars getting

our enhancements inflation. between and our our wage the were labor inflation difference So productivity

we're our able it better lower their some be from AI even to turnover. continue also get teams XX-minute better I to business did added than to restaurant tools as added to seeing by say tool increments, their I forecast benefit, And would before. said, with forecasting our belt business. We've

David Palmer

you're Are second you? related what how the the continue to that that, that that, sort with of for in That's guess or does thinking Is labor labor the thinking should total -- outlook that wage minimum I you I April. the and wonder great. affect California wages about half? productivity And coming in

Ricardo Cardenas

Yes, David.

the it's the in half necessarily outlook where different labor total been of first isn't Our that year. than

still productivity expect enhancements at we contemplated to and I mid-single in which having continues wage as anticipate of we to that. the think even amazing levels. regards Everything California, in brands. our proposition. back we'll employment We will across we in we're say to employment in contemplated in FAST have guidance. digits, inflation around to California, monitoring down, Act our states of all we're the that have pre-COVID that that some should it turnover our closer is us all to much which pretty have proposition better an But pre-COVID levels, I is do tick continue get to

most lower it turnover our is than Our in are wages places higher. is and in California

react okay in that But something So to we'll changes, we're pretty we if California. it. confident feel

Operator

of today Sara Next Senatore Bank from is from question coming America.

Sara Senatore

please. a follow-up, One and then Great. question

as pricing and pricing. ahead just either second that the you've acceleration -- not, already and versus point also the I between been traffic and you in gapping gap course as so see coincidentally reverses I the traffic. or of kind guess, -- in there's priced your might you're below result. but industry, half, an XXX out inflation the your on gap price your positively kind So of think historically, and basis know traffic that versus over your inflation. the pricing historically, inflation of inflation gains seen Is of a you the I expectation that in

So I that kind of a around thinking the about have I And as follow-up. guess margin -- then question traffic? trade-off first that's you're quick

Rajesh Vennam

years. me start last with are pricing just over on grounding let respect So with X to we the us where

just If basically at you years, to think X last about under the our cumulatively, closer XX%. level, the our has Darden been being XX%, price pricing for has

at time restaurant the For CPI frame, XX%. that's same where look if you full-service is,

basis CPI points a of basically XXX over created have to that restaurant X full-service gap years we cumulatively. in time So the

you service, at if at are look XX%. fact, limited In they

that's gap So basis them. a X,XXX to point

that CPI the over that sure points. last pricing is multiple time we by overall very and to overall about we've how gap and over X by talked creating basis have So way, been this to we're we've going prudent, thoughtfully we're deliberately it wanted below frame make price times XXX about very years, and and the the

what strategy do and is experience we separate are is the pricing of execution, driver stuck one drivers continue on. actually the I our So that. to from we guests. of other industry, us of we've the strategy can consistently to what under say that's which But pricing our teams to inflation the we'll combined all the And our the greatest focused and our That, of is outperformance. inflation providing big with aspects, would ourselves from executing helps believe below traffic

Sara Senatore

Understood. little like inflation it I question cohorts. swing the I then a guess different the the not change fourth And first in look it than sort income that quarter, different of sounds I little think, even sort a big your cumulatively, expecting versus said to point, piece you trying you're just together in just thinking but might quarter, traffic will value the on as about of in to bit. everything relative sequentially, about a have a like

the same back you're So you're pre-COVID percentage base you COVID, closer, you're terms a are time, of in to not there, the at quite of as seeing your up you're getting management. but high customer in where check but income

it. put finer on just So a point I guess, you maybe can

income check cohorts coming the the hire lower cohort. is So income or management from

this lower to trying back everything past, of getting to income like kind together. cohorts And piece and now of sounds I'm you're the it may But more patterns. have just some is splurged normal in

Ricardo Cardenas

check cohorts income Yes, Sara. from from income the is the is management The in lower cohorts. more than coming it fine dining higher

said, what Recall, normal in before, I the wrap. Raj we whole as point follow-up. Most on we've last bit a think few back really were a about surging, your to they euphoria we of don't back half. And And getting lot years. in little level. regards in pricing, to of the is a have talked the we're of have pricing more

embedded. how is of most you inflation, we So pricing have think when about much already versus pricing our

that's delta really is. where the And so

the little see see They today. couple might more they are a brands. in going to price a So isn't consumer of bit whole a seeing lot than

about still pattern. where we a big we think feel make our really don't traffic really it's to good So in and going change are, we

Operator

coming O'Cull from is question Stifel. Next from Chris

Unknown Analyst

at This Chris. on Raj, the LongHorn. I curious traffic was is Patrick on for

dig quarter there just And check other are or mentioned last in and specifically could into you maybe trends also you the that management, If more, whether at bit LongHorn. than guys seeing you different any the just to relative to what industry a of then segments? little relative some

Rajesh Vennam

industry Yes, Patrick. in That's -- for held and the up about When pretty when double same-restaurant well. performance at you look a but very traffic dining by room. the the in up combined dining off-premise I The both -- outperformed to around pre-COVID, by We They the strong had at they retention have they room are digits on significantly quarter, XX%. right? sales. for talked quarter look LongHorn, was the

today, the who years are would years have get have take and we there XX LongHorn running X we ago, it to got there at X said to in would volumes So years.

momentum, their really of and see hope continue. So terms happy with we're that where is in LongHorn to we

Unknown Analyst

overall what lie from where supply you curious, some Great. between might I potentially opportunities exploit and Rick, as you think to you in it that on you are about you to leverage? think to just what you strategically, just and step And the get next you XX was months softer technology or of environment, thoughts those the gap it your chain? opportunities curious Is competing a the can competitors? the how your biggest about advantages Is increase -- I then, mean, have? That's continue helpful. when business back over the scale

Ricardo Cardenas

our over believe to that term will XX next bit over in teams make we been I last easier invest few the to say, to execute. -- that the of years. Patrick. But of technology short for months, continue the pretty things Yes, little doing we've we versus a kind it strategic

schedule As I tools That scheduling. And we said, drives we've performance. for if got execute better we better. better, AI

advantage strong. scale chain is pretty supply Our

for which our And check overall pass lower get growth pricing to versus to through on can industry. able with so consumers our we're the better we food,

operating would us one And it's say grow. I there's that's continue no back-to-basics going what is get to to our philosophy to nugget, so

door. really, And what's Raj lot get and excellent of brands as continue really and using better. excellent do, restaurant execution we That's to to than that's the an execute necessarily and bullet. food, not we'll by inviting And do that's scale strategic. our That's next not it well. service atmosphere, hard better what's silver mentioned performance, earlier, is executing to a our That's driving help a our

Operator

Our from next question from today is coming Dennis Geiger UBS.

Dennis Geiger

on Just quarter? go-forward more what in wondering was there. thoughts off-premise, And little it talk a the could on if any bit you the

Rajesh Vennam

slightly Garden was for get how but into below. more see see Olive bit And had a a we on Garden. at is Yes, at going now as basis, XX%. at year-over-year goes and -- it's -- the see we'll Olive But net off-premise forward. the we before should LongHorn so that, at long pretty the little levels similar XX%, we holidays, that Dennis, Typically, we we'll quarter to

like pretty our think we're XXX it's I -- or points system, stabilized basis that it's across but probably something lower ranges. these in

Dennis Geiger

great. That's

broadly regional bit you be know seen? about. I then some quick just thinking portfolio things Just of segments one Anything some little regionally for brands, one regional, earlier across any across on talked to about that the you've a

Rajesh Vennam

with fairly South where little softness crazy. there's a we nothing California meaningful. what of quarter, to It's and Texas a but nothing about. of last mentioned but little bit note Nothing in consistent bit stronger, talk

Operator

today question from Silberman Deutsche is from Lauren Next Bank. coming

Unknown Analyst

Congrats.

you I you or challenging return talked more And to changes to in see see management are before about in monitoring precursor you down a think check as normal a you've how Do generally traffic more check behavior? traffic that? before step environment. this

Ricardo Cardenas

a more a the check euphoria of of Lauren, We the consumers difference, see more lot not Yes, Rick. function is management feeling little year-over-year bit necessarily a this pinched.

the below XX% side. traffic on and said, both income on Now -- closer and going going getting bit is households side the the little The we that's up. check -- as down, we we're mix higher a is

of not So trend. last by more concerned versus hugely really about it we're concerned long-term kind not a management we're or that driven check was now really because year the

Unknown Analyst

for to up? then range just run we quick that Or pick marketing. And to Great. the right The $XX should a million $XX is expect running, that million one currently you're rate?

Rajesh Vennam

to said basically percent I year. Lauren, we're to of going XX versus sales Yes, basis between think last XX points a be as we've

-- should XX be should you if that. XX you within quarter be at we bps last year, look any of and to So

Operator

Barish question is Jefferies. Next Andy from coming from

Andrew Barish

clarification. one Just

term please. On side, I've used Were units other the then relocated got follow-up one question, you unit reopens. and those

Ricardo Cardenas

relocations. the that I a after temporarily We Andy, X%. of -- Yes, we due closed couple couple in reopened fire. of We being restaurants it had to think had was a

So bulk those of that's the really X.

Andrew Barish

And Okay. quick just a update quarter. last

that realization but it potential You is gets reinvested. half of synergy chain kind at the in going talked come about the supply Or earnest? some going Chris, more reinvestment Ruth's things back of that? like more be of that started and as is integrated to in year Has to

Ricardo Cardenas

already of some reinvestment Yes, is that starting. Andy,

as some chain And happens it converts. supply the of

don't the that's we was think an restaurant I yet. every in file. of improvement their One in investments made

December, their on be for that of one closing Another team Christmas we talked and Day. investments in the will that about, doing is we

We're shared we're track with still team some and consistent and our previously, our on those still things time with But we're line, there's with guests. we making consistent. what in. expect to for coming we've even So our members investments accretion be are that

Operator

Gregory coming from today from next is Your Guggenheim. Francfort question

Gregory Francfort

you has And Rick, composition how that traditional you of or channels the a those the ago? just digital categories? remind one how but more versus pre-COVID maybe few either on across marketing. years us other versus Can returns about or think changed

Ricardo Cardenas

yes, bit LongHorn were when because more digital, TV. on partly on of came we're LongHorn Greg, was really a we COVID -- before off versus pre-COVID, television

isn't television, a mix. a side. are mix on more come the off they Olive They did but digital Garden's came substantially bit we bit a So different bit also before. little digital in overall little than off of

us digital, what of on some each the were were turning we media one COVID, the in we'll test time front on of those returns it other when we tested we tell at much is things that we little we to things analytics good we're during the are. And more pretty see see have have good things. to more. able are started the news testing benefits were was and those to if a COVID able returns We that on add of And -- to able one we on, the because the now to digital And actually some didn't bit there future.

Operator

question Andrew coming today BMO. Strelzik Next from from is

Andrew Strelzik

just when on of Does and But that things or up like that. certainly have promotions and your inflation, you look how be some that, more grocery the that or factor you restaurants some makes commentary to to about in My of relative relative to larger think the food on and you that the do about would perception value a and other follow value I one, certainly talking deflation guess made first perception, that into wanted Or on lot and sense. grocery, thoughts view any all? guess, you I and at you calculus brought work home of the if anything, relative see chains great. food any at to

Ricardo Cardenas

couple A of things.

sustenance about very dining still I before, getting because product. the we earlier, not your have X family in that what's together other if a I enjoy versus a out gap discounts mentioned ]. have about It's really mentioned last we pricing years retail is deals, or [ moving say, to we've mean over the do and retail. friends And with taken to happening probably Raj they're just big as more the As than meal. would it's in starts

the And so side. that on us helps cost

home, food they then So eat. we at think to as to out don't the and really "I want look because, to away out to difference partly I food go go they said, and where people determine about, between much very at from very want home eat",

away in difference over home, the in correlations term. food long seen really long, food haven't at from we so home the And

Andrew Strelzik

it. Got

Okay. one other just That's And question. then helpful.

learnings I good the as Ruth is the in very surprises progressed? still very, or guess, On And shape. balance sheet any integration, that's

sheet So you would thinking about that making balance are integration from how Or from either here? the another preclude you acquisition?

Ricardo Cardenas

have determine the by transition few Let months transaction. saying have me capital us X We to from really is. the changes they months. a that and our with to pleased next that integration and use the X the Board we've have But the start to from we're and We're restaurants of close doesn't We'll the things. what to make move we of over continue our had. talk right the preclude still other

mentioned, until something you we a this As balance to comes else but on do sheet, going have strong we're work continue to along.

Operator

is question from Next JPMorgan. coming today Ivankoe from John

John Ivankoe

share cycle? going there what that presidential have but what January have consumers could also was disruption that consider those of you 'XX breaking election it's to of from love into winter. we months. that go perspective? previous cost I a obviously actually the mean topical love or don't how And bounce should kind think been that by experience that. 'XX I at as another were in kind First, operating not little I kind media maybe kind I least guess is on early of and is dining hoping know should lack calendar help back on very be COVID bit my a election then years, mean, we helped is industry warm may is a secondly, you my kind style, lapping considering we And do months of just really the of an Obviously, and February. you laps perspective? to anything if your difficult you? normalize of year you of you of case comparisons much mean, that helped I I perspective be do through of in it's unusually to know with would I companies

Rajesh Vennam

weather was last a different was for way you terms obviously, All answer third is in just February, Omicron that favorable wrapping because, on averages. quarter, when the our winter the at January, pointed try It in quarter to as December, historical whole you aggregate year, situation, a that let year seasonal right, John, before. in which makes was quarter out, to me third dynamic. But of the look sense the in from

essentially quarter third we in in And do the weather a winter headwind quarter averages. be the based so expect to third on just historical

for is I If I that headwind the us, you the been we're can what it would industry, expect at it's same about the industry, like that's looking a -- but it. tell year, there well anything but would it how I don't I of want have to is historically, the this for speak can't confidently

into that's restaurant -- part the of earlier, we think have primarily being comps -- fact, for because it. we quarter of now about the the weather reason that's In we lowest maybe for the year, same headwind. talk that I'll Rick the -- within and -- this And sales reason about third internal can but have presidential part get this of our estimates didn't the years how

Ricardo Cardenas

a focus It's probably of lot TV The think in feel when to if as to go past. out was about going chain out That we digital, the our the on out, media on people this we on there. to be dining video said, they're gets to our as I much is But in maybe we're on it with an how other television an media contentious depends not online so Yes, how pretty We election news reliant and is past and John. aren't election advertising. a and continue that year. going election And restaurants more were now there, good as Yes, as this year restaurants. there's come strategies reliant more contentious more on concerned out is we execute much in television more the casual were much past. and reliant television. confident

Operator

Raymond question Brian coming from Vaccaro next from James. Our is

Brian Vaccaro

a quick Just one for me.

looking how levels? on bookings your on private could perspective year-on-year? to dining you're that might compare comments, to you the up any back Or up help degree which pre-COVID Following frame

Ricardo Cardenas

talk up year-over-year. quarter current we're on Brian, in we're about to dining Yes, much private how this not going

after you happens that So ends. quarter how let the we'll know

Operator

Your Securities. next from question coming is Setyan Wedbush from Nerses

Nick Setyan

is wanted inflation. big of I change guess, kind you've pricing inflation there inflation there just below always up -- to are the follow beyond priced below Historically, really pricing enough magnitude of margins? I a the operating is the Or the on give to are below maintain in QX. QX, in initiatives in medium and then of willing to X-wall term? you margin up terms some

Rajesh Vennam

this pricing Nick, part cadence the actions. when took is think of we I really of

to of actions total a a of X% from took are last the clear last of year, and back taking just is year-over-year we a year. in pricing So we it's the of a pricing a see if lot the this were like year. come function X.X% that not that's on through of beginning because the more we're going why few, in you have actions recall than carryover half half to the at year. we're basis, There very we're new going the -- have pricing to instead we first There's X% that

try are with team year. a this typically our -- -- fiscal pricing actions we our there year. Typically, So take few to we

take are look we can the clear margin we at getting year is been we've the growth. So now longer-term some view that very change. on it things and we a way But

framework, about I'll we expect kind you of margins. which Our growth, and our long-term to grow to guidance refer margin back over then talks time implies

if give we do that's maybe up the quarter, right the Yes, of look mean, year. we for periods thing given time. at Any at I of margins? longer day, end the over the

Operator

coming today Gargiulo Bernstein. from question next Your Danilo from is

Danilo Gargiulo

over I made Raj, on time last you expansion want the the time. on to -- that margin

scale? had you and incremental do where to in margins, you run if the long restaurant the understand long you expansion, run level about results of as kind the continue margin the that the us help the upside over can see think solid task given meaning already the So you biggest for you

Ricardo Cardenas

Danilo, this is Rick.

we're out sales over margin think where the to going basis to better XX able a great And our of growth. put year, our at above for that experience leveraging one the to fairly system consistent get XX our that philosophy years in been back to below over the be we than in we'd out searching and that in operators to our that strategy, operating long-term long-term points updated or costs could back-to-basics that. any inflation the year a still profitable price below scale through it provide better next execute in had the be be margin, You framework we're we've door. our our about take just executing restaurant out field dining that using or expansion And and

those things gaining be than drive those our margins continue that sales do profitable There are less little we that we a growth. things, will have done even and to expansion side, opportunities. bit market we margin that. and more we If years we we're may because may willing years but where to opposite on we're do have be still gain share, There share, the

over look run. it As quarter-to-quarter. about mentioned, at long we it Raj think the don't We

Danilo Gargiulo

excites of to you mentioned improve unfolding is level you -- AI do years? And the and technology stocking you about then road some comment recently what on to be of next going in the implementation What can the few the the think map store. you most about the in

Unknown Executive

lot our up in I bit would and last next as tech segment, back the it But improving little primarily pick years, working would the more maybe few over on the energy guest think technology pay that, years. easier a off-premise to Danilo, plans making of the focused things, we're Yes, the order for consumer-facing. few be we especially the AI on necessarily experience, and of house not part that of on a

lists. for the technology wait friction. to with to-go the on their able being a friction name guest on goal we've of is lot And on Our eliminated put experience eliminate to

our to in friction team. want them. eliminate easier we for to friction Now our it Eliminate management make

for easier them that don't doing added. they is time receiving, schedule, with we time But can think with which time if tasks and spend it can scheduling, make less doing spend lot team spend to more a as are we guests. their nonvalue-added have So ordering, they to what their much and value

future, that impact -- making making the a we from And of so be consumer. whole the see on investments may you not in the might lot we're technology

are be trained. the from consumer because to our it see You'll going better teams

focusing And on. so that's what we're

Operator

management or session. question-and-answer floor We've back turn further like to reached you. end Thank of the over our I'd to for any closing comments.

Kevin Kalicak

plan remind conference happy your with results opens and holiday. before concludes like call March Thanks have participation, Thank call. XX, our you. a market that That on for release third follow. a to to Thursday, you the I'd quarter we to again

Operator

That and does conclude teleconference you. webcast. Thank today's

day. your a disconnect and have this You for thank time, We wonderful you at your lines today. participation

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.