Zach Ogden

Zach Ogden asked about the specific brands driving strength in the 'other businesses' segment's 3.3% Q1 comp growth. He also inquired about Darden's observations regarding the younger cohort (Gen Z) more broadly, beyond delivery, in terms of relative strength or weakness.

Answer

CEO Rick Cardenas stated that three brands in the 'other businesses' segment were positive, with Cheddar's Scratch Kitchen having the highest comp, followed by Yard House and Seasons 52. He noted that the younger cohort (Gen Z) performs fairly similarly to the rest of Darden's consumer groups.

Zach Ogden asked about the specific brands driving the strength in Darden's 'other businesses' segment and what factors are contributing to their outperformance. He also inquired about broader trends observed in the younger cohort (Gen Z), beyond delivery, regarding relative strength or weakness.

Answer

Rick Cardenas, President, CEO & Director, identified Cheddar's Scratch Kitchen as the most positive performer in the 'other businesses' segment, followed by Yard House and Seasons 52. He stated that the younger cohort (Gen Z) exhibits behaviors fairly similar to Darden's overall consumer group.

Zach Ogden asked for clarification on the sources of strength within the 'other businesses' segment, specifically which brands were outperforming. He also inquired about Darden's observations regarding the younger cohort more broadly, beyond delivery, concerning relative strength or weakness among Gen Z.

Answer

Rick Cardenas, President and CEO, identified Cheddar's Scratch Kitchen as the most positive performer within the 'other businesses' segment, followed by Yard House and Seasons 52. He stated that the younger cohort (Gen Z) is performing fairly similarly to the rest of Darden's consumer group.

Zach Ogden of TD Cowen, on for Andrew Charles, asked about the margin impact from initiatives like 'surprise and delight' and increased portioning. He also inquired about the drivers behind the significant increase in third-party delivery volumes during the quarter.

Answer

CFO Mel Hope explained that these initiatives are not considered margin headwinds but are built into the company's operational structure and guest experience. CEO Chris Tomasso added that execution improved in Q2 versus Q1. Regarding delivery, Tomasso attributed the volume growth to optimizing the business model, including reducing the surcharge, and improved operational execution (accuracy, speed, quality), which has enhanced their visibility on third-party platforms.

Zach Ogden, on behalf of Andrew Charles, asked if the Class of 2025 new stores were opening stronger than the Class of 2024 and what was driving this performance. He also followed up on whether the expected tariff impact on new store build-out costs had changed.

Answer

SVP Benjamin Porten confirmed the fiscal 2025 class is one of the strongest in recent memory, highlighting the successful entry into the Pacific Northwest with the Linwood location becoming a top-five store. He also noted strong performance in new DMAs like Fishers, Indiana, and Bakersfield, California, which provides crucial data for future pipeline development. CFO Jeff Uttz added that the previously stated worst-case scenario of a $300,000 to $400,000 impact on build-out costs from tariffs remains their current expectation.

Zachary Ogden, on behalf of Andrew Charles from TD Cowen, asked for the expected same-store sales cadence for the remainder of 2025 to achieve the full-year flat guidance and questioned if persistent tariffs would alter the strategy for retrofitting existing stores with Infinite Kitchens.

Answer

CFO Mitch Reback projected a challenging Q2 due to April's softness and loyalty program launch headwinds, but anticipated an acceleration in Q3 and Q4 driven by easier comps, the return of popular seasonal menus, and a tailwind from the now-established loyalty program. He stated that even with a $100,000 tariff-related cost increase, the ROI on an Infinite Kitchen remains "wildly accretive" due to significant labor savings, and therefore the deployment strategy would not change.

Zachary Ogden of TD Cowen asked for a rank-ordering of the factors contributing to the 400 basis points of traffic headwinds in Q1, including weather, consumer pressures, and the long-running LTO.

Answer

CFO Katherine Fogertey clarified that a low single-digit headwind resulted from the combination of weather, wildfires, and the extended LTO. She added that an incremental pressure from broader industry shifts emerged in February and March, continuing into April.