Uber Partnership with Olive Garden
Q: How will the Uber partnership impact Olive Garden?
A: Darden has entered a 2-year exclusive partnership with Uber to provide first-party delivery for Olive Garden, expecting incremental growth over time. Estimates from Uber are "pretty big," but Darden isn't assuming that in guidance  ,. They may expand delivery to other brands after ensuring the system works well. The partnership is fully integrated into their system  , with delivery being cost-neutral as the delivery fee is paid by the guest. They do not plan to advertise on Uber Eats but will leverage their 17 million guest eClub to promote delivery.

Sales Trends and July Weakness
Q: What's driving the improvement in sales since July?
A: July saw unexpected weakness due to factors like storms, international travel, political volatility, and a COVID uptick. However, sales picked up in August and September  ,. All brands are performing better, and this improvement is included in their guidance  ,.

Olive Garden Promotional Strategy
Q: Will Olive Garden increase promotions or discounts?
A: Olive Garden is shifting marketing to highlight value, adding more price points, and bringing back fan favorites like Never Ending Pasta Bowl  ,. They may introduce limited-time offers but will not return to deep discount promotions. Promotions will be simple to execute and strengthen competitive advantages.

Margin Outlook and Inflation
Q: How are margins affected by sales and inflation?
A: Margins at Olive Garden were impacted by a negative 3% same-restaurant sales decline, leading to deleverage. July's unexpected sales drop made cost adjustments challenging. Commodity inflation is better than expected, with full-year inflation around 2%. Pricing is expected to be in the range of 2.5% to 3% per quarter.

Speed of Service Initiatives
Q: How will you improve speed without rushing guests?
A: Darden plans to speed up the dining experience to meet guests' need for faster service without making them feel rushed. They will focus on operations, valuing guests' time, and capturing occasions where guests have less time. This initiative requires some investment in technology but isn't expected to significantly increase staffing costs.

Differences Between Olive Garden and LongHorn
Q: Why is LongHorn outperforming Olive Garden?
A: LongHorn benefits from being in the steak category, with guests trading down from fine dining and preferring steak due to high grocery prices. Olive Garden has seen a slight decline in first-time guests but isn't losing them to competitors offering deep discounts. They're focusing on highlighting their value proposition to attract new and infrequent users.

Decision Against Uber Eats Marketplace
Q: Why not offer Olive Garden on Uber Eats marketplace?
A: The additional sales would need to offset the current $1 billion in to-go sales without fees. Darden believes most guests come directly to their website and that their own marketing and technology make the marketplace unnecessary. They may consider marketplace options in the future.

Fine Dining Segment Challenges
Q: What's causing challenges in the Fine Dining segment?
A: Fine Dining is experiencing softness due to consumers spending elsewhere, especially over summer months. Suburban markets perform better than urban ones. Darden expects gradual improvement but has no exact timing. They're introducing offerings like wagyu and wine at Capital Grille but remain cautious about altering the brand.

Delivery Fees and Guest Costs
Q: What delivery fees will guests pay?
A: Guests will pay a delivery fee of around $5 plus 5% of the order. On a typical Olive Garden order, delivery would cost about $7, excluding tip. This structure makes delivery cost-neutral to Darden.

Earnings Growth and Guidance
Q: What's the outlook for earnings growth?
A: Darden expects earnings growth in the mid- to high single digits over the next three quarters. All known factors, including the Uber partnership, are included in the guidance.

Commitment to Menu Simplification
Q: Is menu simplification reversing with new items?
A: Darden remains committed to menu simplification. New items fill menu gaps without adding complexity or new SKUs; when items are added, others are removed.

Labor Costs and Staffing
Q: How are labor costs affecting margins?
A: Labor costs are stable, with hourly wages up around 4%, comparable to pre-COVID levels. Applicant flow is high, and they feel positive about the labor situation.

Traffic and Pricing Trends
Q: What are the traffic and pricing trends?
A: Olive Garden had pricing of 1.9% and negative traffic around mid-5%. LongHorn had positive traffic of 0.7% with check growth of 3%.

Never Ending Pasta Bowl Performance
Q: How is Never Ending Pasta Bowl performing?
A: Preference for Never Ending Pasta Bowl is up slightly, with more guests opting for add-ons like proteins. Approximately 60% to 65% of guests add protein, higher than last year. They anticipate it may wear off toward the end but believe it's better than not offering it.