Executive Summary

Q1 FY26 delivered $3.0447B total sales (+10.4% YoY) on blended same-restaurant sales +4.7%; reported diluted EPS $2.19 and adjusted diluted EPS $1.97 as Olive Garden (+5.9%) and LongHorn (+5.5%) led comps while Fine Dining was slightly negative .
Versus S&P Global consensus, revenue modestly beat ($3.0447B actual vs $3.0400B estimate*), adjusted EPS slightly missed ($1.97 actual vs $2.01 estimate*), and EBITDA was below ($435.9M actual vs $452.0M estimate*) .
FY26 outlook raised: total sales growth to 7.5%-8.5% (from 7%-8%); same-restaurant sales to 2.5%-3.5% (from 2%-3.5%); inflation lifted to 3.0%-3.5% and commodities inflation expected 3%-4%; adjusted EPS maintained at $10.50-$10.70 .
Capital returns remain robust: $1.50 dividend declared and ~$183M buybacks; management flagged near-term beef inflation pressure with lowest YoY EPS growth anticipated in Q2, a key near-term stock reaction catalyst .

Note: Asterisked values are from S&P Global consensus. Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

Olive Garden delivered +5.9% comps with successful new menu news (spicy three-meat sauce, bucatini) and strong limited-time Calabrian Steak & Shrimp, plus durable first‑party delivery momentum (“average weekly deliveries doubled” during the campaign; exit volume ~40% above pre-campaign) .
LongHorn comps +5.5% with traffic +3.2%; sustained top-decile industry performance and strong execution culture; total sales +8.8% and 17.4% segment margin despite rising beef costs .
Other Business comps +3.3% with strength at Cheddar’s (ranked #1 for price/affordability) and Yard House; segment profit up to $109.3M (+$25.0M YoY) .

What Went Wrong

Fine Dining comps were slightly negative; segment profit dipped YoY despite targeted actions like Ruth’s $55 three‑course LTO to address category softness .
Margin headwinds from Uber Direct delivery fees and affordability investments compressed restaurant-level EBITDA margin by ~10 bps YoY to 18.9% (Olive Garden segment margin down ~10 bps) .
Beef inflation spiked (limited hedge coverage ~25%) and shrimp tariffs raised seafood costs, pushing FY26 total inflation to 3.0%-3.5% and commodities inflation to 3%-4% .

Financial Results

Metric	Q3 2025	Q4 2025	Q1 2026
Sales ($USD Billions)	$3.158	$3.272	$3.045
Reported Diluted EPS ($)	$2.74	$2.58	$2.19
Adjusted Diluted EPS ($)	$2.80	$2.98	$1.97
Operating Income ($USD Millions)	$418.2	$382.8	$339.2
Operating Margin (%)	13.2% (calc from $418.2/$3,158.0)	11.7% (calc from $382.8/$3,271.7)	11.1% (calc from $339.2/$3,044.7)
Earnings from Continuing Ops ($USD Millions)	$323.7	$304.0	$257.9
Net Income Margin (%)	10.3% (calc from $323.7/$3,158.0)	9.3% (calc from $304.0/$3,271.7)	8.5% (calc from $257.9/$3,044.7)

Notes: Margins calculated from reported figures as cited.

Segment Breakdown (Q1 FY26)

Segment	Sales ($USD Millions)	Sales YoY ($USD Millions)	Segment Profit ($USD Millions)	Profit YoY ($USD Millions)
Olive Garden	$1,301.1	$1,209.1	$267.6	$250.1
LongHorn Steakhouse	$776.4	$713.5	$134.9	$128.4
Fine Dining	$286.5	$278.9	$38.7	$38.9
Other Business	$680.7	$555.5	$109.3	$84.3

KPIs

KPI	Q3 2025	Q4 2025	Q1 2026
Same‑Restaurant Sales – Consolidated	+0.7%	+4.6%	+4.7%
Olive Garden Comps	+0.6%	+6.9%	+5.9%
LongHorn Comps	+2.6%	+6.7%	+5.5%
Fine Dining Comps	−0.8%	−3.3%	−0.2%
Other Business Comps	−0.4%	+1.2%	+3.3%

Olive Garden Delivery Mix	Q1 2026
Delivery as % of Sales (Quarter / Exit)	~5% / ~4%; exit ~40% above pre‑campaign average

Traffic Mix Details	Q1 2026
Olive Garden Traffic and Catering	Traffic +2.8%; catering +0.8% contribution
LongHorn Traffic/Check/Pricing	Traffic +3.2%; check +2.3%; pricing +2.5%; mix −0.2% (alcohol)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Sales Growth	FY26	7%–8%	7.5%–8.5%	Raised
Same‑Restaurant Sales Growth	FY26	2%–3.5%	2.5%–3.5%	Raised (lower bound) / Tightened
New Restaurant Openings	FY26	60–65	~65	Tightened / Raised lower bound
Total Capital Spending	FY26	$700–$750M	$700–$750M	Maintained
Total Inflation	FY26	2.5%–3.0%	3.0%–3.5%	Raised
Commodities Inflation	FY26	N/A	3%–4% (management commentary)	Introduced (higher)
Effective Tax Rate	FY26	~13%	~13%	Maintained
Adjusted Diluted EPS	FY26	$10.50–$10.70	$10.50–$10.70	Maintained
Weighted Avg Diluted Shares	FY26	~117M	~117M	Maintained
Quarterly Dividend	Q1 FY26	$1.50/share (Q4 raised to $1.50)	$1.50 declared, payable Nov 3, 2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q4 2025; Q-1: Q3 2025)	Current Period (Q1 2026)	Trend
Pricing below inflation	Ongoing value focus (no explicit % in PR)	Pricing ~30 bps below inflation; full-year pricing mid-to-high 2%	Continued discipline; gradual price lift
Beef inflation & coverage	Not highlighted in PRs	Beef costs spiked; ~25% coverage; Q2 EPS growth expected lowest; packer cutbacks, Mexican import halt, Brazil tariffs	Headwinds peaking in Q2
First‑party delivery (Uber Direct)	Not highlighted in PRs	1M free deliveries concluded; deliveries doubled; exit ~40% above pre‑campaign; ~5% mix in Q1; another brand to join in Q3	Scaling across brands
Portion size/affordability	Not highlighted in PRs	OG testing lighter portions in ~40% units; affordability scores +15%	Early positive signals
Fine Dining category	Q3 comps −0.8%; Q4 −3.3%	Slightly negative comps; Ruth’s $55 three‑course LTO drove positive comps	Stabilizing actions
Unit growth pipeline	FY26 openings 60–65	~65 openings; development accelerating; smaller, efficient prototypes lowering build costs	Improving pace/returns

Management Commentary

“We had a strong start to the fiscal year with same‑restaurant sales and earnings growth that exceeded our expectations… our winning strategy is enabling us to grow sales and market share, while making meaningful investments in our business and returning capital to our shareholders.” — Rick Cardenas, CEO .
“Our pricing was 30 basis points below inflation… we generated $439 million of adjusted EBITDA… restaurant‑level EBITDA of 18.9%, 10 basis points lower than last year.” — Raj Vennam, CFO .
“We now expect total sales growth of 7.5% to 8.5%… commodities inflation of 3% to 4%… we expect the lowest year‑over‑year EPS growth in the second quarter.” — Raj Vennam .
“Olive Garden’s delivery order volume has remained approximately 40% above the pre‑campaign average.” — Rick Cardenas .

Q&A Highlights

Beef inflation dynamics and limited hedge coverage (~25%): supply constraints (packer cutbacks; Mexican imports halted due to screw worm; Brazil tariffs) drive spikes; management expects demand destruction to temper pricing; willing to take price if sustained .
Pricing strategy: maintain pricing below inflation near‑term (Q2 ~100 bps below), narrowing gap through year; long‑term discipline to protect consumer value .
Olive Garden delivery: Q1 ~5% mix, exit ~4%; post‑campaign volume ~40% above pre levels; ~50% incremental outside the promotion; next brand to adopt first‑party delivery in Q3 .
Affordability tests: OG lighter portions in ~40% units, affordability scores +15%; check dilution offset by mix (e.g., higher‑priced entrees like Calabrian Steak & Shrimp) .
Comps cadence: August strongest gap vs industry; regional callouts include Texas softness; Florida improving; fine dining weekday weakness tied to business travel .

Estimates Context

Metric	Q1 2026 Actual	Q1 2026 S&P Global Consensus	Surprise
Revenue ($USD Billions)	$3.0447	$3.0400*	+$0.0047B (beat)
Primary EPS ($)	$1.97 (Adjusted)	$2.01*	−$0.04 (miss)
EBITDA ($USD Millions)	$435.9 (Adjusted)	$452.0*	−$16.1M (miss)
# of Estimates (Rev / EPS)	—	26 / 31*	—

Note: Asterisked consensus values from S&P Global. Values retrieved from S&P Global.

Key Takeaways for Investors

Slight EPS miss and EBITDA shortfall despite revenue beat; headline risk centers on near‑term beef inflation and management’s call for lowest YoY EPS growth in Q2 .
FY26 sales and comps guidance raised; development accelerating with ~65 openings, supportive of multi‑year unit‑driven growth within Darden’s 3%-4% sales contribution long‑term framework .
Olive Garden is executing well: compelling menu innovation, delivery scaling, and affordability tests drive traffic and broaden the customer base without materially impairing margins .
LongHorn’s consistent traffic gains offset beef cost pressures; expect margin pressure to peak in Q2 with pricing below inflation, then narrow through the year .
Fine Dining softness remains contained with targeted LTOs; portfolio diversity and scale aid resilience across macro cross‑currents .
Capital returns intact: $1.50 dividend and $183M buybacks in Q1; $865M remaining under $1B authorization .
Trading implication: expect near‑term volatility around Q2 cost/coverage updates; medium‑term thesis supported by disciplined pricing, delivery momentum, and unit growth while commodity normalization offers margin recovery leverage .

Sources: Q1 FY26 8‑K and press release ; Q1 FY26 earnings call transcript ; prior quarter press releases Q4 FY25 and Q3 FY25 .

DARDEN RESTAURANTS INC (DRI)·Q1 2026 Earnings Summary