Executive Summary

Q3 FY2025 delivered resilient profitability despite weather headwinds: total sales rose 6.2% to $3.16B, reported diluted EPS $2.74 and adjusted diluted EPS $2.80, up 6.9% YoY, with restaurant-level EBITDA margin up 50 bps YoY to 21.1% .
Same-restaurant sales were +0.7% (OG +0.6%, LongHorn +2.6%, Fine Dining -0.8%, Other Business -0.4%), with management noting ~100 bps weather drag and ~90 bps Thanksgiving shift impact; adjusted for these, same-restaurant sales were ~2.6% and sequentially improved .
FY2025 outlook narrowed: adjusted diluted EPS $9.45–$9.52 (from $9.40–$9.60), weighted average diluted shares guided to 118.3M; other items maintained (sales ~$12.1B, SSS ~1.5%, capex ~$650M, inflation ~2.5%, tax ~12.5%) .
Execution catalysts: Olive Garden “Fan Favorites” and Buy One, Take One LTO; first‑party delivery (Uber Direct) rolled systemwide at OG and piloted at Cheddar’s; smaller prototypes to accelerate unit growth. Management highlighted improved March trends and expects Q4 SSS >3% with adjusted EPS $2.88–$2.95 and sales $3.23–$3.26B .

What Went Well and What Went Wrong

What Went Well
- “Several brands set sales records during the holidays and on Valentine’s Day,” underpinning portfolio strength; segments grew total sales and segment margin .
- Olive Garden’s Fan Favorites (Steak Gorgonzola Alfredo, Stuffed Chicken Marsala) improved base traffic/sales; delivery rolled to nearly all OG units via Uber Direct with higher average check vs curbside and strong early uptake .
- LongHorn momentum persisted: same-restaurant sales +2.6% (5.0% adjusted for calendar/weather), segment margin +70 bps YoY to 19.4%; quality/operations (Grill Master program) drove all-time high “steaks grilled correctly” score .
What Went Wrong
- Weather and Thanksgiving shift damped reported SSS by ~100 bps and ~90 bps respectively; Fine Dining SSS -0.8% (≈-1% adjusted), with persistent check management post holidays .
- Inflation step-up expected in Q4 to ~3%, with commodities (beef, chicken, seafood) turning inflationary; operating profit not seen growing materially YoY given pricing below inflation .
- Casual consumer below $50k income showed pullback; Fine Dining remained soft, with management cautious despite holiday strength .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Billions)	$2.757	$2.890	$3.158
Reported Diluted EPS ($)	$1.74	$1.82	$2.74
Adjusted Diluted EPS ($)	$1.75	$2.03	$2.80
Same-restaurant Sales (%)	-1.1%	2.4%	0.7%
Operating Income ($USD Millions)	$269.2	$292.1	$418.2
Operating Margin (%)	9.8% (269.2/2,757.0)	10.1% (292.1/2,890.0)	13.3% (418.2/3,158.0)
Restaurant-level EBITDA ($USD Millions)	—	$445	$559
Restaurant-level EBITDA Margin (%)	—	19.5%	21.1%
Marketing Expenses ($USD Millions)	$44.7	$48.8	$35.4
Effective Tax Rate (%)	—	12.3%	13.4%
Consensus Revenue* ($USD Billions)	$2.800*	$2.869*	$3.216*
Consensus EPS* ($)	$1.833*	$2.023*	$2.795*

Values with * retrieved from S&P Global.

Segment Breakdown (Q3 2024 → Q3 2025)

Segment	Q3 2024 Sales ($USD Millions)	Q3 2025 Sales ($USD Millions)	Q3 2024 Segment Profit ($USD Millions)	Q3 2025 Segment Profit ($USD Millions)
Olive Garden	$1,310.2	$1,330.3	$294.7	$306.6
LongHorn Steakhouse	$730.7	$768.1	$136.6	$149.3
Fine Dining	$372.9	$385.3	$81.4	$86.1
Other Business	$561.0	$674.3	$83.7	$104.0
Consolidated Darden	$2,974.8	$3,158.0	—	—

KPIs

KPI	Q3 2025	YoY
Same-restaurant Sales – Consolidated Darden	0.7%	+0.7 pp
Same-restaurant Sales – Olive Garden	0.6%	+0.6 pp
Same-restaurant Sales – LongHorn	2.6%	+2.6 pp
Same-restaurant Sales – Fine Dining	-0.8%	-0.8 pp
Same-restaurant Sales – Other Business	-0.4%	-0.4 pp
Company-owned restaurants (Total)	2,165	+143 vs 2,022
OG delivery mix (pilot restaurants)	~2.5% of sales	Higher check vs curbside
Share repurchases	$53M	—

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Sales	FY2025	~$12.1B	~$12.1B	Maintained
Same-restaurant Sales Growth	FY2025	~1.5%*	~1.5%*	Maintained
New Restaurant Openings	FY2025	50–55	50–55	Maintained
Total Capital Spending	FY2025	~$650M	~$650M	Maintained
Total Inflation	FY2025	~2.5%	~2.5%	Maintained
Effective Tax Rate	FY2025	~12.5%	~12.5%	Maintained
Weighted Avg Diluted Shares	FY2025	~118M	118.3M	Raised
Adjusted Diluted EPS (cont. ops)	FY2025	$9.40–$9.60	$9.45–$9.52	Narrowed (midpoint ~unchanged)
Dividend	Quarterly	$1.40/share declared (Q2)	$1.40/share declared (Q3)	Maintained

*Does not include Ruth’s Chris and Chuy’s due to 16-month ownership rule .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
First‑party delivery (Uber Direct)	Q2: ~100 OG pilots; single‑digit basis point sales impact; higher average order; systemwide rollout targeted by end of Q3	OG fully rolled out; pilot at Cheddar’s (10 units); delivery checks ~20% higher than pickup; early 40–50% incrementality; catering items ~12% of delivery sales	Scaling across brands; positive early economics
Menu “news” & value	Q1: Soft July; reiteration of FY guide ; Q2: Extended NEPB; Fan Favorites return; targeted compelling price points	Buy One, Take One LTO at $14.99 starting price; improved base traffic/sales; value scores gradually rising	Re-accelerating traffic via disciplined LTOs
POS modernization & tech/data	Q2: Next-gen POS rewrite; modern UI; faster analytics; staged rollout	POS piloted at two OG restaurants; Chuy’s next; operators prefer new POS despite early bugs	Execution progress; supports speed/analytics
Supply chain & commodities	Q2: Commodities slightly deflationary; beef coverage strategy	Q4 inflation step-up; beef/chicken/seafood inflationary; still buying chicken below market via contracts	Inflation rising near term; contracts mitigate
Tariffs/macro	Q2: Consumer sentiment improving; hurricanes impact	Potential tariffs: ~80% domestic sourcing; mitigation via alt sourcing, vendor negotiation	Monitoring; limited direct exposure
Pace of service	Q2: Early brand-specific initiatives; long-term change management	Early improvements across brands; long-term program; not yet attributing traffic gains	Gradual improvement underway
Portfolio development	Q2: Target high-end of unit growth framework; capex step-up	Smaller prototypes (Yard House, Cheddar’s) ~20% smaller, ~15% cheaper; performance at/above expectations	Enables accelerated unit growth

Management Commentary

CEO: “All of our segments grew total sales and segment profit margin… reinforcing the strength of our portfolio and the loyalty of our guests.”
Olive Garden strategy: “Fan Favorites… significantly improved base traffic and sales trends… delivery available in all restaurants… with a higher check average than curbside.”
LongHorn execution: “All-time high steaks grilled correctly score in the third quarter… investments in food quality continue to pay off.”
Integration: “Chuy’s… HR platform conversion now; supply chain transitions begin in June; POS transition late summer.”
Outlook tone: Adjusted EPS narrowed; Q4 inflation up to ~3%; Q4 adjusted EPS $2.88–$2.95 and SSS >3% .

Q&A Highlights

Margin outlook and inflation: Q4 inflation ~3% vs low-2s in first three quarters; pricing below inflation implies flattish operating margins YoY .
Delivery economics: Delivery checks ~20% higher than pickup; early 40–50% incrementality without significant awareness advertising; pilot units ~2.5% of sales .
Tariff exposure: ~80% of cost basket domestically sourced; non-importer of record for imported items; mitigation via inventory and alternative sourcing .
Value and marketing cadence: Marketing expected +10–20 bps YoY; connected TV/digital effectiveness rising; Uber co-funds limited TV campaign .
Consumer segmentation: Growth in $50k–$100k cohort; under $50k casual consumer negative after weather adjustments; sentiment changes not tightly correlated to dining spend post‑COVID .

Estimates Context

Versus consensus (S&P Global): Q3 revenue $3.158B vs $3.216B estimate* (miss); adjusted EPS $2.80 vs $2.795* (beat), reported EPS $2.74 (below adjusted comparator). Q2 revenue $2.890B vs $2.869B (beat); adjusted EPS $2.03 vs $2.023* (beat). Q1 revenue $2.757B vs $2.800B* (miss); adjusted EPS $1.75 vs $1.833* (miss). Values with * retrieved from S&P Global.
Implications: Modest top-line shortfall in Q3 driven by weather/calendar, offset by disciplined cost control and mix; estimate revisions may shift toward slightly stronger Q4 comps and EPS within the narrowed FY range, with near‑term inflation pressure acknowledged .

Key Takeaways for Investors

Cost discipline and scale advantages preserved margins despite weather; restaurant-level EBITDA margin expanded to 21.1% (+50 bps YoY) .
Traffic catalysts in place: OG LTOs and first‑party delivery should support Q4 >3% SSS and adjusted EPS $2.88–$2.95; monitor the delivery awareness campaign impact .
Inflation turning up in Q4; pricing kept below inflation—expect operating profit to be flat YoY; watch commodities (beef/chicken/seafood) .
Portfolio strengthening: Smaller, cheaper prototypes performing at/above plan; supports higher unit growth trajectory into FY2026 (60–65 openings) .
Tariff and macro risks manageable given domestic sourcing and supplier negotiation; consumer resilience persists, with <$50k cohort softer .
FY2025 guidance narrowed around ~$9.49 adjusted EPS with shares at 118.3M; dividends maintained at $1.40/quarter and $548M buyback capacity remaining .
Near-term positioning: Expect estimate fine-tuning toward Q4 comp/EPS ranges; setup favors operators executing value/news without deep discounting, benefiting OG and LongHorn .

Citations: Earnings press release and 8-K ; Earnings call transcript –; Prior quarter releases and transcript – –; Uber partnership release . Values with * retrieved from S&P Global.

DARDEN RESTAURANTS INC (DRI)·Q3 2025 Earnings Summary