Darden Restaurants on Thursday forecast full-year profit below Wall Street estimates and reported lower-than-expected fourth-quarter sales, as higher input costs and increased marketing expenses weighed on margins amid persistent inflationary pressures.
Shares of the Olive Garden parent were down about 3 per cent in premarket trading.
Despite restaurant chains rolling out value-focused meal deals, U.S. consumers are cutting back on dining out and opting to eat at home instead, dragging down sales. To stimulate demand, Darden also launched smaller meals priced under US$15 to cater to customers seeking lighter portions amid the rapid adoption of weight-loss drugs.
The company, which also owns restaurants Cheddar’s Scratch Kitchen and Chuy’s among others, now expects annual earnings per share from continuing operations between $11.10 and $11.35, below an expectation of $11.40 per share, according to data compiled by LSEG.
It expects annual same-restaurant sales to grow 2.5 per cent to 3.5 per cent, the midpoint of which is above analysts’ estimates of 2.81 per cent.
Darden reported overall sales of $3.72 billion for the fourth quarter ended May 31, missing analysts’ estimate of $3.73 billion.
Its total operating costs and expenses rose 10.7 per cent to $3.20 billion in the fourth quarter from the prior year.
Sales at LongHorn Steakhouse, its biggest revenue generator, rose 9.5 per cent from a year ago.
Darden’s fourth-quarter adjusted profit from continuing operations came in at $3.66 per share, above estimates of $3.63 per share.
(Reporting by Koyena Das in Bengaluru; Editing by Diti Pujara)
