Darden Restaurants got off to a strong start in 2026 led by its two largest brands, Olive Garden and LongHorn Steakhouse.
At Olive Garden, same-store sales rose 3.2% during the three months ended Feb. 22, Darden’s fiscal third quarter.
Same-store sales at sister brand LongHorn Steakhouse, meanwhile, surged 7.2%, their highest mark in over a year.
Darden’s fine-dining concepts recorded a 2.1% increase, and its “other business” segment, which includes the 184-unit Cheddar’s Scratch Kitchen, grew by 3.9%.
Companywide same-store sales rose 4.2%, which included a 100-basis point negative impact from Winter Storm Fern in January, which forced Darden to temporarily close more than 40% of its restaurants.
Overall, Orlando-based Darden said same-store sales growth outpaced the broader industry by 400 basis points and that it is widening its lead on the competition.
The performance caused the company to brighten its outlook on the rest of the fiscal year, which ends in late May. Darden is now forecasting companywide same-store sales growth of 4.5%, up from a previous range of 3.5% to 4.3%. That includes estimated growth of 3.5% to 5% in the current quarter.
At 944-unit Olive Garden, the chain has been using strategic promotions to drive traffic, while also working to improve the experience in its restaurants. Last quarter, for instance, it pushed staff to focus on replenishing customers’ bottomless breadsticks and salads and saw customer service scores rise to an all-time high.
Olive Garden actually had less promotional activity in the quarter than usual. Expecting better weather, it decided to scrap one of its usual offers, meaning it had three fewer weeks with a low-price special than the same period a year ago.
“[We thought] we'd have some weather tailwinds for us this quarter. Well, there were headwinds,” Darden CEO Rick Cardenas said during an earnings call Thursday. “So, that was just something that happened.”
The chain has otherwise found success with a new selection of lighter-portioned entrees under $15. Customers who order these are visiting more frequently and giving the chain higher scores on value and portion size. And the dishes are easy for the kitchen to execute because they are simply scaled-down versions of existing recipes.
These lower-priced meals did contribute to a smaller average check in the quarter. Much of Olive Garden’s same-store sales growth came from a 2.8% price increase, while traffic was down 0.4%.
However, bad weather was a factor, and Olive Garden’s catering orders grew by 1.3%, which is not counted as traffic.
“When you add back the weather and the catering, that's basically a positive 2% comp on traffic,” said CFO Raj Vennam.
The brand plans to build on that this quarter with the return of its popular buy one, take one offer, which allows customers to order one entree to eat in the restaurant and another to take home for later. The deal starts at $14.99.
It will run one week longer than a year ago, and the brand will support the offer with additional advertising, which it believes will make for a strong quarter.
The chain also continues to promote its new delivery service with Uber, which last quarter accounted for 4.7% of sales, up from 0.8% a year ago.
Over at 608-unit LongHorn, the ongoing momentum is the result of a “long path” to improve the chain’s business and food, Cardenas said. LongHorn does an excellent job of cooking steaks, he said, and the chain has also underpriced grocery store beef inflation. The result: “Guests are getting an amazing value when they go to LongHorn,” he said.
Rising beef costs did hurt LongHorn's profits in the quarter: Margins declined about 1 point year over year, to 18.6%.
As the largest full-service restaurant operator in the industry, Darden is often viewed as a litmus test for the state of consumers, who have proven fickle in recent years as they navigate inflation and uncertainty.
Darden said it is seeing growth across all households with incomes above $50,000 a year, with the biggest increase coming from those making more than $150,000.
That jives with what is widely viewed as a K-shaped economy in which consumers making less money are pulling back while wealthier people are spending normally.
Darden was also asked about the recent spike in gas prices and how it might affect restaurant demand.
Cardenas noted that there has not historically been a strong correlation between gas and restaurant spending, and that Darden's restaurants have been performing well in the three weeks since the start of the Iran war caused gas prices to rise sharply.
If gas prices begin to hurt U.S. GDP, then there may be softness, he said, because GDP is more closely tied to restaurant traffic.
“In general, we’re not too worried about gas prices, and we'll be able to react however we need to if they stay really high for a while,” he said.
Darden stock was up about 2% Thursday following the positive earnings report.
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