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DRI NYSE· Darden Restaurants, Inc
Earnings report Q4 2023

Darden Restaurants Reports Strong Revenue Growth in Latest Quarter

Segments of Revenue

Darden Restaurants, Inc. reported total sales of $2.73 billion for the second quarter of fiscal 2024, representing a 9.7% increase compared to the same quarter of the previous year. For the six months ended November 26, 2023, the company's sales reached $5.46 billion, reflecting a growth of 10.6% compared to the same period in fiscal 2023.

The breakdown of revenue by segment is as follows:

  • Food and beverage costs amounted to $845.8 million, representing a 3.4% increase compared to the previous year's second quarter. For the six-month period, food and beverage costs reached $1.70 billion, reflecting a growth of 5.2%.
  • Restaurant labor expenses totaled $880.9 million, showing a significant increase of 9.0% compared to the same quarter of the previous year. For the six months ended November 26, 2023, restaurant labor expenses amounted to $1.76 billion, representing a growth of 9.6%.
  • Restaurant expenses reached $450.4 million for the second quarter, indicating an 8.0% increase compared to the previous year. For the six-month period, restaurant expenses amounted to $897.0 million, reflecting a growth of 9.3%.
  • Marketing expenses totaled $36.9 million for the second quarter, representing an 18.7% increase compared to the same quarter of the previous year. For the six months ended November 26, 2023, marketing expenses reached $75.5 million, reflecting a growth of 23.0%.
  • General and administrative expenses amounted to $114.8 million for the second quarter, showing a significant increase of 27.0% compared to the previous year's second quarter. For the six-month period, general and administrative expenses reached $268.1 million, representing a growth of 50.0%.

Strengths

Darden Restaurants demonstrated strong revenue growth in the latest quarter, with a 9.7% increase in sales compared to the same quarter of the previous year. This growth can be attributed to various factors, including a 6.3% increase in average check offsetting a 1.3% decrease in same-restaurant guest counts. Additionally, the company's Fine Dining segment experienced sales growth primarily due to the acquisition of Ruth's Chris, although same-restaurant sales decreased. Darden Restaurants expects sales for fiscal 2024 to be approximately $11.5 billion, driven by same-restaurant sales growth of 2.5% to 3.0% and new restaurant openings.

Challenges

Despite the overall revenue growth, Darden Restaurants faced challenges in certain areas. The company experienced a decrease in same-restaurant guest counts, resulting in a 1.3% decrease for the second quarter and a 0.1% increase for the six months ended November 26, 2023. Additionally, the Fine Dining segment witnessed a decrease in same-restaurant sales due to a 6.0% decrease in same-restaurant guest counts, partially offset by a 4.5% increase in average check.

Noteworthy

Darden Restaurants reported diluted net earnings per share from continuing operations of $1.76 for the second quarter of fiscal 2024, compared to $1.52 for the same quarter of the previous year. For the six months ended November 26, 2023, diluted net earnings per share were $3.35, compared to $3.09 for the same period in fiscal 2023. The company expects capital expenditures of approximately $600 million for fiscal 2024, which will be allocated towards building new restaurants, remodeling and maintaining existing restaurants, and technology initiatives.

Summary

Darden Restaurants delivered strong revenue growth in the latest quarter, with a 9.7% increase in sales compared to the same quarter of the previous year. The company's performance was driven by a combination of factors, including an increase in average check and the acquisition of Ruth's Chris. However, challenges were observed in terms of decreased same-restaurant guest counts and a decline in same-restaurant sales for the Fine Dining segment. Darden Restaurants remains optimistic about its future performance, expecting sales of approximately $11.5 billion for fiscal 2024.

Source documents

Form 10-Q  filed on Jan 03, 2024
85 pages scanned

Reference data

Company financials Q4 revenue 2.73B
Analyst estimates Q4 EPS beat by 6.20%
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