Darden Restaurants sees growth in FY25 and beyond amid menu, tech Innovations

Darden Restaurants, Inc. (NYSE: DRI) has successfully navigated the challenging market environment by constantly innovating its menu offerings and fostering customer loyalty. In the third quarter, sales and profit margin increased across all operating segments, and the stock rallied following the earnings announcement this week. Same-store sales of Oliver Garden and LongHorn Steakhouse, the company’s top restaurant brands, rose 0.6% and 2.6% respectively.

Last month, the full-service dining company’s stock crossed the $200 mark, setting a new record. On Thursday, DRI made strong gains in premarket trading. It has grown 19% in the past six months. Over the years, the company has hiked its quarterly dividends consistently, and the current yield is a better-than-average 2.8%. That makes the stock an attractive long-term investment.

Q3 Numbers

In the third quarter of 2025, total sales increased 6.2% from the prior-year period to $3.2 billion. Blended same-restaurant sales edged up 0.7%. The sales growth translated into a 7% year-over-year increase in Q3 adjusted earnings from continuing operations to $2.80 per share. Unadjusted profit was $323.4 million or $2.74 per share, vs. $312.9 million or $2.60 per share in Q3 2024. The results were broadly in line with estimates, like in the prior quarter.

From Darden’s Q3 2025 earnings call:

“Our ability to deliver profitable sales growth in this challenging environment is a testament to the strength of our business model and adherence to our proven strategy, which is anchored in our four competitive advantages and our restaurant team’s commitment to being brilliant with the basics. Several of our brands set sales records during the Christmas and New Year’s holidays, as well as on Valentine’s Day, which reinforces the strength of our portfolio and the guest loyalty our teams work so hard to earn.”

Expectation

For fiscal year 2025, the company expects total sales of around $12.1 billion and same-restaurant sales growth of 1.5%. Adjusted profit from continuing operations is expected to be between $9.45 per share and $9.52 per share in FY25. For the fourth quarter specifically, the company’s annual outlook implies total sales of $3.23-3.26 billion, same-restaurant sales growth above 3%, and adjusted EPS between $2.88 and $2.95. The guidance suggests a better performance compared to last year.

The positive outlook reflects the management’s optimism about stable consumer spending, though inflation and cutbacks on discretionary spending remain a challenge for the restaurant industry, in general. Olive Garden and LongHorn Steakhouse are aggressively adopting new technology to enhance customer experience. Last month, Olive Garden rolled out delivery services through a two-year exclusive deal with Uber Eats.

Store Expansion

The Darden leadership has revealed plans to open 60-65 new restaurants in fiscal 2026, and to spend $375-400 million for new restaurants and $300-325 million on ongoing restaurant maintenance and technology. FY26 will include an extra week and that is expected to contribute around $0.20 in additional earnings per share.

Darden’s shares have traded above their 52-week average since the beginning of 2025. The stock gained about 8% on Thursday morning, soon after the company reported earnings.