Sales from all eight of its brands constitute Darden Restaurants’ (DRI) revenue. In fiscal 3Q18, Olive Garden generated 50.4% of total revenue, while LongHorn Steakhouse and other businesses generated 21.3% and 28.3%, respectively.
Fiscal 3Q18 performance
In fiscal 3Q18, Darden posted revenue of $2.13 billion, which represents growth of 13.3% from $1.88 billion in fiscal 3Q17. However, the company’s fiscal 3Q18 revenue was lower than analysts’ estimate of $2.15 billion.
Revenue growth across segments:
- Olive Garden: The brand posted revenue of $1.07 billion, which represents growth of 3.7% from $1.04 billion in fiscal 3Q17. The revenue growth was driven by the net addition of ten restaurants in the last four quarters and positive SSSG (same-store sales growth) of 2.2%.
- LongHorn Steakhouse: The brand posted revenue of $452.8 million in fiscal 3Q18, which represents growth of 4.3% from $434.3 million in fiscal 3Q17. The revenue growth was driven by the net addition of 11 new restaurants in the last four quarters and positive SSSG of 2.0%.
- Other businesses: The revenue from other businesses grew 47.2% to $602.4 million in fiscal 3Q18 due to the acquisition of Cheddar’s Scratch Kitchen, positive SSSG, and the addition of new restaurants. The company had acquired Cheddar’s in April 2017. During the quarter, The Capital Grille, Eddie V’s, Yard House, and Bahama Breeze posted positive SSSG. In the last four quarters, the other businesses—excluding 154 Cheddar’s locations—added 13 restaurants, which also contributed to fiscal 3Q18 revenue growth.
For fiscal 2018, Darden’s management maintained its revenue growth guidance at 13.0%. For the next four quarters, analysts expect the company to post revenue of $8.34 billion, which represents growth of 5.9% from $7.88 billion in the corresponding four quarters of the previous year.
Next in this series, we’ll look at Darden’s same-store sales growth in fiscal 3Q18.