Darden’s Q2 2019 Revenue Fell Short of Analysts’ Estimate

In the second quarter of fiscal 2019, Darden Restaurants (DRI) posted revenue of $1.97 billion, a rise of 4.9% from $1.88 billion in the corresponding quarter of fiscal 2018. The company’s addition of 40 restaurants in the last four quarters and its overall positive SSSG (same-store sales growth) of 2.1% contributed to its revenue growth in the quarter.

However, Darden’s revenue fell short of analysts’ consensus expectation of $1.98 billion.

In the quarter, Olive Garden posted revenue of $998.1 million, a rise of 4.9% from $951.6 million in the second quarter of fiscal 2018. This revenue growth was driven by the company’s addition of nine new Olive Garden restaurants in the last four quarters, which contributed 1.4% to the rise, while its positive SSSG added 3.5%.

In the quarter, LongHorn Steakhouse posted revenue of $412.6 million, a rise of 6.4% from $387.7 million in the second quarter of fiscal 2018. The company’s addition of 14 new LongHorn Steakhouse restaurants in the last four quarters contributed 3.5% to the segment’s revenue growth, while its SSSG contributed 2.9%.

The revenue from the company’s Fine Dining segment included sales from the Capital Grille and Eddie V’s. During the quarter, the segment posted revenue of $146.7 million, a rise of 4.3% from $140.6 million in the second quarter of fiscal 2018. This revenue growth was driven by positive SSSG in both brands and the opening of one new restaurant for both brands.

The company’s Other segment posted revenue of $401.6 million, a rise of 3.6% from $416.0 million in the second quarter of fiscal 2018. The addition of 15 restaurants in the last four quarters drove the segment’s revenue during the quarter, which was partially offset by negative SSSG in the Cheddar’s, Yard House, Seasons 52, and Bahama Breeze brands.

During the same period, Texas Roadhouse (TXRH), Bloomin’ Brands (BLMN), and Brinker International (EAT) posted revenue rises of 10.0%, 1.7%, and 1.9%, respectively.

For fiscal 2019, Darden’s management expects its revenue to rise in the range of 5.0%–5.5%. Analysts expect the company to report revenue of $8.52 billion during the same period, a rise of 5.4% from $8.08 billion in fiscal 2018.

Next, we’ll look at Darden’s SSSG in the second quarter of fiscal 2019.