DARDEN RESTAURANTS INC Q1 FY2025 earnings call

• Culinary innovations: Olive Garden brought back Steak Gorgonzola Alfredo and Stuffed Chicken Marsala; LongHorn added lemon garlic chicken and dragon fruit margarita; Yard House introduced new pizza platform; Cheddar's leveraged opportunity buys and reintroduced onion rings. • Service focus: Focus on improving meal pace to capture quicker meal occasions. • Atmosphere initiatives: Maintenance and remodels of restaurants, and brand-specific activities like Yard House's best-on-tap competition. • Marketing strategies: Connected TV testing across brands, and Olive Garden shifting to highlight price points in advertising. • Uber partnership: Pilot at Olive Garden for first-party delivery, with phased rollout and two-year exclusive with Uber. • Chuy's acquisition: On track to close mid-October, neutral to adjusted earnings per share for fiscal year excluding transaction costs.

Olive Garden: Total sales decreased by 1.5% due to negative same-restaurant sales of 2.9%, segment profit margin 20.6%. LongHorn: Total sales increased 6.5%, driven by same-restaurant sales growth of 3.7%, segment profit margin 17.9%. Fine Dining: Total sales increased 2%, but same-restaurant sales negative, lower segment profit margin. Other Business Segment: Sales declined slightly, but outperformed industry by 70 basis points, segment profit margin 15.1%.

• Reaffirmed guidance considering first quarter performance. • Fiscal 2025 second quarter earnings release on Dec 19 before market open. • Adjusted earnings per share expected in mid to high single digits over next few quarters. • Chuy's acquisition expected to be neutral to adjusted EPS for fiscal year excluding transaction and integration related expenses.

• Market uncertainties including political volatility and weather impacts affecting consumer sentiment. • Commodity price fluctuations, particularly with chicken contract expiring in new calendar year. • Potential challenges with delivery rollout and capturing expected incremental sales from Uber partnership.

Q: Brian Bittner from Oppenheimer asked about the Uber partnership impact and exclusivity.

A: Rick Cardenas said they'll learn from the pilot, have a two-year exclusive with Uber, and can expand to other brands if successful.

Q: Brian Harbour from Morgan Stanley asked about service speed focus.

A: Rick Cardenas said they aim to speed up experience without rushing guests, working on operations and technology.

Q: Jon Tower from Citi asked about Uber advertising and tech investment.

A: Rick Cardenas said no advertising on Uber Eats, but marketing funds available, and tech investments in speed improvements.

Q: Eric Gonzalez from KeyBanc Capital Markets asked about Olive Garden price point advertising and fine dining performance.

A: Raj Vennam said marketing is thoughtful, and fine dining challenged by summer factors but expected to gradually recover.

Q: David Palmer from Evercore ISI asked about delivery fee and margin.

A: Rick Cardenas said delivery fee is paid by guest, around $5 plus 5% of order.