Darden acknowledges customers are trading down, spending less

U.S. restaurant giant Darden’s sales soared in its fiscal first quarter, driven by its acquisition of Ruth’s Chris Steakhouse restaurants and other factors.

The Orlando, Florida, U.S.A.-based operator of Eddie V’s Prime Seafood, The Capital Grille, Olive Garden, LongHorn Steakhouse, and other restaurant chains also realized savings from lower food and beverage costs.

Darden’s total sales in its Q1 2024 soared 11.6 percent to USD 2.7 billion (EUR 2.5 billion), thanks to a blended same-restaurant sales increase of 5.0 percent, the addition of 77 company-owned Ruth's Chris Steak House restaurants, and 46 other net new restaurants.

While sales at its fine dining restaurants dropped 2.8 percent in the quarter, LongHorn’s sales jumped 8 percent and Olive Garden rose 6 percent. Its same-restaurant sales for the quarter outpaced the industry by 410 basis points and same-restaurant guest counts exceeded the industry by 430 basis points, Darden Chief Financial Officer Raj Vennam said on the company’s earnings investor call.

Darden acquired Winter Park, Florida, U.S.A.-based Ruth’s Chris Hospitality Group, which operates 154 upscale restaurants globally, in a  USD 715 million (EUR 675 million) deal in early May. Darden now expects to realize more synergies with Ruth’s Chris than originally anticipated, according to Darden President and CEO Rick Cardenas said during the call, and plans to reinvest some of them in the guest and team member experience.

While the company previously anticipated USD 20 million (EUR 19 million) in annualized run rate synergies, it now expects around USD 35 million (EUR 33 million) of gross run rate synergies and other cost savings, according to Vennam, “We anticipate investing approximately USD 10 million [EUR 9.4 million] into the business, resulting in annualized net run rate synergies of approximately USD 25 million [EUR 24 million],” Vennam said ... 

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