Q1 2026 Darden Restaurants Inc Earnings Call

It shouldn't you May press star one on your Touchtone phone.

We ask you please limit yourself to one question and one follow up and return to the queue. This conference is being recorded if you have any objections. Please disconnect at this time I will now.

I'll turn the call over to MS. Courtney Aquila.

Again.

Thank you Kevin Good morning, everyone and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's, President and CEO and Roger.

Bob.

As a reminder comments made during this call will include forward looking statements as defined in the private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the company's press release.

Speaker #3: Greetings and welcome to the Darden Fiscal Year 2026 first quarter earnings conference call. You're lined up and placed on this, and only until the question and answer session.

Rajesh Vennam: Greetings and welcome to the Darden Restaurants Fiscal Year 2026 First Quarter Earnings Conference Call. Your line has been placed on listen-only until the question and answer session. To ask a question, you may press star one on your touch-tone phone. We ask you to please limit yourselves to one question, one follow-up, then return to the queue. This conference is being recorded. If you have any objections, please disconnect at this time. I'll now turn the floor over to Ms. Courtney Aquila. Thank you. You may begin.

Speaker #3: To ask a question, you may press star one on your touch-tone phone. We ask that you please limit yourselves to one question, one follow-up, and return to the queue.

Which was distributed this morning and in its filings with the Securities and Exchange Commission.

We are simultaneously broadcasting a presentation. During this call which is posted in the Investor Relations section of our website at Darden Dot Com today's discussion and presentation includes certain non-GAAP measurements and reconciliations of these measurements are included in the presentation.

Speaker #3: This conference is being recorded. If you have any objections, please disconnect at this time. I'll now turn the call over to Ms. Courtney Aquilla.

Speaker #3: Thank you. You may begin.

Speaker #4: Thank you, Kevin. Good morning, everyone, and thank you for participating in today's call. Joining me are Ric Cardenas, Darden's president and CEO, and Raj Vinnam, CFO.

Courtney Aquilla: Thank you, Kevin. Good morning, everyone. Thank you for participating on today's call. Joining me are Rick Cardenas, Darden Restaurants' President and CEO, and Rajesh Vennam, CFO. As a reminder, comments made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning, and in its filings with the Securities and Exchange Commission. We are simultaneously broadcasting a presentation during this call, which is posted in the Investor Relations section of our website at Darden.com. Today's discussion and presentation includes certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation.

Looking ahead, we plan to release fiscal 2026 second quarter earnings on Thursday December 18th before the market opens.

Speaker #4: As a reminder, comments made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.

Followed by a conference call.

During today's call all references to the industry through results referred to Black box intelligence casual dining benchmarks, excluding darden during our fiscal first quarter average same restaurant sales for the industry grew 5% and average same restaurant guest counts grew two 6%. Additionally, due to the continued divergence.

Speaker #4: Those risks are described in the company's press release, which was distributed this morning, and in its filings with the Securities and Exchange Commission. We are simultaneously broadcasting a presentation during this call, which is posted in the Investor Relations section of our website at darden.com.

I mean average and median results. We are sharing that median same restaurant sales for the industry grew three 3% and median same restaurant guest counts grew one 3%. This morning, Rick will share. Some brief remarks on the quarter and Raj will provide details on our first quarter and share our updated fiscal 2026 financial outlook.

Speaker #4: Today's discussion and presentation include certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation. Looking ahead, we plan to release fiscal 2026 second quarter earnings on Thursday, December 18th, before the market opens.

Courtney Aquilla: Looking ahead, we plan to release fiscal 2026 second quarter earnings on Thursday, December 18, before the market opens, followed by a conference call. During today's call, all reference to the industry's results refer to Black Box Intelligence Casual Dining benchmark, excluding Darden Restaurants. During our fiscal first quarter, average same-restaurant sales for the industry grew 5%, and average same-restaurant guest counts grew 2.6%. Additionally, due to the continued divergence between average and median results, we are sharing that median same-restaurant sales for the industry grew 3.3%, and median same-restaurant guest counts grew 1.3%. This morning, Rick will share some brief remarks on the quarter, and Raj will provide details on our first quarter and share our updated fiscal 2026 financial outlook. Now I will turn the call over to Rick.

Now I will turn the call over to Rick.

Thank you Courtney and good morning, everyone. We had a great quarter with same restaurant sales and earnings growth that exceeded our expectations.

Speaker #4: Followed by a conference call. During today's call, all references to the industry results referred to Black Box Intelligence, casual dining benchmark, excluding Darden. During our fiscal first quarter, average name restaurant sales for the industry grew 5%, and average name restaurant guest counts grew 2.6%.

For the first quarter three of our four segments generated positive same restaurant sales and traffic growth.

The strength of our results is a testament to the power of our strategy.

Across our portfolio our restaurant teams remain focused on being brilliant with the basics through culinary innovation and execution attentive service and an engaging atmosphere all enabled by our people.

Speaker #4: Additionally, due to the continued divergence between average and median results, we are sharing that median same-restaurant sales for the industry grew 3.3%, and median same-restaurant guest counts grew 1.3%.

And at the darn level, we continued to strengthen and leverage our four competitive advantages of significant scale extensive data and insights rigorous strategic planning and the quality of our employees to further position our brands for long term success.

Speaker #4: This morning, Ric will share some brief remarks on the quarter, and Raj will provide details on our first quarter and share our updated fiscal 2026 financial outlook.

Speaker #4: Now I will turn the call over to Ric.

Speaker #3: Thank you, Courtney. And good morning, everyone. We had a great quarter with same restaurant sales and earnings growth that exceeded our expectations. For the first quarter, three of our four segments generated positive same restaurant sales and traffic growth.

Rick Cardenas: Thank you, Courtney. Good morning, everyone. We had a great quarter with same-restaurant sales and earnings growth that exceeded our expectations. For the first quarter, three of our four segments generated positive same-restaurant sales and traffic growth. The strength of our results is a testament to the power of our strategy. Across our portfolio, our restaurant teams remain focused on being brilliant with the basics through culinary innovation and execution, attentive service, and an engaging atmosphere, all enabled by our people. At the Darden level, we continue to strengthen and leverage our four competitive advantages of significant scale, extensive data and insights, rigorous strategic planning, and the quality of our employees to further position our brand for long-term success. Olive Garden's same-restaurant sales grew 5.9%, driven by compelling food news and the continued growth of first-party delivery.

Olive garden same restaurant sales grew five 9% driven by compelling food news and the continued growth of first party delivery.

Early in the quarter Olive garden's marketing highlighted there create your own pasta platform from the core menu.

Speaker #3: The strength of our results is a testament to the power of our strategy. Across our portfolio, our restaurant teams remain focused on being brilliant with the basics through culinary innovation and execution, attentive service, and an engaging atmosphere.

Their television creative featured a new spicy <unk> sauce, and Bucatini pasta, starting at 12 99.

This new soft taps into guests' evolving tastes for Boulder more flavorful offerings.

Speaker #3: All enabled by our people. At the DARDEN level, we continue to strengthen and leverage our four competitive advantages: significant scale, extensive data and insights, rigorous strategic planning, and the quality of our employees, to further position our brands for long-term success.

It was well received and helped drive a significant increase in preference for the create your own pasta platform.

Olive garden built on the momentum of bold and spicy flavors by debut and Calabrian steak and shrimp Bucatini for a limited time during the quarter.

This exceeded expectations and quickly became a new guest favorites.

Speaker #3: All of Darden's same-restaurant sales grew 5.9%, driven by compelling food news and the continued growth of first-party delivery. Early in the quarter, all of Darden's marketing highlighted their create-your-own-pasta platform from the core menu.

Hmm.

The top 10 entrees for preference.

First party delivery through our partnership with Uber direct is helping capture younger more affluent guests who value convenience and crave olive garden.

Rick Cardenas: Early in the quarter, Olive Garden's marketing highlighted their create-your-own pasta platform from the core menu. Their television creative featured a new spicy three-meat sauce and bucatini pasta starting at $12.99. This new sauce taps into guests' evolving tastes for bolder, more flavorful offerings. It was well received and helped drive a significant increase in preference for the create-your-own pasta platform. Olive Garden built on the momentum of bold and spicy flavors by debuting Calabrian steak and shrimp bucatini for a limited time during the quarter. The dish exceeded expectations and quickly became a new guest favorite, ranking among the top 10 entrees for preference. First-party delivery through our partnership with Uber Direct is helping capture younger, more affluent guests who value convenience and crave Olive Garden.

Speaker #3: Their television creative featured a new spicy three-meat sauce and bucatini pasta, starting at $12.99. This new sauce taps into guests' evolving tastes for bolder, more flavorful offerings.

This represents a significant incremental opportunity for the brand as these guests have a higher check average and typically do not use olive garden for an in restaurant dining occasion.

Speaker #3: It was well received and helped drive a significant increase in preference for the create-your-own-pasta platform. All of Darden built on the momentum of bold and spicy flavors by debuting Calabrian steak and shrimp bucatini for a limited time during the quarter.

Olive garden's advertising, featuring 1 million free deliveries concluded in the first quarter with all the free deliveries being redeemed.

Average weekly deliveries doubled throughout the campaign.

Following the campaign delivery order volume has remained approximately 40% above the pre campaign average.

Speaker #3: The dish exceeded expectations and quickly became a new guest favorite, ranking among the top 10 entrées for preference. First-party delivery through our partnership with Uber Direct is helping capture younger, more affluent guests who value convenience and crave all of Darden.

The team will continue to promote delivery across number of channels.

On our last call, we talked about putting a greater emphasis on sales growth and reinvesting to drive long term growth.

One of the ways. We're doing this at olive garden is by strengthening affordability on the menu to give guests more variety and approachable price points.

Speaker #3: This represents a significant incremental opportunity for the brand, as these guests have a higher check average and typically do not use all of Darden for an in-restaurant dining occasion.

Rick Cardenas: This represents a significant incremental opportunity for the brand as these guests have a higher check average and typically do not use Olive Garden for an in-restaurant dining occasion. Olive Garden's advertising featuring 1 million free deliveries concluded in the first quarter, with all the free deliveries being redeemed. Average weekly deliveries doubled throughout the campaign. Following the campaign, delivery order volume has remained approximately 40% above the pre-campaign average. The team will continue to promote delivery across a number of channels. On our last call, we talked about putting a greater emphasis on sales growth and reinvesting to drive long-term growth. One of the ways we're doing this at Olive Garden is by strengthening affordability on the menu to give guests more variety at approachable price points.

During the quarter Olive Garden's began testing a lighter portions section of the menu featuring seven of their existing entrees with reduced portions and a reduced price.

Speaker #3: All of Darden's advertising, featuring 1 million free deliveries, concluded in the first quarter, with all the free deliveries being redeemed. Average weekly deliveries doubled throughout the campaign.

These items available at dinner and all day during the weekend still offer abundant portions and come with olive Garden's never ending first course of unlimited breadsticks and unlimited soup or salad.

Speaker #3: Following the campaign, delivery order volume has remained approximately 40% above the pre-campaign average. The team will continue to promote delivery across a number of channels.

40% of Olive Garden restaurants currently offer this menu and the initial response from guests has been encouraging.

Speaker #3: On our last call, we talked about putting a greater emphasis on sales growth and reinvesting to drive long-term growth. One of the ways we are doing this at all of Darden is by strengthening affordability on the menu to give guests more variety at approachable price points.

With affordability scores, increasing 15 percentage points and high satisfaction with portion sizes.

I have confidence in olive gardens initiatives for the year as well as their five year roadmap to sustained long term growth and success.

Longhorn Steakhouse grew same restaurant sales by five 5%.

Speaker #3: During the quarter, all of Darden began testing a lighter portion section of the menu, featuring seven of their existing entrées with reduced portions and a reduced price.

Rick Cardenas: During the quarter, Olive Garden began testing a lighter portion section of the menu featuring seven of their existing entrees with reduced portions and a reduced price. These items, available at dinner and all day during the weekend, still offer abundant portions and come with Olive Garden's never-ending first course of unlimited breadsticks and unlimited soup or salad. 40% of Olive Garden restaurants currently offer this menu, and the initial response from guests has been encouraging, with affordability scores increasing 15% and high satisfaction with portion size. I have confidence in Olive Garden's initiatives for the year, as well as their five-year roadmap to sustain long-term growth and success. LongHorn Steakhouse grew same-restaurant sales by 5.5%, driven by continued adherence to their strategy rooted in quality, simplicity, and culture.

Driven by continued adherence to their strategy rooted in quality simplicity and culture.

The team continues to raise the bar on food quality by consistently executing every dish and their menu to their high standards.

Speaker #3: These items, available at dinner and all day during the weekend, still offer abundant portions and come with all of Darden's never-ending first course of unlimited breadsticks and unlimited soup or salad.

This is reflected by Longhorns number one ranking among casual dining brands major casual dining brands within technomic industry tracking tool for food quality service atmosphere and value.

Speaker #3: 40% of all Darden restaurants currently offer this menu, and the initial response from guests has been encouraging, with affordability scores increasing 15 percentage points and high satisfaction with portion size.

I'm really proud of the operational consistency at longhorn and the work the team is doing to maintain their momentum.

Speaker #3: I have confidence in all of Darden's initiatives for the year, as well as their five-year roadmap to sustain long-term growth and success. LongHorn Steakhouse grew same-restaurant sales by 5.5%.

Same restaurant sales for our other business segment grew three 3% during the quarter driven by strong performance at yard House, Cheddar scratch kitchen and seasons 52.

During the quarter yard house strengthen their competitive advantage of distinctive culinary offerings with broad appeal by enhancing their taco platform with higher quality ingredients and more options for guests.

Speaker #3: Driven by continued adherence to their strategy, rooted in quality, simplicity, and culture, the team continues to raise the bar on food quality by consistently executing every dish on their menu to their high standards.

Rick Cardenas: The team continues to raise the bar on food quality by consistently executing every dish on their menu to their high standards. This is reflected by LongHorn's number one ranking among major casual dining brands within Technomic's industry tracking tool for food quality, service, atmosphere, and value. I'm really proud of the operational consistency at LongHorn and the work the team is doing to maintain their momentum. Same-restaurant sales for our other business segment grew 3.3% during the quarter, driven by strong performance at Yard House, Cheddar’s Scratch Kitchen, and Seasons 52. During the quarter, Yard House strengthened their competitive advantage of distinctive culinary offerings with broad appeal by enhancing their taco platform with higher quality ingredients and more options for guests. As they have seen with similar investments in their burger and pizza platforms, this resulted in higher preference and guest satisfaction.

As they have seen with similar investments in their Burger and pizza platforms. This resulted in higher preference and guest satisfaction.

Speaker #3: This is reflected by LongHorn's number one ranking among casual dining brands—major casual dining brands—within Technomic's industry tracking tool for food quality, service, atmosphere, and value.

To help strengthen their competitive advantage of a socially energized bar yard house held its third annual best on tap competition during the quarter.

Speaker #3: I'm really proud of the operational consistency at LongHorn and the work the team is doing to maintain their momentum. Same restaurant sales for our other business segment grew 3.3% during the quarter, driven by strong performance at Yard House, Cheddar's Scratch Kitchen, and Seasons 52.

What began as a test of knowledge in hospitality skills has grown into a cornerstone of the yard house culture.

Or every bartender competes.

Congratulations to this year's winter Michelle <unk> from the yard House at City Center in Houston, Texas.

Speaker #3: During the quarter, Yard House strengthened its competitive advantage of distinctive culinary offerings with broad appeal by enhancing its taco platform with higher quality ingredients and more options for guests.

The Cheddar team Leverages efficiency and gardens purchasing power to provide great food served in a while price.

During the quarter they introduced a Hawaiian sirloin.

Intercut top sirloin finished with pineapple and the sweet Hawaiian glaze starting at $16 49.

Speaker #3: As they have seen with similar investments in their burger and pizza platforms, this resulted in higher preference and guest satisfaction. To help strengthen their competitive advantage of a socially energized bar, Yard House held its third annual "Best on Tap" competition during the quarter.

This limited time offer also included a honey butter croissant in two sides for that price.

Rick Cardenas: To help strengthen their competitive advantage of a socially energized bar, Yard House held its third annual Best on Tap competition during the quarter. What began as a test of knowledge and hospitality skills has grown into a cornerstone of the Yard House culture, where every bartender competes. Congratulations to this year's winner, Michelle Yanez, from the Yard House at City Center in Houston, Texas. The Cheddar’s Scratch Kitchen team leverages efficiency in Darden Restaurants’ purchasing power to provide great food served at a wow price. During the quarter, they introduced a Hawaiian sirloin, a center-cut top sirloin finished with pineapple and a sweet Hawaiian glaze, starting at $16.49. This limited-time offer also included a honey butter croissant and two sides for that price. In Technomic’s most recent survey, Cheddar’s Scratch Kitchen ranked first among casual dining brands for both price and affordability.

And <unk>. Most recent survey Cheddars ranked first among casual dining brands for both price and affordability.

Speaker #3: What began as a test of knowledge and hospitality skills has grown into a cornerstone of the Yard House culture, where every bartender competes. Congratulations to this year's winner, Michelle Yanez, from the Yard House at City Center in Houston, Texas.

During the quarter Cheddars also saw strong off premise sales growth driven by first party delivery.

Off premise sales grew 15% during the quarter and the Cheddars team will continue to promote delivery through owned and digital channels as well as into the restaurant.

Speaker #3: The Cheddar team leverages efficiency in Darden's purchasing power to provide great food served at a wow price. During the quarter, they introduced a Hawaiian sirloin, a center-cut top sirloin finished with pineapple and a sweet Hawaiian glaze, starting at $16.49.

Yeah.

Same restaurant sales for the fine dining segment was slightly negative for the quarter, but I am encouraged by the actions each of our fine dining brands are taking to address the softness.

For example in the current environment more guests are seeking price certainty and Ruth's Chris Steakhouse introduced.

Speaker #3: This limited-time offer also included a honey butter croissant and two sides for that price. In Technomic's most recent survey, Cheddar's ranked first among casual dining brands for both price and affordability.

A five week limited time offer featuring a three course menu that drove positive comps for the quarter.

For $55 guests could select one of three entrees as well as a super salad and individual side and dessert.

Speaker #3: During the quarter, Cheddar's also saw strong off-premise sales growth, driven by first-party delivery. Off-premise sales grew 15% during the quarter, and the Cheddar's team will continue to promote delivery through owned and digital channels, as well as in restaurant.

Rick Cardenas: During the quarter, Cheddar’s Scratch Kitchen also saw strong off-premise sales growth, driven by first-party delivery. Off-premise sales grew 15% during the quarter, and the Cheddar’s Scratch Kitchen team will continue to promote delivery through owned and digital channels, as well as in restaurant. Same-restaurant sales for the fine dining segment were slightly negative for the quarter, but I’m encouraged by the actions each of our fine dining brands are taking to address the softness. For example, in the current environment, more guests are seeking price certainty, and Ruth’s Chris Steak House introduced a five-week limited-time offer featuring a three-course menu that drove positive comps for the quarter. For $55, guests could select one of three entrees, as well as a soup or salad, an individual side, and dessert. The offer was well received, with strong guest preference and sales lift.

Or was.

With strong guest preference and sales lift.

Now I want to share a quick update on the sale of eight olive garden locations in Canada that I referenced during our last call.

Speaker #3: Same restaurant sales for the fine dining segment were slightly negative for the quarter, but I'm encouraged by the actions each of our fine dining brands are taking to address the softness.

On July 14th we closed on the sale of those locations to recipe unlimited the largest full service operator in Canada.

In closing, we also entered into an area development agreement with recipe unlimited to open 30, more olive garden's over the next 10 years.

Five of which have already been approved.

Our franchising team is focused on growing our global presence today, we have 163 franchise locations.

Which includes 63 in the continental United States and 100 outside the Continental U S.

Last month, we held our annual leadership conference, which provides a powerful way for us to engage with every general manager and managing partner across our brands celebrate past performance and align on key operational priorities.

Rick Cardenas: Now I want to share a quick update on the sale of eight Olive Garden locations in Canada that I referenced during our last call. On July 14, we closed on the sale of those locations to Recipe Unlimited, the largest full-service operator in Canada. At closing, we also entered into an area development agreement with Recipe Unlimited to open 30 more Olive Garden locations over the next 10 years, five of which have already been approved. Our franchising team is focused on growing our global presence. Today, we have 163 franchise locations, which include 63 in the continental U.S. and 100 outside the continental U.S. Last month, we held our annual leadership conference, which provides a powerful way for us to engage with every General Manager and Managing Partner across our brands, celebrate past performance, and align on key operational priorities.

This was also an opportunity for these restaurant leaders to learn about their brands five year business plan and understand what they need to do to win today and into 2030.

The opportunity to interact with this talented group of operators is one of the highlights of the year.

I came away energized by the level of engagement and passion on display which further reinforced the results of our most recent engagement survey.

A new all time high for Darden.

Overall I am pleased with the strong start to our new fiscal year, our strategy is working.

<unk> us to grow sales and take market share, while meaningful making meaningful investments in our business and returning capital to our shareholders.

Beyond that we have a larger purpose of darden to nourish and delight everyone. We serve.

Rick Cardenas: This was also an opportunity for these restaurant leaders to learn about their brand’s five-year business plan and understand what they need to do to win today and into 2030. The opportunity to interact with this talented group of operators is one of the highlights of the year. I came away energized by the level of engagement and passion on display, which further reinforced the results of our most recent engagement survey, a new all-time high for Darden. Overall, I am pleased with the strong start to our new fiscal year. Our strategy is working, enabling us to grow sales and take market share, while making meaningful investments in our business and returning capital to our shareholders. Beyond that, we have a larger purpose at Darden to nourish and delight everyone we serve. One of the ways we do this is by fighting hunger.

One of the ways. We do this is by fighting hunger.

Once again this year Darden is helping feeding up feeding America add refrigerated trucks for nine remember food banks.

With the addition of these new trucks, the Darden Foundation with support from our partner Penske truck leasing has funded more than 50 vehicles to meet the increasing demand for food assistance and communities, where we operate.

Our philanthropic giving would not be possible without the efforts of our 200000 team members and their passion to nourish and delight, our guests and communities. Thank.

Thank you for all you do now I will turn it over to Raj.

Thank you Rick and good morning, everyone.

The first quarter was another strong quarter for Darden sales and earnings growth exceeded our expectations as our sales momentum from the fourth quarter continued into the first quarter.

Rick Cardenas: Once again this year, Darden is helping Feeding America add refrigerated trucks for nine member food banks. With the addition of these new trucks, the Darden Foundation, with support from our partner, Penske Truck Leasing, has funded more than 50 vehicles to meet the increasing demand for food assistance in communities where we operate. Our philanthropic giving would not be possible without the efforts of our 200,000 team members and their passion to nourish and delight our guests and communities. Thank you for all you do. Now I'll turn it over to Raj.

This strong top line sales growth.

And our significant scale provide us with the opportunity to keep a long term perspective and continue investing in our business.

In addition to the menu investments as Rick mentioned, the largest investment we made over the past several years as pricing below total inflation.

During the first quarter, our pricing was 30 basis points below inflation.

We generated $3 billion of.

Total sales, 10% higher than last year, driven by same restaurant sales growth of four 7% the acquisition of 103, Chili's restaurants, and the addition of 22 net new restaurants.

Rajesh Vennam: Thank you, Ric, and good morning, everyone. The first quarter was another strong quarter for Darden Restaurants, Inc. Sales and earnings growth exceeded our expectations as our sales momentum from the fourth quarter continued into the first quarter. This strong top-line sales growth and our significant scale provide us with the opportunity to keep a long-term perspective and continue investing in our business. In addition to the menu investments Ric mentioned, the largest investment we made over the past several years is pricing below total inflation. During the first quarter, our pricing was 30 basis points below inflation. We generated $3 billion of total sales, 10% higher than last year, driven by same-restaurant sales growth of 4.7%, the acquisition of 103 Chuy’s restaurants, and the addition of 22 net new restaurants. Both our same-restaurant sales and same-restaurant guest counts for the quarter were in the top quartile of the industry.

Both our same restaurant sales and same restaurant guest counts for the quarter were in the top quartile of the industry.

Adjusted diluted net earnings per share from continuing operations of $1 97, or 12.6% higher than last year.

We generated $439 million of adjusted EBITDA and returned $358 million to our shareholders this quarter by paying $175 million in dividends and repurchasing $183 million and shares.

Uh, and our significant scale provides us with the opportunity to keep a long-term perspective and continue investing in our business.

In addition to the menu investments Rick mentioned, the largest investment we made over the past several years is pricing below a total inflation.

During the first quarter, our pricing was 30 basis points below inflation.

Now looking at our adjusted margin analysis compared to last year.

Food and beverage expenses were 20 basis points, lower driven by pricing leverage as commodities inflation was approximately one 5% for the quarter.

We generated $3 billion of total sales, 10% higher than last year, driven by same-store sales growth of 4.7%, the acquisition of 1,032 East restaurants, and the addition of 22 net new restaurants.

That's certain labor was 20 basis points unfavorable as a result of high performance based compensation expense, including a higher 401 match for our restaurant teams.

Rajesh Vennam: Adjusted diluted EPS from continuing operations of $1.97 were 12.6% higher than last year. We generated $439 million of adjusted EBITDA and returned $358 million to our shareholders this quarter by paying $175 million in dividends and repurchasing $183 million in shares. Now, looking at our adjusted margin analysis compared to last year, food and beverage expenses were 20 basis points lower, driven by pricing leverage as commodities inflation was approximately 1.5% for the quarter. Restaurant labor was 20 basis points unfavorable as a result of high performance-based compensation expense, including a higher 401(k) match for our restaurant teams. Total labor inflation of 3.1% was fully offset by pricing of 2.2% and productivity improvement. Restaurant expenses were 10 basis points higher as sales leverage was more than offset by Uber Direct fees and the brand mix with the addition of Chuy’s.

Both our same-restaurant sales and same-restaurant guest counts for the quarter were in the top quartile of the industry.

Total labor inflation of three 1% was fully offset by pricing of two 2% and productivity improvements.

Adjusted diluted earnings per share from continuing operations were $1.97, which is 12.6% higher than last year.

Especially on expenses were 28 or 10 basis points higher as sales leverage was more than offset by Uber direct fees and the brand mix with the addition of cheese.

Marketing expenses were flat as cost savings and marketing help fund additional marketing activity in the quarter.

We generated $439 million of adjusted EBITDA and returned $358 million to our shareholders this quarter by paying $175 million in dividends and repurchasing $183 million in shares.

Now, looking at our adjusted margin analysis compared to last year.

This resulted in restaurant level EBITDA of $18, 9% 10 basis points lower than last year.

Adjusted G&A expenses were 30 basis points favorable.

Food and beverage expenses were 20 basis points lower, driven by pricing leverage as commodities. Inflation was approximately 1.5% for the quarter.

Synergies from the acquisition and leverage from sales growth were partially offset by unfavorable mark to market expense on our deferred compensation.

Labor was 20 basis points unfavorable, as it is a result of high performance-based compensation expenses, including a higher 401(k) match for our restaurant teams.

Due to the way, we hedge mark to market expense. This unfavourably is fully offset in the tax line.

Total labor. Inflation of 3.1% was fully offset by pricing of 2.2% and productivity improvements.

Interest expense increased 10 basis points due to the financing expenses related to the <unk> acquisition.

Our adjusted effective tax rate for the quarter was 10, 5% helped by the Mark to market hedge I mentioned earlier.

Restaurant expenses were 20 basis points higher at sales levels, which was more than offset by Uber direct fees and the brand mix with the addition of cheese.

Rajesh Vennam: Marketing expenses were flat as cost savings in marketing helped fund additional marketing activity in the quarter. This resulted in restaurant-level EBITDA of 18.9%, 10 basis points lower than last year. Adjusted G&A expenses were 30 basis points favorable. Synergies from the acquisition and leverage from sales growth were partially offset by unfavorable mark-to-market expense on our deferred compensation. Due to the way we hedge mark-to-market expense, this unfavorability is fully offset in the tax line. Interest expense increased 10 basis points due to the financing expenses related to the Chuy’s acquisition. Our adjusted effective tax rate for the quarter was 10.5%, helped by the mark-to-market hedge I mentioned earlier. Our effective tax rate would have been approximately 12.5% without this impact. In total, we generated $231 million in adjusted earnings from continuing operations, which was 7.6% of sales.

Our effective tax rate would have been approximately 12, 5% without this impact.

Marketing expenses were flat, as cost savings in marketing helped fund additional marketing activity in the quarter.

In total we generated $231 million and adjusted earnings from continuing operations, which was seven 6% of sales.

This resulted in restaurant level EBIT of 18.9%, 10 basis points lower than last year.

Adjusted GNA expenses were favorable by 30 basis points.

Looking at our segments for the quarter.

Total sales for Olive garden increased by seven 6% driven by strong same restaurant sales and traffic growth.

Synergies from the acquisition and leverage from sales growth were partially offset by unfavorable mark-to-market expense on our deferred compensation.

The sales from the addition of 18, new restaurants more than offset the sales loss from the Refranchising of eight Canadian restaurants.

Due to the way we hedge mark-to-market expense, this unfavorably is fully offset in the tax line.

Net sales momentum continued from the prior quarter with same restaurant sales in the top decile of the industry and outperforming the industry benchmark by 90 basis points.

Interest expense increased 10 basis points due to the financing expenses related to the 2 East acquisitions.

Olive Garden, Delaware strong segment profit margin of 26% for the quarter, which was only 10 basis points below last year, even with the investments in affordability and the impact of delivery fees.

Our adjusted effective tax rate for the quarter was 10.5%. Health by The Market to Market, h, i I mentioned earlier.

Our effective tax rate would have been approximately 12.5% without this impact.

At Longhorn total sales increased eight 8% driven by same restaurant sales growth of five 5% and the addition of 18 new restaurants.

In total, we generated $231 million in adjusted earnings from continuing operations, which was 7.6% of sales.

Rajesh Vennam: Looking at our segments for the quarter, total sales for Olive Garden increased by 7.6%, driven by strong same-restaurant sales and traffic growth. The sales from the addition of 18 new restaurants more than offset the sales loss from the refranchising of eight Canadian restaurants. Their sales momentum continued from the prior quarter, with same-restaurant sales in the top decile of the industry and outperforming the industry benchmark by 90 basis points. Olive Garden delivered a strong segment profit margin of 20.6% for the quarter, which was only 10 basis points below last year, even with the investments in affordability and the impact of delivery fees. At LongHorn Steakhouse, total sales increased 8.8%, driven by same-restaurant sales growth of 5.5% and the addition of 18 new restaurants.

Looking at our segments for the quarter.

The sustained sales and traffic outperformance resulted in same restaurant sales in the top quartile of the industry for the 13th consecutive quarter with this quarter ranking in the top decile.

And traffic growth.

The longhorn team is doing a great job of staying focused on this strategy and maintaining momentum within the business. Despite continued cost pressures.

The sales from the addition of 18 new restaurants more than offset the sales loss from the refi of 8 Canadian restaurants.

Higher than expected beef cost towards the end of the quarter and pricing below total inflation of approximately 100 basis points resulted in segment profit margin of 17, 4% 60 basis points below last year.

Their sales momentum continued from the prior quarter, with same-restaurant sales in the top decile of the industry and outperforming the industry benchmark by 90 basis points.

Olive Garden delivered a strong segment profit margin of 20.6% for the quarter, which was only 10 basis points below last year, even with the investments in affordability and the impact of delivery fees.

Total sales in the fine dining segment increased two 7% driven by the addition of five net new restaurants.

While same restaurant sales for the segment was slightly negative the strong performance of the limited time offer at Ruth's, Chris helped to offset the continued challenges within the fine dining category.

Rajesh Vennam: The sustained sales and traffic outperformance resulted in same-restaurant sales in the top quartile of the industry for the 13th consecutive quarter, with this quarter ranking in the top decile. The LongHorn Steakhouse team is doing a great job of staying focused on their strategy and maintaining momentum within the business despite continued cost pressures. Higher than expected beef cost towards the end of the quarter and pricing below total inflation of approximately 100 basis points resulted in a segment profit margin of 17.4%, 60 basis points below last year. Total sales at the fine dining segment increased 2.7%, driven by the addition of five net new restaurants. While same-restaurant sales for the segment were slightly negative, the strong performance of the limited-time offer at Ruth’s Chris Steak House helped to offset the continued challenges within the fine dining category. Overall, segment profit margin was lower than last year.

At LongHorn, total sales increased 8.8%, driven by same-restaurant sales growth of 5.5% and the addition of 18 new restaurants.

Overall segment profit margin was lower than last year.

The sustained sales and traffic outperformance resulted in same-store sales in the top quartile of the industry for the 13th consecutive quarter.

With this quarter ranking in the top decile.

The other business segment sales increased 22, 5% with the acquisition of QE and positive same restaurant sales of three 3%.

The Longhorn team is doing a great job of staying focused on their strategy and maintaining momentum within the business, despite continued cost pressures.

The positive sales momentum and continued productivity improvements in multiple brands within the segment resulted in segment profit margin of 16, 1% 90 basis points higher than last year.

Now turning to our financial outlook for fiscal 2026. This morning, we updated a few items in our guidance taking into consideration actual performance year to date and the evolving commodities outlook for the remainder of the fiscal year.

Higher than expected beef costs towards the end of the quarter, along with pricing below total inflation of approximately 100 basis points, resulted in segment profit margin of 17.4%, which is 60 basis points below last year.

Total sales in the fine dining segment increased 2.7%, driven by the addition of 5 net new restaurants.

We are raising our expected total sales growth and tightening the range of same restaurant sales to reflect the outperformance in the first quarter acceleration in our new unit pipeline and any incremental pricing, we may take to partially offset the additional commodities costs.

While same-restaurant sales for the segments were slightly negative, the strong performance of the Limited Time Offer at Ruth's Chris helped to offset the continued challenges within the fine dining category.

Overall, segment profit margin was lower than last year.

Rajesh Vennam: The other business segment sales increased 22.5% with the acquisition of Chuy’s and positive same-restaurant sales of 3.3%. The positive sales momentum and continued productivity improvements in multiple brands within the segment resulted in a segment profit margin of 16.1%, 90 basis points higher than last year. Now, turning to our financial outlook for fiscal 2026, this morning we updated a few items in our guidance, taking into consideration actual performance year to date and the evolving commodities outlook for the remainder of the fiscal year. We are raising our expected total sales growth and tightening the range of same-restaurant sales to reflect the outperformance in the first quarter, acceleration in our new unit pipeline, and any incremental pricing we may take to partially offset the additional commodities cost.

We now expect total sales growth for the year of seven 5% to eight 5% Tim.

The other business segments' sales increased 22.5% with the acquisition of 2 East and positive same-store sales of 3.3%.

Same restaurant sales growth of two 5% to three 5%.

Approximately 65.

New restaurant openings.

The positive sales momentum and continued productivity improvements in multiple brands within the segment resulted in segment profit margin of 16.1%, 90 basis points higher than last year.

And total inflation of three 3% to three 5% with commodities inflation of 3% to 4%.

All other aspects of our guidance remain unchanged, including adjusted diluted net earnings per share between $10 50, and $10 77.

Now, turning to our financial outlook for fiscal 2026. This morning, we updated a few items in our guidance, taking into consideration actual performance here to date and the evolving commodities outlook for the remainder of the fiscal year.

While we are reiterating our full year earnings per share guidance, we expect the lowest year over year EPS growth to be in the second quarter driven by the significant step up in beef costs.

And our measured approach to pricing part of these costs.

We are raising our expected total sales growth and tightening the range of same-store sales to reflect the outperformance in the first quarter, the acceleration in our new unit pipeline, and any incremental pricing we may take to partially offset the additional commodity costs.

Rajesh Vennam: We now expect total sales growth for the year of 7.5% to 8.5%, same-restaurant sales growth of 2.5% to 3.5%, approximately 65 new restaurant openings, and total inflation of 3% to 3.5%, with commodities inflation of 3% to 4%. All other aspects of our guidance remain unchanged, including adjusted diluted EPS between $10.50 and $10.70. While we are reiterating our full-year earnings per share guidance, we expect the lowest year-over-year EPS growth to be in the second quarter, driven by the significant step up in beef costs and our measured approach to pricing for these costs. We expect our pricing for the second quarter to be approximately 100 basis points below total inflation. We have a proven track record of successfully navigating through higher costs and will continue to take a disciplined approach to ensure the long-term health of our business.

We expect our pricing for the second quarter to be approximately 100 basis points below total inflation.

We now expect total sales growth for the year of 7.5% to 8.5%.

We have a proven track record of successfully navigating through higher costs and we will continue to take a disciplined approach to ensure the long term health of our business.

Same restaurant sales are expected to grow by 2.5% to 3.5%.

Approximately 65.

New restaurant, openings.

We believe our strategy remains the right one for our company.

And total inflation of 3.3% to 3.5%, with commodities inflation of 3% to 4%.

Now we will take your questions.

Thank you and now be conducting a question and answer session. As a reminder, we ask you. Please ask one question and one follow up then return to the queue, if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to have your question.

All other aspects of our guidance remain unchanged, including adjusted diluted earnings per share between $10.50 and $10.70.

From the Q once again Thats star one to get into question can we ask you. Please ask one question one follow up then return to the queue.

While we are reiterating our full-year earnings per share guidance, we expect the lowest year-over-year EPS growth to be in the second quarter, driven by the significant step-up in beef costs and our measured approach to pricing for these costs.

Our first question today is coming from Brian <unk> from Morgan Stanley. Your line is that life.

We expect our pricing for the second quarter to be approximately 100 basis points below total inflation.

Yeah.

Yes. Good morning, guys, maybe just on that last 0.1st Raj could you could you talk about sort of.

Contracting through the balance of the year and sort of what gives you visibility that.

Rajesh Vennam: We believe our strategy remains the right one for our company. Now we'll take your questions. Thank you. We'll now be conducting a question and answer session. As a reminder, we ask you to please ask one question and one follow-up, then return to the queue. If you'd like to be placed into question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to move your question from the queue. Once again, that's star one to get into question queue. We ask you to please ask one question, one follow-up, then return to the queue. Our first question today is coming from Brian Harbert from Morgan Stanley. Your line is now live.

We have a proven track record of successfully navigating through higher costs, and we'll continue to take a disciplined approach to ensure the long-term health of our business.

We believe our strategy aligns the right way for our company.

You've kind of encompass the range of food cost outcomes.

Now, we'll take your questions.

Yeah, Brian I think if you look at what we published this morning, we are Colorado.

Less than typical especially in beef right now we only have about 25% coverage can be for the for the Mexican month.

And.

And that's one of the biggest opportunities in terms of where we're seeing the biggest advance and.

Thank you. I'll be conducting a question and answer session. As a reminder, we ask you to please ask one question and one follow-up, then return to the queue. If you'd like to be placed into the question queue, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you'd like to move your question from the queue. Once again, that's *1 to get into the question queue. We ask you to please ask one question and one follow-up, then return to the queue.

I think as you all know.

There's been a significant spike in beef costs recently, especially tenders antibodies.

Our first question today is coming from Brian Harbor from Morgan Stanley. Your line is now live.

[Analyst 1]: Yeah, morning, guys. Maybe just on that last point first, Raj, could you talk about contracting through the balance of the year and what gives you visibility that you've kind of encompassed the range of food cost outcomes?

So and we don't believe these price levels are sustainable and Thats why we don't have as much coverage in and that's part of the reason.

And given the significant price increase.

Yeah, good morning, guys. Maybe just on that last point. First, Raj, could you talk about sort of, um, contracting through the balance of the year and sort of what gives you visibility that?

We are starting to see some demand destruction in detail.

You've kind of encompassed the range of food cost outcomes.

So I guess really the big picture beef is the biggest variable here and then the other component here, where do you see your seat.

Rajesh Vennam: Yeah, Brian, I think if you look at what we published this morning, our coverage is less than typical, especially in beef. Right now we only have about 25% coverage in beef for the next six months, and that's one of the biggest opportunities in terms of where we're seeing the biggest headwinds. I think, as you all know, there's been a significant spike in beef costs recently, especially tenders and rib eyes. We don't believe these price levels are sustainable, and that's why we don't have as much coverage, and that's part of the reason. Given the significant price increase, we are starting to see some demand destruction in retail. I guess really the big picture, beef is the biggest variable here.

A higher inflation is on seafood.

Primarily due to the tariffs on shrimp and our team is working through to figure out how to mitigate some of that and that's really the reason why we're taking that inflation up from two 5% at the beginning of the year to now 3% to 4%, but you know there's situations.

There is still a very fluid here.

Okay understood. Thanks.

Rick maybe just on that.

Comments about sort of the new portion sizes at Olive garden.

Are you seeing sort of a different guests that is asking for that do you think this is extra sort of a traffic driver for for olive garden or I guess on the other hand, you know do you think this is Chuck dilutive in some sense.

Rajesh Vennam: The other component here where you're seeing higher inflation is on seafood, primarily due to the tariffs on shrimp, and our team is working through to figure out how to mitigate some of that. That's really the reason why we're taking the inflation up from 2.5% at the beginning of the year to now 3% to 4%. This situation is still very fluid here.

Sure.

People actually sort of approaching that and what are you seeing from those guys.

Yeah, Brian it's still pretty early we do believe in the long run this is a traffic driver.

It will dilute our check a little bit is if people trade from a higher portion size item to a lower portion size item, but we believe that that's the portion that those guests want.

Specially in beef. Uh, right now we only have about 25% coverage in beef for the, uh, for for the seimei 6 months. Uh, and, uh, you know, and that's, that's 1 of the biggest opportunities, uh, in terms of, uh, where we're seeing the biggest Advance. Um, and I think as you all know, uh, there's been a significant spike in beef cost recently, especially, uh, tenders and revise, uh, so, and we don't believe these price levels are sustainable. And that's why we don't have as much coverage. And, and that's part of the reason. Um, and, uh, you know, and given the significant price increase. Uh, there are we are starting to see some, uh, demand destruction and Retail. Uh, so I guess really, the big picture beef is the biggest variable here. Um, and then the other component here where you see you're seeing a higher inflation is on Seafood uh primarily due to the tariffs on shrimp uh and and our team is working through to figure out how to mitigate some of that. And that's really the reason why we're taking the uh,

Inflation uh up from 2 and a half percent at the beginning of the year to now 3 to 4%. Um but you know this this situation is still very fluid here.

[Analyst 1]: Okay, understood. Thanks. Rick, maybe just on the comments about the new portion sizes at Olive Garden. What, you know, are you seeing sort of a different guest that is asking for that? Do you think this is actually sort of a traffic driver for Olive Garden? On the other hand, do you think this is check dilutive in some sense? How are people actually sort of approaching that and what are you seeing from those items?

It's very early indications are that we're seeing a little bit more frequency.

Okay, understood, thanks. Um,

But it's not necessarily new guests because we haven't marketed it.

And we put it in restaurant without even any fanfare and it's just <unk>.

Rick maybe just on the the comments about sort of the, the new portion sizes that Olive Garden. What? What? Um,

People are gravitating towards that it's not significant preference gravitating towards it but there is some preference moving there.

Thank you. Your next question is coming from John Howard from Citi. Your line is now live.

Rick Cardenas: Yeah, Brian, it's still pretty early. We do believe in the long run this is a traffic driver. It will dilute our check a little bit as if people trade from a higher portion size item to a lower portion size item. We believe that's the portion that those guests want. Very early indications are that we're seeing a little bit more frequency, but it's not necessarily new guests because we haven't marketed it. We put it in restaurant without even any fanfare, and people are gravitating towards that. It's not significant preference gravitating towards it, but there is some preference moving there.

You know, are you are you seeing sort of a a different guests that that is asking for that? Do you think this is actually sort of a traffic driver for for Olive Garden? Or I guess on the other hand, you know, do you think this is check dilutive in some sense? Like how, how are, how are people actually sort of approaching that? And what, what are you seeing from those items?

Great. Thanks for taking the questions maybe kind of.

Yeah, Brian, it's still pretty early. We do believe in the long run that this is a traffic driver.

In the same vein that do.

The affordability pivot.

This quarter as well as the Uber eats.

Uh, it will dilute our check a little bit, as if people trade from a higher portion size item to a lower portion size item. But we believe that that’s the portion that those guests want.

Amplification or or build in the quarter can you maybe speak to how that hit on the cost line during the period end.

I noticed that.

And the very early indications are that we're seeing it a little bit more frequently. Um, but it's not necessarily a new guest because we haven't marketed it.

Obviously the restaurant margin.

Didn't lever that as much on a pretty solid comp in the period. So maybe Raj if you could speak to.

Those costs during the period, and what Youre expecting going forward as well.

And we put it in the restaurant without even any fanfare. And it’s just that people are gravitating towards that. It’s not a significant preference, but there is some preference moving there.

[Analyst 1]: Thank you.

Thank you.

Rajesh Vennam: Thank you. Next question is coming from John Tower from Citi. Your line is now live.

Yeah, John Let me first start by saying this.

These are things we planned on and we had in our plan and I think we said that's why we said we are actually exceeding our plan.

Thank you. Next question is coming from John Tower from City. Your line is now live.

[Analyst 1]: Great. Thanks for taking the questions. Maybe, in the same vein, the affordability pivot this quarter, as well as the Uber Eats amplification or build in the quarter, can you maybe speak to how that hit on the cost line during the period? I noticed that, obviously, the restaurant margin, you didn't lever that as much on a pretty solid comp in the period. Maybe Raj, if you could speak to those costs during the period and what you're expecting going forward as well.

And it's actually.

The fact that the segment profit margin is only down 10%, there's still north of 20% is a testament to the strength of the business model at Olive Garden with that said, let me explain a little bit more detail first of all we still priced below total inflation olive garden's pricing was only one 9%. So that's a pretty low price in this environment.

Given the again the total inflation second specific to those two items they were roughly on the on the margin. If you just purely look at the margin percentage impact they'll probably about 20 basis points. Each so if you put that back I mean, we would have been positive 30, right, but that's again, even with pricing below inflation. So I think thats the setup.

Great. Thanks for taking the questions. Maybe, uh, kind of, uh, in the same vein that, um, the affordability pivot and, um, this quarter as well as the Uber Eats, um, amplification or build in the quarter. Can you maybe speak to how that hit, uh, on the cost line during the period? And, you know, I noticed that, um, obviously the restaurant margin, you know, you didn't lever that as much on a pretty solid comp in the period. So, maybe Roger, if you could speak to, um, those costs during the period and what you're expecting going forward as well.

Rajesh Vennam: Yeah, John, let me first start by saying these are things we planned on and we had in our plan. I think we said that's why we said we're actually exceeding our plan. It's actually the fact that the segment profit margin is only down 10%, they're still north of 20%, which is a testament to the strength of the business model at Olive Garden. Now, with that said, let me explain in a little bit more detail. First of all, we still priced below total inflation. Our Olive Garden's pricing was only 1.9%. That's a pretty low price in this environment, given the total inflation. Second, specific to those two items, they were roughly on the margin. If you just purely look at the margin percentage impact, they were probably about 20 basis points each. If you put that back, we would have been positive 30, right?

The key metric that we need to take into consideration.

Because we believe long term these are the right decisions we're making.

And I think any business, where would the NV at 20 plus segment profit margin.

Okay.

Got it I appreciate that and then maybe just drill in a little bit more into the delivery business.

At Olive Garden can you talk about you know Rick you had mentioned that you're pleased with though obviously youre seeing younger guests make their way in more affluent.

Can you give us any more information on the frequency of those guests are they coming more so than what youre seeing within the store.

Yeah, John uh, let me first start by saying. Uh, these are things we plan on and we had in our plan and I think we said you know, that's why we said we're actually exceeding our plan. Uh and it's actually uh you know the fact that the segment profit margin is only down. 10% they're still north of 20% is a testament to the strength of the business model at all of garden. Now with that said, when let me explain a little bit more detail. First of all, we still priced below total inflation. All I've got is pricing, was only 1.9%. So that's a pretty low price in this environment. Uh given the given the total inflation second specific to those 2 items. They were roughly on the on the margin. If you just

In terms of frequency and and how they're using it even obviously it hasn't been a year, yet, but you know.

Rajesh Vennam: That's again, even with pricing below inflation. I think that's a key metric that we need to take into consideration, because we believe long-term these are the right decisions we're making. I think any business would envy a 20-plus segment profit margin.

Seasonally how they may be using that channel relative to in store.

Yeah, John we've said.

As we said in the past we are getting higher frequency for delivery guests and we are in dining guests. It's still early and we haven't had the delivery for more for a year yet as you mentioned.

Just purely. Look at the margin percentage impact. They're probably about 20 basis Points each. Uh, so if you put that back, I mean we would have been positive 30, right? But that's again, even with pricing below inflation. So I think that's that's the other key, uh, metric that we need to take into consideration, uh, because we believe long term. These are the right decisions, we're making and I think any business would would uh Envy a 20 plus segment profit margin.

[Analyst 1]: Got it. I appreciate that. Maybe just drill in a little bit more into the delivery business at Olive Garden. Can you talk about, you know, Rick, you had mentioned that you're pleased with how obviously you're seeing younger guests make their way in, more affluent. Can you give us any more information on the frequency of those guests? Are they coming more so than what you're seeing within the store, in terms of frequency and how they're using it? Even obviously, it hasn't been a year yet, but seasonally, how they're maybe using that channel relative to in-store?

As to seasonality.

The one thing that Uber told us is normally over the summer delivery orders start to kind of fall off and we really haven't seen that so well.

We'll know a little bit more about the.

The seasonality of delivery after we passed a year, maybe even two years because it continues to grow for us.

That said, we're very excited about how delivery is growing and as Raj mentioned earlier, we are using some of that ex extra guest count and extra margin to invest for all guests and we feel really good about that for the long term.

Um, you know, seasonally how they're maybe using that channel relative to in-store.

Rick Cardenas: Yeah, John, as we've said in the past, we are getting higher frequency for delivery guests than we are in dining guests. It's still early. We haven't had the delivery for a year yet, as you mentioned. As to seasonality, the one thing that Uber told us is normally over the summer, delivery orders start to kind of fall off. We really hadn't seen that. We will know a little bit more about the seasonality of delivery after we've passed a year, or maybe even two years, because it continues to grow for us. That said, we're very excited about how delivery is going. As Raj mentioned earlier, we are using some of that extra guest count and extra margin to invest for all guests. We feel really good about that for the long term.

Got it thanks for taking the questions.

Thank you. Your next question is coming from David Palmer from Evercore ISI. Your line is now live.

Yeah John um we've said as as we said in the past we are getting higher frequency for delivery guests and we are in in dining guests. It's still early. We haven't had the delivery for for a year yet, as you mentioned.

Oh, Thanks, good morning, aside from the beef cost question I think.

as to seasonality,

Probably two areas that are.

Major areas of curiosity and ice.

Certainly share them and one is the strong performance of the casual dining segment, which is becoming increasingly unusual after fast casual has slowed through the year through the middle of this year.

The one thing that Uber told us is that normally over the summer, delivery orders start to kind of fall off, and we really hadn't seen that. So, we'll know a little bit more about it.

The seasonality of delivery after we've passed a year, or maybe even two years, continues to grow for us.

And another I think as olive garden.

That said, we're very excited about how delivery is going.

Against more difficult comparisons later in your fiscal year, how we will do and what are you're lining up against that so you know theres a really my two questions. What are your thoughts about why casual dining is doing as well and do you think that'll continue and then and then separately Olive garden, you Youre rolling out a pretty large tests done small portions but.

And as Ros mentioned earlier, we are using some of that extra guest count and extra margin to invest for all guests. We feel really good about that for the long term.

[Analyst 1]: Got it. Thanks for taking the questions.

Got it. Thanks for taking the questions.

Rajesh Vennam: Thank you. Next question is coming from David Palmer from Evercore ISI. Line is now live.

What are your thoughts and what are your kind of lining up to keep the momentum going as you get into lapping some of the good stuff you've you're doing you've been doing in the last three three or four months. Thanks.

Thank you. Next question, is coming from David Palmer from Evercore. Your line is now live.

[Analyst 1]: Oh, thanks. Good morning. Aside from the beef cost question, I think there's probably two areas that are major areas of curiosity, and I certainly share them. One is the strong performance of the casual dining segment, which is becoming increasingly unusual after fast casual has slowed through the year, through the middle of this year. Another, I think, is Olive Garden. Against more difficult comparisons later in your fiscal year, how will it do, and what are you lining up against that? Those are really my two questions. What are your thoughts about why casual dining is doing as well, and do you think that'll continue?

Yeah, David the I believe the strong casual dining segment is driven by <unk>.

Generally less pricing than other segments of dining.

For the segment itself for casual dining itself.

And for the larger players in casual dining even lower pricing than casual dining total. So there's the guests are starting to see the value that casual dining bricks.

Now we've been seeing that for a few years now as you know it's just others are kind of following in line with that and we're seeing that the guests see the value.

[Analyst 1]: Then, separately, Olive Garden, you're rolling out a pretty large test on small portions, but what are your thoughts, and what are you kind of lining up to keep the momentum going as you get into lapping some of the good stuff you've been doing in the last three or four months? Thanks.

Also when they're trying to figure out where they spend their money.

They're going to places, where they can connect and engage with their friends and family.

There may be less snacking going on and less kind of munching.

Rick Cardenas: Yeah, David. I believe the strong casual dining segment is driven by generally less pricing than other segments of dining for the segment itself, for casual dining itself. For the larger players in casual dining, even lower pricing than casual dining in total. The guests are starting to see the value that casual dining brings. We've been seeing that for a few years now, as you know. It's just others are kind of following in line with that. We're seeing that the guests see the value. Also, when they're trying to figure out where they spend their money, they're going to places where they can connect and engage with their friends and family. There may be less snacking going on and less kind of munching.

Thanks. Uh, good morning aside from uh, the beef Cost question. I think there's probably 2 areas that are um, major areas of of curiosity. And I, I certainly share them. And 1 is, you know, the strong performance of the casual dining segment, which is becoming increasingly unusual after fast, casual has slowed through the year through the middle of this year and and another I think is is Olive Garden. You know, against more difficult comparisons, later in your fiscal year. How will it do and what do you aligning up against that? So, you know, there's a really my 2 questions. What are your thoughts about, why casual dining is doing as well? And do you think that'll continue? And then, and then separately, Olive Garden. You know, you're rolling out a pretty large test on small portions but you know, what are your thoughts and what are you kind of lining up to keep the momentum going? As you get into lapping some of the good stuff you've you're doing, you've been doing in the last 3, 3 3 or 4 months. Thanks.

But when people are going out to eat they're going out to where they can feel they can get a great meal at a great value and have time with their friends.

Yeah, David, I believe the strong casual dining segment is driven by.

In regards to olive garden for the back half of the year.

Generally, less pricing than other segments of dining for the segment itself, for casual dining itself.

We have plans to continue the momentum we do know that the comparisons get a little bit more challenging.

But you know the olive garden team is working on things that we could do in the back half of the year. We've got a great plan, we do believe that over time.

And for the larger players in casual dining, even lower pricing than the casual dining total. So, there's a, the guests are starting to see the value that casual dining brings.

Portability items on the menu of the lighter portion I don't want to call them affordability there, they're the right portion size for the right price for a group of consumers.

Now, we've been seeing that for a few years now. As you know, others are kind of following in line with that, and we're seeing that the guests see the value.

That.

Will that will eventually drive more traffic it might not drive it in the back half of the year, because we're not talking about it yet.

Also, when they're trying to figure out where they spend their money, they're going to places where they can connect and engage with their friends and family.

Rick Cardenas: When people are going out to eat, they're going out to where they can feel they can get a great meal at a great value and have time with their friends. In regards to Olive Garden for the back half of the year, we have plans to continue the momentum. We do know that the comparisons get a little bit more challenging. The Olive Garden team is working on things that we could do in the back half of the year. We've got a great plan. We do believe that over time, the affordability items on the menu are the lighter portion. I don't want to call them affordability. They're the right portion size for the right price for a good group of consumers that will eventually drive more traffic. It might not drive it in the back half of the year because we're not talking about it yet.

Uh, there may be less snacking going on and less kind of munching.

That said, we may start talking about it in the back half of the year. So there's a lot of things that we're going to do we've got a great team and we will react to whatever the sales trends looked like at Olive garden.

But when people are going out to eat, they're going out to where they can feel, they can get a great meal at a great value, and have time with their friends.

And we'll go from there.

In regards to Olive Garden for the back half of the year.

Thank you.

Thank you next question is coming from Jim Sklaren from Stephens. Your line is now live.

We have plans to continue the momentum. Uh, we do know that the comparisons get a little bit more challenging.

Sure erosion. Good morning, Thanks for taking my question.

I was hoping you could give us a breakdown on longhorn just comp split between traffic and ticket and then as a follow up on that.

But you know, the Olive Garden team is working on things that we could do in the back half of the year. We've got a great plan. We do believe that over time.

Have you seen any increase engagement, which consume me you mentioned, obviously pricing a 100 basis points below.

The affordability items on the menu are the lighter portion sizes. I don't want to call them "affordability"; they're the right portion size for the right price for a group of consumers.

That.

Inflation should we kind of expect that similar gap to progress through the year or any thoughts around how we should expect pricing to trend. Thank you.

Rick Cardenas: That said, we may start talking about it in the back half of the year. There are a lot of things that we're going to do. We've got a great team, and we'll react to whatever the sales trends look like at Olive Garden. We'll go from there.

Will, uh, that will eventually drive more traffic. It might not drive it in the back half of the year because we're not talking about it yet.

Yeah. So, let's first start with the longhorn traffic worse at Longhorn traffic was up about three 2% for the quarter are the same restaurant sales for five five so the check was two or three that pricing was two 5%.

That said, we may start talking about it in the back half of the year. So, there's a lot of things that we're going to do. We've got a great team, and we'll react to whatever the sales trends look like at Olive Garden.

And, uh, we'll go from there.

[Analyst 1]: Thank you.

Thank you.

Rajesh Vennam: Thank you. Next question is coming from Jim Solero from Stephens. Your line is now live.

Thank you. Next question is coming from Jim Sarra from Steven. Your line is now live.

[Analyst 1]: Eric, Raj, good morning. Thanks for taking our question. I was hoping you could give us a breakdown on LongHorn, just the comp split between traffic and ticket. As a follow-up on that, have you seen any increase in engagement with consumer? You mentioned, obviously, pricing 100 bps below inflation. Should we kind of expect that similar gap to progress through the year, or any thoughts around how we should expect pricing to trend? Thank you.

They had a little bit of a negative mix, primarily all come out of 20 basis points in terms of pricing versus inflation.

At Longhorn.

Ted.

There was a bigger spike in beef prices that was a little bit of a surprise at the end of the quarter.

Good morning. Thanks for taking our question. I was hoping you could give us a breakdown on Longhorn, just the comp split between traffic and ticket. And then, as a follow-up on that,

But it but we also had planned on having some gap to pricing. So it would further widen I guess.

By the time, we ended the quarter a little bit.

As we look through the year, we expect second quarter at the Darden level without getting specific segment level here at.

Have you seen any increase in engagement with consumers? You mentioned, obviously, pricing 100 basis points below inflation. Should we expect that similar gap to progress through the year, or do you have any thoughts on how we should expect pricing to trend? Thank you.

Rajesh Vennam: Yeah. Let's first start with LongHorn. Traffic versus LongHorn traffic was up about 3.2% for the quarter. The same-restaurant sales were 5.5%, so the check was 2.3%. Their pricing was 2.5%. They had a little bit of a negative mix, primarily Oak Bell, of 20 basis points. In terms of pricing versus inflation, at LongHorn, as we said, there was a bigger spike in beef prices. That was a little bit of a surprise at the end of the quarter. We also had planned on having some gap to pricing, so it further widened by the time we ended the quarter a little bit. As we look through the year, we expect second quarter at the Darden level, without getting specific segment level here.

At the Darden level, we expect pricing to be about higher basis points below inflation, and we expect that gap to narrow as we go through the year and so you would expect the pressure on the margin to be kind of followed that right. So.

We have the biggest gap in Q2, maybe cut that in half by the time you get to Q3, and then try to narrow that part of it as we get to Q4, but are consistent with our philosophy, our pricing for the full year will probably be.

Salesforce 55. So, yeah, the check was 23, the pricing was 2 and a half percent. Uh, they had a little bit of a negative mix primarily above, uh, of 20 basis points, uh, in terms of pricing versus inflation. Um,

You know they'll end up being below inflation.

Is it going to be 30, or 50, I don't know we're working through that I think you know our we've been always very thoughtful about what costs do we actually price for and we don't want we don't want a price for a temporary costs. We want a price for you know all of our time find other ways to.

At Longhorn. Uh, as we said, we, you know, there was a bigger spike in beef prices. That was a little bit of a surprise at the end of the quarter. Uh, but but we also had planned on having some Gap to pricing. So it it, it further widened, I guess uh by the time we ended the quarter a little bit

Rajesh Vennam: At the Darden level, we expect pricing to be about 100 basis points below inflation, and we expect that gap to narrow as we go through the year. You would expect the pressure on the margin to kind of follow that, right? We probably have the biggest gap in Q2, maybe cut that in half by the time you get to Q3, and then try to narrow that further as we get to Q4. Consistent with our philosophy, our pricing for the full year will probably be below inflation. Is it going to be 30 or 50? I don't know. We're working through that. I think we've been always very thoughtful about what cost do we actually price for. We don't want to price for temporary costs. We want to, over time, find other ways to solve for these incremental costs. That's what our team is focused on.

Solve for these incremental costs.

And that's what our team is focused on.

Yeah.

Great and then.

You guys mentioned the.

Value focused menu expansion and olive garden is that something that we could see maybe in a more limited fashion longhorn as well maybe focus on like advertisers are smaller played items or was that something that right now it's just olive garden.

Yes.

We're using we're doing this at olive garden to see how that works out and if other brands I think that it makes sense for them and they get the learnings from Olive garden, maybe they will implement but right now the focus is the olive garden and it's the olive garden team that's driving it.

As we look through the year, uh, we expect second quarter at the dawn level. Uh, without getting specific segment level here, at the dawn level, we expect pricing to be able about 100 basis points below inflation and we expect that Gap to narrow as we go through the year. And so, you would expect the pressure on the margin to be kind of Follow that, right? So we probably have either biggest Gap in Q2, maybe cut that in half by the time you get to Q3 and then try to narrow that further as we get to Q4. But uh, you know, consistent with our philosophy, our pricing for the full year, will probably be uh you know, we'll we'll end up being below inflation. Um, is it going to be 30 or 50? I don't know. We're working through that. I think, you know, our uh, we've been always very thoughtful about what cost do we actually price for? Um, and we don't want to, we don't want to price for

And as I said, we will see how that goes now there might be some things that longhorn does in the future or other brands do in the future but.

They will make those decisions as as those times come.

Uh temporary costs. We want a price for you know, over time, find other ways to uh solve for uh these incremental costs. Uh and that's what our team is focused on.

[Analyst 1]: Great. You guys mentioned the value-focused menu expansion at Olive Garden. Is that something that we could see maybe in a more limited fashion at LongHorn Steakhouse as well, maybe focused on appetizers or smaller plate items? Is that something that right now is just Olive Garden focused?

Okay I appreciate it that's all thank you.

Thank you next question is coming from Eric <unk> from Keybanc capital market. Your line is now live.

Hi, Thanks for taking the question just a few quarters ago, you talked about some strength among the lower income consumers and obviously most of your peers, particularly on the fast food side are talking about weakness among that cohort of Av.

Great. And and then you guys mentioned the, uh, value Focus menu expansion at Olive Garden. Is that something that we could see maybe in a more limited fashion at Longhorn as well? Uh, maybe focus on like appetizers or or smaller, um, plate items or is that something that right now? It's just all of garden.

Rick Cardenas: Yeah, we're using, we're doing this at Olive Garden to see how that works out. If other brands think that it makes sense for them, and they get the learnings from Olive Garden, maybe they will implement. Right now, the focus is the Olive Garden, and it's the Olive Garden team that's driving it. As I said, we'll see how that goes. There might be some things that LongHorn Steakhouse does in the future or other brands do in the future, but they'll make those decisions as those times come.

Focus.

Income. So if you maybe you could talk about what youre seeing from an income perspective and.

Are you gaining gaining share them on lower income consumers do you think.

Do you think that that part of the equation is actually holding as yourselves up relative to your peers and are you seeing some maybe trade into the category from some of the higher income folks.

You know, we're using, we're doing this at Olive Garden to see how that works out. If other brands think that it makes sense for them and they get the learnings from Olive Garden, maybe they will implement it. But right now, the focus is on Olive Garden, and it's the Olive Garden team that's driving it.

On the casual dining side.

Yeah Eric.

[Analyst 1]: I appreciate the thoughts, all. Thank you.

Specific to casual dining.

And as I said, we'll see how that goes now. There might be some things that LongHorn does in the future or other brands do in the future, but they'll make those decisions as those times come.

All of our casual dining brands saw an increase in visits year over year.

I appreciate your thoughts all happen. Thank you.

Rajesh Vennam: Thank you. Next question is coming from Eric Gonzalez from KeyBanc's Halper Market. Your line is now live.

From guests across all income groups.

But it's specifically those in higher income groups. So you would you would expect that that would have been that could've been some trade down but it could be trade up from a lower income groups to have great value in casual dining.

Thank you. Next question is coming from Miracle Gonzalez, from Kate copper Market. Your line is now live.

[Analyst 1]: Hi, thanks for taking the question. Just a few quarters ago, you talked about some strengths among the lower-income consumers. Obviously, most of your peers, particularly on the fast food side, are talking about weakness among that cohort of income. If you maybe could talk about what you're seeing from an income perspective, are you gaining share among lower-income consumers? Do you think that part of the equation is actually holding your sales up relative to your peers? Are you seeing some maybe trade into the category from some of the higher-income folks, particularly on the casual dining side?

We are seeing a few shifts in behavior and that guests are going towards what price certainty.

So they know what they're going to pay before they come in.

Or or greater perceived value.

Even if the item is a high price. So if you think about the collaborate and steak and shrimp that we had at olive garden great preference.

Hi, thanks for taking the question. Um, just a few quarters ago, you know, you talked about some strengths among the lower income consumers, and, you know, obviously most of your peers particularly on the fast food, side are talking about weakness among that cohort of of, of income. So if you maybe you could talk about what you're seeing, uh, from an income perspective and and you know, are you, are you gaining gaining share among lower income consumers? You think? Uh, you think that, that part of the the equation is is actually holding your your sales up relative to your peers and are you seeing some maybe trade into the category from some of the higher income folks?

Great perceived value it was the highest price menu item on the menu.

Rick Cardenas: Yeah, Eric, specific to casual dining, all our casual dining brands saw an increase in visits year over year from guests across all income groups, specifically those in higher-income groups. You would expect that could have been some trade down, but it could be trade up from the lower-income groups to a great value in casual dining. We are seeing a few shifts in behavior, and guests are going towards price certainty, so they know what they're going to pay before they come in, or greater perceived value, even if the item is a high price. If you think about the Calabrian steak and shrimp bucatini that we had at Olive Garden, great preference, great perceived value. It was the highest-priced menu item on the menu. We are seeing, as I said, for casual dining brands, growth among all income groups.

Particularly on the casual dining side.

But we are seeing.

I said for four casual dining brands growth among all income groups.

Yeah. Eric, uh, specifically to casual dining, all of our all, our casual dining Brands, saw an increase in visits year-over-year,

From guests across all income groups.

Yes.

And then on the.

Just to close the loop on on the commodity discussion based on where the commodities are now and what you've locked in I know youre, a little bit lighter on the on the beef side.

But it's specifically those in higher income groups. So you would you would expect that that would have been that could have been some trade down, but it could be trade up from a lower income groups to to a great value and casual dining.

Um,

What do you think that implies for store level margins and what's embedded in the guidance you know in the past you talked about.

Modest margin expansion do you still think you can get there based on what you did in the first quarter and where you are locked in.

We are, uh, seeing a few shifts in behavior and that guests are are going towards what price certainty. Um, so they know what they're going to pay before they come in.

Or or greater perceived value.

Eric I would refer you back to our long term framework, which basically talks about our earnings after tax.

From zero to 20 basis points growth. So if you look at our guidance.

Even if the item is a high price. So if you think about the collaboration steak and shrimp that we had at Olive Garden, great preference.

Great perceived value. It was highest price menu item on the on the menu.

Even at the low end, we're basically either flat or growing margin at each level, we don't want to focus too much on any one line item and for us ultimately.

So, uh, but we are seeing.

as I said,

For casual dining brands, growth among all income groups.

[Analyst 1]: Great. Just to close the loop on the commodity discussion, based on where the commodities are now and what you've locked in, I know you're a little bit lighter on the beef side. What do you think that implies for store-level margins and what's embedded in the guidance? In the past, you talked about modest margin expansion. Do you still think you can get there based on what you did in the first quarter and where you are locked in?

To achieve our long term framework and get that the targets, we want to get too.

By investing more in the guest we wanted to do that if that means that the segment profit margins are down year over year, that's not something we're concerned about I think our focus ultimately he's on the eat level at the earnings after tax level are we staying flat or growing margins and that's we feel like we're still on a path to get there.

Great. And then on the, you know, just to close the loop on on the commodity discussion, you know, based on where the Commodities are now and and what you've locked in, I know you're a little bit lighter on the, on the beef side.

What do you think that implies for store-level margins and what's embedded in the guidance? You know, in the past you talked about, uh, you know, modest margin expansion. Do you still think you can get there based on, you know, what you did in the first quarter and where you are locked in?

Rajesh Vennam: Eric, I would refer you back to our long-term framework, which basically talks about our earnings after tax from 0 to 20 basis points growth. If you look at our guidance, even at the low end, we're basically either flat or growing margin at the EAT level. We don't want to focus too much on any one line item. For us, ultimately, if we're able to achieve our long-term framework and get the targets we want to get to by investing more in the guest, we want to do that. If that means that the segment profit margins are down year over year, that's not something we're concerned about. I think our focus ultimately is on at the EAT level, at the earnings after tax level, are we staying flat or growing margins? That's what we feel like we're still on a path to get there.

Yeah, I would refer you back to our long-term framework.

Great. Thank you.

Yeah.

Basically, this talks about our earnings after tax.

Thank you. Our next question today is coming from David Tarantino from Baird. Your line is now live.

Hi, good morning.

Basis point growth. So if you look at our guidance, um, even at the low end,

Rick Alex.

Question about your views on the overall health of the consumer spending environment. You know certainly you had a great quarter, but I guess you know over the last few months. We've seen you know a lot of crosscurrents relate it to the job updates and whatnot. So I'm just maybe wanting to get your your thoughts on.

Where we are from the state of consumer spending and whether you think anything's changed recently relative to maybe where you thought it was at the start of the year.

Mhm.

Yeah, David I can't say that anything has changed dramatically from where we saw it started the year. We are ahead of where we thought we'd be right now.

[Analyst 1]: Great. Thank you.

We're basically uh, either flat or growing margin at the eat level, uh, we don't want to focus too much on any 1 line item, and for us, ultimately uh, if we're able to achieve our long-term framework and get the the targets. We want to get to uh, by investing more in the guests, we want to do that. If that means that the segment profit margins are down here over here. That's not something we're concerned about. I think, our our, our Focus ultimately is on at the heat level at the earnings after tax. Level are we staying flat or growing margins? And that's we we feel like we're still on a path to get there.

Great. Thank you.

Rajesh Vennam: Thank you. The next question today is coming from David Tarantino from Baird. Your line is now live.

You know, there's a lot of talk about the job revisions.

Thank you. Next question, coming from David, Tarantino from beard. Your line is not live.

[Analyst 1]: Hi, good morning. Rick, I had a question about your views on the overall health of the consumer spending environment. Certainly you had a great quarter, but I guess over the last few months, we've seen a lot of cross-currents related to the job updates and whatnot. I'm just maybe wanting to get your thoughts on where we are from the state of consumer spending and whether you think anything's changed recently relative to maybe where you thought it was at the start of the year.

But those jobs didn't exist. So that's what the that's what people were working and so we were dealing with what was actually happening now.

Not what was thought to be happening.

And so I believe that the August retail sales were up pretty significantly.

And we had a pretty darn good August two so I don't see any dramatic change to what we thought the consumer was.

Great that's helpful and Raj one one quick clarification, you mentioned the inflation.

Versus pricing gap is expected to narrow as is it getting to maybe the second half of the year is that because the price components going higher or the inflation components coming down I guess I could.

Uh hi. Good morning. Um, Rick I I had a question about your views on the overall health of the consumer spending environment, you know, certainly you had a great quarter but I guess you know over the last few months we've seen you know a lot of cross-currents related to the job updates and and whatnot. So I'm I'm just maybe wanting to get your your thoughts on where we are from the state of consumer. Um spending and whether you think anything's changed recently relative to maybe where you thought it was at the start of the year.

Rick Cardenas: Yeah, David, I can't say that anything's changed dramatically from where we saw it started the year. We are ahead of where we thought we'd be right now. There's a lot of talk about the job revisions, but those jobs didn't exist. That's what people were working. We're dealing with what was actually happening, not what was thought to be happening. I believe that August retail sales were up pretty significantly, and we had a pretty darn good August too. I don't see any dramatic change to what we thought the consumer was.

Would you explain kind of how how that might work.

Yeah sure David.

Yeah, David I I can't say that anything's changed dramatically from where we saw start of the year. We are ahead of where we thought we'd be right now. You know, there's a lot of talk about the job revisions.

It's primarily.

We are taking a little bit more price as we go through the year, we mentioned that at the beginning of the year right. We started pretty low in the first quarter, we expect to get for the full year to be in the mid to high twos and if we start with two two as you can see is as the year progresses that moves up a little bit.

And then there's also some some near term pressures that we expect because like I said in the commentary around beef.

But those jobs didn't exist. So that's what the that's what people were working. And so we were dealing with what was actually happening, not what was thought to be happening. And so I I believe that uh that August uh reach retail sales were up pretty significantly and we had a pretty darn good August too. So I don't see any dramatic change to what we thought the consumer was.

[Analyst 1]: Great. That's helpful. Raj, one quick clarification. You mentioned the inflation versus pricing gap is expected to narrow as you get into maybe the second half of the year. Is that because the price component's going higher or the inflation component's coming down? I guess, could you explain kind of how that might work?

We don't think saw these high prices are sustainable.

Great, that's helpful. And Raj, one quick clarification. You mentioned the inflation.

I mean, these are pretty punitive to the consumer and we're trying to protect them by not pricing for it.

Yeah.

Makes sense. Thank you very much.

Thank you next question is coming from Sara Senatore from Bank of America. Your line is now aligned.

The pricing gap is expected to narrow as we get into maybe the second half of the year. Is that because the price components are going higher or the inflation components are coming down? I guess I...

Rajesh Vennam: Yeah, sure, David. It's primarily that we are taking a little bit more price as we go through the year. We mentioned that at the beginning of the year, right? We started pretty low in the first quarter. We expect to get for the full year to be in the mid to high 2%. If we start with 2022, as you can see, as the year progresses, that moves up a little bit. There are also some near-term pressures that we expect because, like I said in the commentary around beef, we don't think some of these high prices are sustainable. I mean, these are pretty punitive to the consumer, and we're trying to protect them by not pricing for it.

Certainly! Please provide the segment of the transcript you would like me to edit.

Great. Thank you.

I wanted to ask about the idea of sort of investing and growing top line and more of a top line tenant grants algorithm.

You've mentioned pricing below inflation, obviously affordability.

Our brands are known for in terms of value for the money, but I guess I could alphatec marketing as it related to that or even perhaps subsidizing delivery fees. So I was just.

I'm curious as you think about the kind of different investments as marketing something I know you said you got some leverage you have to have marketing dollars for higher though perhaps a little bit later, but we might have expected and you talked about delivering fees as perhaps margin pressures and I wasn't sure if that's because.

Yeah sure. Uh David it's primarily the we are taking a little bit more price as we go through the year. We we mentioned that at the beginning of the year, right? We started pretty low in the first quarter, we expect to get for the full year to be in the mid to high twos and if we started with 2 2 as you can see as as the year progresses that moves up a little bit uh and then there's also some some uh, near-term pressures uh, that we expect because like it's

Said in the commentary around beef.

Uh, we don't think all these high prices are sustainable. Um, I mean, these are pretty punitive to the consumer and we're trying to protect them by not pricing for it.

[Analyst 1]: Makes sense. Thank you very much.

Makes sense. Thank you very much.

Rajesh Vennam: Thank you. Next question is coming from Sarah Senator from Bank of America. Your line is now live.

Because youre not fully covering them with what you're hearing from your customers, but perhaps you could and I never think of recurring just curious to perhaps have been exception, but maybe you could talk a little bit about you know as you think about investing behind topline.

Thank you. Next question is coming from Sarah, Senator from Bank of America. Your line is now live.

[Analyst 1]: Great. Thank you. I wanted to ask about the idea of sort of investing and growing top line, you know, more of a top-line driven growth algorithm. You mentioned pricing below inflation, and obviously, you know, affordability is something that your brands are known for in terms of value for the money. I guess I could also characterize marketing as a way to do that or even perhaps subsidizing delivery fees. I was just curious, as you think about the kind of different investments, is marketing something? I know you said you got some leverage, so marketing dollars were higher, though perhaps a little bit light of what we might have expected. You talked about delivery fees as perhaps margin pressure. I wasn't sure if that's because you're not fully covering them with what you charge your customers.

Or.

Is it possible.

And then I can't remember a quick follow up.

Yeah, Sara we do believe that marketing can help drive traffic and while our marketing as a percent of sales didn't seem to grow I think Raj mentioned in his prepared remarks, we had some cost saves in marketing that offset our actual marketing growth. So we actually had more trp's out there.

Great, thank you. Um, I I wanted to ask about the idea of sort of investing and and growing Topline, you know, more of a Topline driven growth algorithm. You, you mentioned price and obviously you know, affordability is is is something that, you know, your brands are known for in terms of value for the money. But I guess I could also characterize marketing as a way to do that or even perhaps subsidizing delivery fees. So I was just

Our other brands that are not on not on linear TV or testing.

Testing.

Connected TV and other digital aspects.

Cheddar has their first ever 32nd commercial on a connected TV.

[Analyst 1]: Perhaps you could, and I know it's free delivery this quarter, so perhaps that's an exception. Maybe you could talk a little bit about, as you think about investing behind top line, these other possible ways to do that. I do have another quick follow-up.

So we are we are increasing our marketing activity because we believe that.

That will drive some traffic, but we're not doing it at deep discounting and the ways that we had done it in the in the past.

Rick Cardenas: Yeah, Sarah, we do believe that marketing can help drive traffic. While our marketing as a % of sales didn't seem to grow, I think Raj mentioned in his prepared remarks, we had some cost saves in marketing that offset our actual marketing growth. We actually had more TRPs out there. Our other brands that are not on linear TV are testing connected television and other digital aspects. Cheddar’s Scratch Kitchen has their first ever 30-second commercial on a connected television.

Curious, uh, you know, as you think about the kind of, uh, different Investments is, is marketing. Something I know you said, you got some, uh, leverage, you know, some marketing dollars, or higher, though, perhaps a little bit later of what we might have expected, um, and you talked about delivery fees as perhaps margin pressure. So I wasn't sure if that's, um, because you're not fully covering them with what you charge your your customers. But perhaps you could, and I know it's free delivery this quarter. So perhaps that's an exception, but maybe you could talk a little bit about, you know, as you think about investing behind Topline these other, um, you know, these other possible, uh, ways to do that. And then and then I do have another quick follow-up.

And you did already I think you answered a question on the under delivery fees.

There are other ways that we can do things to drive delivery, but this quarter. The 1 million free deliveries did impact did impact a little bit of a margin.

Great. Thank you and then just to follow up with I think you alluded to last snacking or our main thing I was curious is that a like a D. L. P. One reference you know in terms of like how people are changing there.

Yes, Sarah, we do believe that marketing can help Drive traffic. And while our marketing, as a percent of sales, didn't seem to grow. I think Raj, mentioned in a prepared remarks, we had some cost saves in marketing that offset our actual marketing growth. So we actually had more trps out there. Uh our, our other brands that are not on, not on linear TV or testing uh testing uh connected television, and other digital aspects.

Any patterns. There was more you know people are prepared to give up some of these kind of convenience and impulse occasion.

Courtney Aquilla: We are increasing our marketing activity because we believe that will drive some traffic, but we're not doing it at deep discounting in the ways that we had done it in the past. You did already, I think you answered your question on the delivery fees. You know, there are other ways that we can do things to drive delivery, but this quarter, the million free deliveries did impact a little bit of the margin.

Spend behind yet really been experience they get at olive garden longhorn or your other brands.

Severe 302 commercial on a connected television. So we are, we are increasing our marketing activity because we we believe that

Yes, sure I think it was a little bit of both.

There are some people on G. L P ones that when when you do the research on them they they eat smaller portions or they eat out a little less but when they eat out they actually eat up more in casual dining and so there is a little bit of that but but I think it's it's maybe even a consumer that says I'm just trying to.

That will drive some traffic, but we're not doing it at deep discounting, and the ways that we had done it in the past.

The.

Operator: Great. Thank you. The follow-up was, I think, you alluded to less snacking or munching. I was curious, is that a like a JLP One reference, in terms of how people are changing their eating patterns, or it was more people are prepared to give up some of these sort of convenience or impulse occasions, and spend behind the really good experiences like they get at Olive Garden or LongHorn or your other brands?

And you did already. I think you answered your question on the delivery fees. You know, there are other ways that we can do things to drive delivery, but this quarter, the million free deliveries did impact a little bit of the margin.

To be healthier or eat a little less and so maybe there was a little less snacking.

And at the lower end consumer.

They probably don't have as much resource to go out as much as they did and it's probably impacting another category more than it is impacting us.

Okay. Thank you so much.

Thank you. Your next question today is coming from Jeffrey Bernstein from Barclays. Your line is my life.

Courtney Aquilla: Sure. I think it's a little bit of both. There are some people on GLP-1 that, when you do the research on them, they eat smaller portions or they eat out a little less. When they eat out, they actually eat out more in casual dining. There is a little bit of that, but I think it's maybe even a consumer that says, "I'm just trying to be healthier or eat a little less." Maybe there is a little less snacking. At the lower-end consumer, they probably don't have as much resource to go out as much as they did, and it's probably impacting another category more than it is impacting us.

Great, thank you. And, and then, just the, the follow-up was, I think, you know, Rick, you alluded to less snacking or or munching I was curious. Is that a, like, a jlp1 reference, you know, in terms of like how people are changing, um, their eating patterns or was more, you know, people are prepared to give up some of these sort of convenience or impulse occasions uh, and and spend behind, you know, really good experiences like they get at, you know, all of Garden or Longhorn or your other brands.

Great. Thank you very much.

Yeah, sure. I think it's a little bit of both.

Rick for fiscal 'twenty six you raised your comp guide modestly.

Yeah, there are some people on GLP-1 that when you do the research on them, they...

But clearly thats in spite of maybe what many people expected a slightly tougher macro and concerns of Ms. Krewson somewhat slow down and we know about the tougher compares I think you mentioned in the first quarter was modestly above your plan, but.

Any color you could share on your confidence in raising that guide.

I mean, as we think about the current fiscal two Q. The compares are definitely much tougher.

Eat smaller portions or eat out a little less. But when they eat out, they actually eat out more in casual dining. And so, there is a little bit of that. But I think it's maybe even a consumer that says, "I'm just trying to be healthier or eat a little less." And so, maybe there is a little less snacking.

Last quarter, you were willing to frame kind of what you expect for the current quarter versus your full year Guide wondering whether you think the fiscal second quarter will come in above or below kind of that new range and then I had one follow up.

Operator: Very good. Thank you so much.

And at the the lower end consumer uh they probably don't have as much resource to to go out as much as they did and it's probably impacting another category more than it is. Impacting us

Very good. Thank you so much.

Courtney Aquilla: Thank you. Next question today is coming from Jeffrey Bernstein from Barclays. Your line is now live.

Yes.

Yeah, Jeff I'll start by saying, we wouldn't have increased our guidance if we didnt feel confident about it so you.

Thank you. Next question comes from Jeffrey Bernstein from Barclays. Your line is now live.

Rajesh Vennam: Great. Thank you very much. Rick, for fiscal 2026, you raised your comp guide, but clearly, that's in spite of maybe what many people expected, a slightly tougher macro and concerns since we're going to slow down, and we know about the tougher compares. I think you mentioned the first quarter was modestly above your plan. Nicole, you could share on your confidence in raising that guide. As we think about the current fiscal Q2, the compares are definitely much tougher. The last quarter, you were willing to frame kind of what you expected for the current quarter versus your full-year guide, wondering whether you think the fiscal second quarter will come in above or below kind of that new range. I had one follow-up.

Great, thank you very much.

You know as we look at it.

At our same restaurant sales and our total sales.

Rick uh for fiscal 26. Uh, you raised your comp guide.

Part of the reason we raised our total sales as we're really confident in our unit count and development.

We increased the number of restaurants.

We got rid of the low end of our range for for development and we say now we're approximately 65.

Um, but clearly, that's in spite of maybe what many people expected—a slightly tougher macro environment and concerns about a slowdown. We know about the tougher comparisons; I think you mentioned that the first quarter was modestly above your plan.

Partly because we are.

But most of the restaurants are either built or being built or open already.

And some of them are coming in earlier than we thought so we feel really good about our development pipeline and I'll, let Raj talk about the cadence of our comp.

But but for the second quarter and beyond.

But any call you could share on your confidence in raising that guide. Um, as we think about the current fiscal Q2, the comps are definitely much tougher. In the last quarter, you were willing to frame kind of what you expected for the current quarter versus your full year guide. I’m wondering whether you think the fiscal second quarter will come in above or below kind of that new range. And then I had one follow-up.

Courtney Aquilla: Yeah, Jeff, I'll start by saying we wouldn't have increased our guidance if we didn't feel confident about it. As we look at our same-restaurant sales and our total sales, part of the reason we raised our total sales is we're really confident in our unit count in development. We increased the number of restaurants, we got rid of the low end of our range for development, and we say now we're approximately 65, partly because most of the restaurants are either built or being built or open already. Some of them are coming in earlier than we thought. We feel really good about our development pipeline. I'll let Raj talk about the cadence of our comp for the second quarter and beyond.

Yes, Jeff I'd say look we expected as we get relative to the year for <unk>.

In the back half to be not as strong in comps as the first half.

But I think as.

The year is progressing well and we're learning more and we feel really good about how even the second quarter started off and that's all taken into consideration as we provided this guidance.

Yeah, Jeff. I'll start by saying we wouldn't have increased our guidance if we didn't feel confident about it. So, um, you know, as we look at our same-restaurant sales and our total sales, you know, part of the reason we raised our total sales is we're really confident in our unit count in development. We increased the number of restaurants, well,

But I think ultimately the cadence will still be the fact that we still expect the back half to be lower than the first half.

We got rid of the low end of our range for development, and we say now we're approximately 65.

Partly, because we are.

Okay.

Understood and then just a follow up on your Uber partnership I noticed still early but it seems like youre, having success with olive garden and Cheddar is with the <unk> I'm just wondering first whether you'd consider our next brand to embrace that one P over delivery and whether there's any updated thoughts on potential for using <unk>.

Most of the restaurants are either built or being built or open already and some of them are coming in earlier than we thought. So we feel really good about our our development Pipeline. And I'll let Raj talk about the Cadence of our comp, uh, but uh, but for the, for the second quarter and Beyond

Rick Cardenas: Yeah, Jeff, I'd say, look, we expected as we went into the year for, you know, the back half to be not as strong in comps as the first half. I think as the year is progressing, we're learning more, and we feel really good about how even the second quarter started off, and that's all taken into consideration as we provided this guidance. I think ultimately, the cadence will still be the fact that we still expect the back half to be lower than the first half.

Or for the order aggregation part of things not just delivery. Thank you.

Yeah, Jeff. I would say, look, we expected as we went into the year for, you know, the back half to be not as strong in comps as the first half.

Yeah, Jeff we are pleased with our first party delivery, both at Olive garden and at Cheddars.

Continues to grow for us we do have another brand that wanting to embrace it and we would expect that brand to be on the platform sometime in Q3.

I won't tell you what brand that is.

But I think as as the, as the year is progressing, we're, we're learning more and uh, we feel really good about how even the second quarter started off and that's all taken into consideration as we provide this guidance. Um, but I think ultimately the the Cadence will still be the fact that we we still expect the back half to be lower than the front staff.

They're very excited to jump into the first party delivery.

Rajesh Vennam: Understood. Just to follow up on your Uber partnership, I know it is still early, but it seems like you're having success with Olive Garden and Cheddar’s Scratch Kitchen with the first-party. I'm just wondering, first, whether you'd consider a next brand to embrace that first-party Uber delivery and whether there's any updated thoughts and potential for using Uber for the order aggregation part of things, not just delivery. Thank you.

In regards to marketplace to a third party, whether it's uber or anyone else.

We still have some challenges.

With the model, we're focused on first party right now and we've talked about the things that we don't like about third party.

If a provider can come with every solution that we have for four third party of the reasons that we don't like it then we would definitely consider it but right now we're very comfortable and very pleased without first party deliveries going.

Courtney Aquilla: Yeah, Jeff, we are pleased with our first-party delivery, both at Olive Garden and at Cheddar’s Scratch Kitchen. It continues to grow for us. We do have another brand that's wanting to embrace it, and we would expect that brand to be on the platform sometime in Q3. I won't tell you what brand that is, but they're very excited to jump into the first-party delivery. In regards to marketplace or third party, whether it's Uber or anyone else, you know, we still have some challenges with the model. We're focused on first party right now, and we've talked about the things that we don't like about third party. If a provider can come with every solution that we have for third party or the reasons that we don't like it, then we would definitely consider it.

Understood. And then just a follow-up on your Uber partnership. I know it is still early, but it seems like you're having success with Olive Garden and Cheddar's with the 1 P. I'm just wondering—first, whether you'd consider a next brand to embrace that 1 P, and whether there are any updated thoughts on the potential for using Uber for the water aggregation part of things, not just delivery. Thank you.

Yeah, Jeff, we are pleased with our first-party delivery, both at Olive Garden and at Cheddar's. It continues to grow for us.

Thank you.

Thank you. Your next question is coming from Jacob Philips familiar as research. Your line is now live.

We do have another brand that wants to embrace it, and we would expect that brand to be on the platform sometime in Q3.

Uh, I won't tell you what brand that is.

Uh huh.

I guess I first wanted to double back on unit growth acceleration over like the medium to long term I know you took away the ore and how.

But they're very excited to jump into the first-party delivery.

How should we think about that ramping up.

To marketplace or third party, whether it's Uber or anyone else.

Especially with I know, there's some new prototypes, there's some acceleration in Canada.

Well moving parts.

You know, we still have some challenges with the model we're focused on first-party right now, and we've talked about the things that we don't like about third-party.

Yeah. The the development is our owned restaurant, so 65 of our restaurants.

Canada is all franchised so that doesn't count in our unit growth.

Courtney Aquilla: Right now, we're very comfortable and very pleased at how first-party delivery is going.

We get a lot of good royalties from that but that doesn't isn't a unit for us.

If a provider can come up with every solution that we have for third-party, or the reasons that we don't like it, then we would definitely consider it. But right now, we're very comfortable and very pleased with our first-party. Delivery is going.

Rick Cardenas: Thank you.

Thank you.

In regards to how we're going to ramp up our.

Rajesh Vennam: Thank you. Next question is coming from Jacob Aiken-Phillips from Melias Research. Your line is now live.

Five year plan has us solidly in our our long term framework of 3% to 4% of our sales growth came from new units and so you would expect our unit growth percentage to ramp up a little bit year over year.

Thank you. Next question is coming from Jacob, a Phillips from Melia's. Researcher Line is now live.

[Analyst 1]: Hi. Good morning. I first wanted to double back on unit growth acceleration over the medium to long term. I know you took away the lower end. Just how should we think about that ramping up, especially with I know there's some new prototypes, some acceleration in Canada, and a couple of moving parts.

Great and then just on <unk>.

There was like some prototypes of smaller there's been also some competitors are saying, they're seeing some higher construction costs for imported stuff I mean carbons there.

Hi. Hi, good morning. Um, I guess I first wanted to double back on unit growth acceleration over the medium to long term. I know you took away the lower end. Just how should we think about that ramping up, especially with? I know there are some new prototypes, there's some acceleration in Canada, and a couple of moving parts.

Courtney Aquilla: Yeah. The development is our owned restaurant, so 65 of our restaurants. Canada is all franchised, so that doesn't count in our unit growth. We get a lot of good royalties from that, but that isn't a unit for us. In regards to how we're going to ramp up, you know, our five-year plan has us solidly in our long-term framework of 3 to 4% of our sales growth coming from new units. You would expect our unit growth percentage to ramp up a little bit year over year.

Yeah, We've got a couple of brands actually all of our brands, especially olive garden longhorn over a year's work on the right prototype size.

Yard House, and shatters have just come out with new prototypes that are smaller much more efficient.

Yeah, the development is our own restaurant. So 65 of our restaurants in Canada are all franchised, so that doesn't count in our unit growth. Uh, we get a lot of good royalties from that, but that doesn't count as a unit for us.

And the costs are lower than it would be for building on our existing prototype size restaurants.

And we've opened a few of them and they're doing really well and they're able to generate the sales that are existing prototypes are generating in general.

In regards to how we're going to ramp up, you know our 5-year plan has a solidly in our our long-term framework of 3 to 4% of our sales growth coming from a new units. And so you would expect our unit growth percentage to ramp up a little bit year over year.

[Analyst 1]: Great. Just on, I know that there were some prototypes of smaller, and also some competitors are saying they're seeing some higher construction costs from imported stuff. Any comments there?

In regards to costs.

Our costs are much closer and actually sometimes under our budgeted amounts which is very different than it was before the tariff impacts. We don't believe are too dramatic to to construction costs and so we feel really confident about our pipeline and being able to.

Great. And then um, just on like I I know that there was like some prototypes of like smaller and then also some of competitors are saying they're seeing some higher construction costs from like imported stuff. Any comments there.

Courtney Aquilla: Yeah. We've got a couple of brands. Actually, all of our brands, especially Olive Garden and LongHorn Steakhouse, have over years worked on the right prototype size. Yard House and Cheddar’s Scratch Kitchen have just come out with new prototypes that are smaller, much more efficient, and the costs are lower than it would be for building our existing prototype-sized restaurants. We've opened a few of them, and they're doing really well, and they're able to generate the sales that our existing prototypes are generating in general. In regards to costs, our costs are much closer and actually sometimes under our budgeted amounts, which is very different than it was before. Tariff impacts, we don't believe, are too dramatic to construction costs. We feel really confident about our pipeline and being able to build them at a very good return for us.

Build them at a very a very good return for us.

Thank you.

Thank you. Your next question is coming from Jake Bartlett from true as Securities. Your line is now live.

Great. Thanks for taking the question. My first one is on delivery I'm, hoping you can frame the mix of delivery was.

Yeah, we've got a couple of Brands, actually, all of our Brands, especially all of our Long, Long Horn had over years, worked on on the right prototype size, uh, Yard House and Cheddars. Have just come out with new prototypes that are smaller, much more efficient, uh, and and the costs are lower than it would be for building. An our existing prototype size restaurants

In the first quarter, but also what the exit rate was after the promotion.

And we've opened a few of them and they're doing really well, and they're able to generate the sales that our existing products are generating in general.

Um, in regards to costs

So whether you expect to come out it was similar promotions in the absence of $4 26, and then I have a follow up.

Yeah, Jay I'll speak specifically to Olive Garden, I think that's what you're asking for so for olive garden delivery in the first quarter was about 5%.

Our costs are much closer and actually sometimes under our budgeted amounts, which is very different than it was before. Tariff impacts, we don't believe, are too dramatic to construction costs.

We exited at about 4%.

As we mentioned when we stopped a million free deliveries, we exited a little bit lower but still a 40, 40% above where we were before the promotion.

And so we feel really confident about our pipeline and being able to build them at a very, uh, a very good return for us.

[Analyst 1]: Good, thank you.

Thank you.

Rajesh Vennam: Thank you. Next question is coming from Jake Bartlett from Truist Securities. Your line is now live.

[Analyst 2]: Great. Thanks for taking the question. My first one is on delivery. I'm hoping you can frame the mix that delivery was in the first quarter, but also what the exit rate was after the promotion. Also, whether you expect to promote similar promotions as we go forward in 2026, and then I have a follow-up.

Do you think that would shrink.

Thank you. Next question is coming from Jake Bartlett from Truist Securities. Is your line live?

That was the question and whether you expect to do in a similar portion to the military.

Yes, sorry.

I don't know if we may do another 1 million free deliveries I don't know, but we do have marketing funds that that Uber gives us based on our volume and so we're going to utilize those somehow whether it's millions free deliveries or doing something different we will utilize those funds.

Courtney Aquilla: Yeah, Jake. I'll speak specifically to Olive Garden. I think that's what you're asking for. For Olive Garden, delivery in the first quarter was about 5%. We exited at about 4%. As we mentioned, when we stopped the million free deliveries, we exited a little bit lower, but still 40% above where we were before the promotion.

Great, thanks for taking the question. Um, my first 1 is on delivery. Um, I'm hoping you can frame, um, the mix that delivery was, um, you know, in the in the, uh, first quarter but also you know what, the exit rate was after the promotion. Um, also, um, you know, whether you expect to promote, um, you know, a similar promotions, you know, in in the, um, you know, as we go forward in 26, and then I have a follow-up.

Got it in terms of the never ending pasta Bowl promotion.

Times similar to last year.

Yeah, J, call. I speak specifically to Olive Garden. I think that's what you're asking for. So, for Olive Garden delivery, in the first quarter, it was about 5%.

I'm wondering you made a comment about consumers really grabbing hurting tending towards on price certainty.

The momentum in August I'm wondering whether you can comment on how you expect never ending pasta Bowl to perform this year versus last and maybe how it is performing whether it's particularly resonating with consumers right now.

Uh, we exited at about 4%. As, as we mentioned, uh, when we stopped the million free deliveries, uh, we exited a little bit lower but still 40, 40% above where we were before the promotion. Um,

Rick Cardenas: You think that was your question, I think.

Courtney Aquilla: That was the question.

[Analyst 2]: Whether you expect to do a similar promotion to the million.

Yeah, I will say that never any possible is off to a good start for us.

Courtney Aquilla: Sorry.

[Analyst 2]: Yeah.

Courtney Aquilla: Yeah, I don't know if we may do another million free deliveries. I don't know, but we do have marketing funds that Uber gives us, based on our volume. We are going to utilize those somehow. Whether it's million free deliveries or doing something different, we will utilize those funds.

It's really at the center of Olive Garden's core equity of never ending craveable abundant Italian food.

And preferences up versus last year.

And the team is doing an amazing job ensuring that guests get refills. So the repo rate is way up so I think guests are understanding that promotion more and more as we brought it back in.

[Analyst 2]: Got it. In terms of the Never Ending Pasta Bowl promotion, I think times are similar to last year. I'm wondering, you mentioned you made a comment about consumers really gravitating towards price certainty, some momentum in August. I'm wondering whether you can comment on how you expect Never Ending Pasta Bowl to perform this year versus last and maybe how it is performing, whether it's particularly resonating with consumers right now.

I think that was, that was the question. Oh, oh. And and whether you expect you, you know, do a similar promotion to the million million. Yeah, sorry. Um, uh, yeah, I don't know if we may do another million free deliveries, I don't know. But we do have marketing funds that that Uber gives us, uh, based on our volume. And so we're going to utilize those somehow whether it's million free deliveries or doing something different. We will utilize those funds.

And they really understand the value that it brings.

Now I will say that the the performance to date.

As in our guidance.

Great. Thank you so much.

Thank you next question is coming from Peter Saleh from <unk>. Your line is now less.

In in, in terms of the the The NeverEnding possible promotion. Um you know, I think time similar to to last year. Um I'm wondering you you made you made a comment about consumers, really gravitating towards um, price, certainty. Um, some momentum in August. I'm wondering whether you can come in on how you expect NeverEnding possible to perform this year versus last and maybe you know how it is performing. Whether it's particularly resonating with with consumers.

Courtney Aquilla: Yeah. I will say that Never Ending Possible is off to a good start for us. It's really at the center of Olive Garden's core equity of never-ending craveable abundant Italian food. Preference is up versus last year. The team is doing an amazing job ensuring that guests get refills, so the refill rate is way up. I think guests are understanding that promotion more and more as we brought it back, and they really understand the value that it brings. I will say that the performance to date is in our guidance.

Great. Thanks for taking the question maybe just one question on on the beef situation can you elaborate a little bit more on maybe what's driving it higher and then near term or more recently in <unk>.

For us.

Uh, it's really at the center of Olive Garden's core equity: never-ending, craveable, abundant Italian food.

Why do you think this is not sustainable and then just more specifically if these prices are sustained or maybe even go higher.

And preference is up versus last year.

Would you take a little bit more price at longhorn and the back end of the year just trying to understand.

The strategy there if if beef prices actually go a little higher from here.

Yeah, Peter let's just start with the the dynamics right right now supply is constrained from a few things one there've been some pack or a packet of cut backs and also our Mexican cattle imports have been halted because of the screw arm outbreak. So those are kind of the drivers of the.

And and the team is doing an amazing job ensuring that guests get refills. So the refill rate is way up so I think guests are understanding that promotion more and more as we brought it back and they really understand the value that it brings, and I will say that the, the, the performance to date uh, is in our guidance.

[Analyst 2]: Great, thank you so much.

Great, thank you so much.

Rajesh Vennam: Thank you. Next question is coming from Peter Salai from BTIG. Your line is now live.

[Analyst 3]: Great. Thanks for taking the question. Maybe just one question on the beef situation. Can you elaborate a little bit more on maybe what's driving it higher in the near term or more recently, and why do you think this is not sustainable? More specifically, if these prices are sustained or maybe even go higher, would you take a little bit more price at LongHorn Steakhouse in the back end of the year? Just trying to understand the strategy there if beef prices actually go a little higher from here.

Thank you. Next question is from Peter Clay from BTIG. Your line is now live.

Supply constraint in addition to that tariffs on Brazil are causing a significant reduction in beef imports into the U S. So that's also creating a constraint. So those are on the supply side.

You know that part of the reason, we don't believe the Doc kind of price increases, especially double digit price increase you saw we're seeing are not sustainable is because the consumer can't afford these in over time there'll be something there should be some demand destruction.

Uh great uh thanks for taking the question. Uh maybe just 1 question on on the beef situation. Um can you elaborate a little bit more on maybe what's driving it higher in the in the near term or more recently? And why do you think this is not sustainable? And then just more specifically, if these prices are sustained or maybe even go higher, um, would you take a little bit more price at Longhorn in the back? End of the year, uh, just trying to understand the um, the strategy there if, if be price is actually go a little higher from here.

Rick Cardenas: Yeah, Peter, let's just start with the dynamics, right? Right now, supply is constrained from a few things. One, there have been some packer cutbacks, and also Mexican cattle imports have been halted because of the screwworm outbreak. Those are kind of the drivers of the supply constraint. In addition to that, tariffs on Brazil are causing a significant reduction in beef imports into the U.S. That's also creating a constraint. Those are on the supply side. Part of the reason we don't believe that that kind of a price increase, especially double-digit price increase you saw, we're seeing, are not sustainable is because the consumer can't afford these. Over time, there will be some, there should be some demand destruction. Also, the amount of cattle on feed has actually been fairly consistent month to month.

And and also they had the amount of cattle on feed has actually been a fairly consistent month to month and at some point. The scandal has to be has to go to.

Put to work I guess so.

Yeah.

So those are the reasons why how do we think about.

Where are the prices might go who knows exactly we don't know we're just you know, but we're a lot more open for those reasons now as we think about.

What would we do yeah. If these price if prices stay very high that means that the demand is also very high which means we should be able to take some price.

We're not that's not our preferred path, but you know, but if if the dynamics at Lithia a place where we feel good about demand and then yeah, we'll take some price.

Okay.

Thank you very much.

Thank you. Your next question is coming from Johnny Wankel from Jpmorgan. Your line is not less.

Rick Cardenas: At some point, this cattle has to be, has to go to, you know, put to work, I guess. Those are the reasons of how we think about where the prices might go. Who knows exactly? We don't know. We're just, you know, but we're a lot more open for those reasons. Now, as we think about what would we do, yeah, if these prices, if prices stay very high, that means that the demand is also very high, which means we should be able to take some price. We're not, that's not our preferred path. If the dynamics lead to a place where we feel good about demand, then yeah, we'll take some price.

Yeah, Peter uh let's just start with the the Dynamics, right? Right now, uh, Supply is constrained uh from a few things 1 there, there have been some pack, Packer cut backs and also uh Mexican cattle Imports have been halted because of the screw arm outbreak. So those are kind of the drivers of the supply constraint. Uh, in addition to that, uh, tariffs on Brazil are causing a significant reduction in beef Imports into the US. So that's also creating a constraint. So those are on the supply side. Um, you know, the part of the reason we don't believe the the that kind of price increases especially double digit. Price increase you saw we're seeing are not sustainable, is because at the consumer, can't afford these. And over time, there will be some, there should be some demand destruction, um, and, and also the, uh, the amount of cattle on feed has actually been, uh, fairly consistent month to month. And at some point, this cattle has to be, um,

Hi, I wanted to go a couple of different directions at first Roger in your prepared remarks, you did talk about seeing some demand destruction at retail I wonder if if if you're actually seeing that if its recent you know.

Has to go to, uh, you know, put to work, I guess. Uh, so you know.

Some of the data that I've seen I thought it was recent was actually showing quite high demand.

You know at the retail level. So you know I just you know hopefully got your facts being better than mine you just to kind of correct me, what we're seeing in retail and if we are seeing.

So those are the reasons why how we think about uh you know where uh, the prices might go. Uh, who knows? Exactly, we don't know. We're just, you know, but we're we're a lot more open uh, for those reasons. Um, now as we think about, what would we do? Yeah, if the if these price if prices stay very high, that means that the demand is also very high which means we should be able to take some price. Uh

Any material signs of any slowdown in retail because I could certainly help us on the restaurant side from a supply perspective.

But that's not our preferred path. But, you know, if the dynamics lead to a place where we feel good about demand, then yeah, we'll take some price.

Rajesh Vennam: Thank you very much.

Thank you very much.

Yeah, John So you're right in the fact that if you go back a few months its been pretty.

[Analyst 2]: Thank you. Next question is coming from Johnny Vonkel from J.P. Morgan. Your line is now live.

And I'm not robust, but if you look at the last month of data you're starting to see that decline actually there on.

[Analyst 4]: Hi. I want to go a couple of different directions. First, Raj, in your prepared remarks, you did talk about seeing some demand destruction at retail. I wondered if you're actually seeing that, if it's recent. Some of the data that I've seen, I thought it was recent, was actually showing quite high demand at the retail level. Hopefully, got your facts being better than mine, just to kind of correct me what we're seeing in retail and if we are seeing any material signs, any slowdown in retail because that could certainly help us on the restaurant side from a supply perspective.

The wallet the data we have shows that the volume actually declined.

In the low single digits year over year at retail.

Wasn't the case for prior call it four to five months or so so there was yes. There was some resiliency in that but it's starting to at least we saw one month of database slipped.

In the low single digit decline year over year.

Okay, and that's what anybody just classic growing season being over and people are just.

Shifting shifting the other things that's helpful. So no.

What are your sorry, I just wanted to clarify we'll look at it year over year. So it's seasonality is captured in the year over here, yes, yes, but it's at.

Thank you. Next question, is coming from Johnny vonco from JP Morgan. Your line is now less. Um, hi. I I want to go a couple different directions. It first Raj and you prepared remarks. You did talk about seeing some demand destruction at retail. I I wondered if if you're actually seeing that if it's recent um, you know, some of the data that that I've seen. I thought it was recent was actually showing quite high demand, um, you know, at the retail level. So you know, I just, you know, hopefully got your facts being better than mine. You just to kind of correct me what we're seeing in retail and if we are seeing any material signs in a Slowdown in retail because I could certainly help us on the restaurant side, um, from a supply perspective,

Rick Cardenas: Yeah, John. You're right in the fact that if you go back a few months, it's been pretty robust. If you look at the last month of data, you're starting to see that decline. Actually, the data we have shows that the volume actually declined in the low single digits year over year at retail. That wasn't the case for prior, call it, four or five months or so. There was some resiliency in that, but it's starting to, at least we saw one month of data where it slipped into low single-digit decline year over year.

We are speaking the same language like I, just said that awkwardly.

So it was interesting you know hearing things like well.

You know reduce reduce pour some prices some of reasons Bruce prices in some portions of some core menu items things like Hawaiian stake I'm not going to name the brand that it reminds me of 20 years ago, but and as far as any darden concept that I've seen this done actually quite unsuccessfully.

Yeah, John, uh, so you're right in the fact that if you go back a few months, it's been pretty, uh, you know, a robust. But if you look at the last month of data, you're starting to see that decline. Actually, they had the wall, the data. We have shows that the volume actually declined, uh, in the low single digits year-over-year at retail, uh, that wasn't the case for prior call it 4 or 5 months or so. So there was, yeah, there was some resiliency in that, but it's starting to, at least the, we saw 1 month of data where it slipped.

[Analyst 4]: Okay. That's maybe just classic growing season being over and people are just, you know, shifting to other things. That's helpful.

Over time in other words, when consumers kind of expect to see a certain amount of food on the plate at especially at dinner.

Uh, into low single-digit decline year over here.

That's not something that youre necessarily happy with even if they are paying lower prices. So.

Rick Cardenas: No, John, it's year over year. Sorry. I just want to clarify. We look at year over year. Seasonality is captured in the year over year.

Ricky I I'm sure you know exactly what I'm talking about but was there anything to learn about you know previous history lessons in casual dining specifically I think this is probably tried around 2007 2008.

[Analyst 4]: Yes. Yeah. We're speaking the same language. I just said that awkwardly. It was interesting hearing things like, we reduced prices in some portions of some core menu items, things like Hawaiian steak. I'm not going to name the brand that it reminds me of 20 years ago, but this wasn't a Darden concept, but I've seen this done actually quite unsuccessfully over time. In other words, when consumers kind of expect to see a certain amount of food on the plate, especially at dinner, it's not something that you're necessarily happy with, even if they are paying lower prices. Rick, I'm sure you know exactly what I'm talking about, but was there anything to learn about previous history lessons in casual dining, specifically? I think this was probably right around 2007, 2008, where smaller portions at smaller prices were tried but weren't successful.

You know were smaller portion of that smaller prices were tried but weren't successful and things like Hawaiian stake way back way in which you tried that you know a few people like but it really a lot of people different where are we on that stage gate process today in 2025, maybe versus some of the lack of his the lack of success.

Menu items, like Hawaiian steak—I'm not going to name the brand that it reminds me of from 20 years ago, but this wasn't a garden concept. I've seen this done, actually, quite unsuccessfully.

The overall industry had 20 years ago.

Hey, John I'll start with the Hawaiian and say, it's not a smaller portion size, it's a cheddars.

Great portion for Hawaiian steak and by the way Longhorn ran Hawaiian.

Over time. In other words, when consumers kind of expect to see a certain amount of food on the plate, especially at dinner, you know, they you know that it's not something that you're necessarily happy with even if they are paying lower prices. So

<unk> steak and did really well with it a few years back so maybe theres different tastes now than they were back then.

And in regards to the portion size you know I think if you go back.

2030 years ago, overall, portions, where maybe a little bit smaller than the dining in the dinner menu already and so if somebody brought even smaller portion it went a little bit too far.

[Analyst 4]: Things like Hawaiian steak way back when, which are tried that a few people like, but really a lot of people different. Where are we on that stage-gate process today in 2025, maybe, versus some of the lack of success the overall industry had 20 years ago?

And then but the way we're thinking about it is there is a consumer group out there.

<unk> believes in abundance, but abundance is different for everybody.

Courtney Aquilla: Hey, John. I'll start with the Hawaiian steak. It's not a smaller portion size. It's at Cheddar’s Scratch Kitchen. It's a great portion for Hawaiian steak. By the way, LongHorn Steakhouse ran Hawaiian steak and did really well with it a few years back. Maybe there's different tastes now than there were back then. In regards to portion size, if you go back 20, 30 years ago, overall portions were maybe a little bit smaller in the dinner menu already. If somebody brought an even smaller portion, it went a little bit too far. The way we're thinking about it is there is a consumer group out there that believes in abundance, but abundance is different for everybody. By bringing some smaller portion sizes to the dinner menu at Olive Garden, they're still abundant portion sizes, but it also adds price breadth to the menu. Consumers can choose.

And what by bringing some smaller portion sizes to the dinner menu at Olive garden.

You know, Rick I I'm sure, you know exactly what I'm talking about, but was there anything to learn about, you know, previous history, lessons and casual dining? You know, specifically I think this is probably tried around 2007208. Um, you know, we're smaller portions at smaller prices, we're tried but we're successful and things like Hawaiian steak way back when which are tried that, you know, a few people like but really A lot of people different, where are we on that stage gate process today in 2025, maybe versus some of the lack of his, the lack of success, the, the overall industry had 20 years ago,

There are still abundant portion sizes.

But it also adds price breadth to the menu.

So consumers can choose we're not changing our entire menu to make it a smaller portion we are putting items on there that are smaller with a compelling price point and at Olive Garden, you still get the unlimited soup or salad and you get all the bread 61, so it's still a great. It's still it's still abundant.

Hey, John, I'll start with the Hawaiian steak. Uh, it's not a smaller portion size, it's a Cheddar's. Uh, it's a, it's a great portion for Hawaiian steak. And by the way, Longhorn ran Hawaiian, uh, Hawaiian steak and did really well with it, a few years back. So, uh, maybe there's different tastes now than there were back then. Uh, And in regards to portion size,

you know, I think if you go back,

And maybe our consumers finally evolve that you don't need to have uneaten food on the plate to feel that <unk> gotten good value you can just see just the right amount of portion and be happy with it so that that would certainly be a change versus the old America, but.

You know, 20–30 years ago, overall portions were maybe a little bit smaller on the dining menu already. And so, if somebody brought even smaller portions, it went a little bit too far.

That obviously would be a good direction to go.

And then, but the way we're thinking about it is there is a consumer group out there that believes in abundance. But abundance is different for everybody.

Okay. Thank you.

Yeah.

Thank you. Your next question is coming from Lauren Silberman from Deutsche Bank. Your line is now live.

And, but what by bringing some smaller portion sizes to the dinner menu at Olive Garden.

Uh, there's still abundant portion sizes.

Hey, thanks.

But it also adds price breath to the menu.

At the top line a lot of questions, obviously, what's going on in the restaurant industry broadly you talked about strong August can you just help unpack kind of what you saw in terms of cadence of comps during the quarter any more color on September from that and then any differences in performance that you're seeing across the region.

Courtney Aquilla: We're not changing our entire menu to make it a smaller portion. We are putting items on there that are smaller with a compelling price point. At Olive Garden, you still get the unlimited soup or salad, and you get all the breadsticks you want. It's still a great, it's still, it's still abundant.

So consumers can choose, we are not changing our entire menu to make it a smaller portion. We are putting items on there that are smaller with a compelling price point.

And at Olive Garden, you still get the unlimited soup or salad, and you get all the breadsticks you want. So it's still a great, it's still abundant.

[Analyst 4]: Maybe our consumers finally evolved that you don't need to have uneaten food on the plate to feel that you've gotten good value. You can just eat just the right amount of portion and be happy with it. That would certainly be a change versus the old America, but that obviously would be a good direction to go. Okay. Thank you.

Yeah, Lauren I think.

From a cadence of comps actually that that the gap to the industry was it was the biggest for us in August.

In fact.

When we look at our own internal comps are we would've actually.

July was our weakest and and so you know that.

Uh, and maybe your consumer is finally evolved that you don't need to have uneaten food on the plate to feel that you've gotten good value, you can just eat, just the right amount of portion and then be happy with it. So that that would certainly be a change versus the old America but um that that obviously be a good direction to go. Um, okay, thank you.

Rajesh Vennam: Thank you. Next question is coming from Lauren Silberman from Deutsche Bank. Your line is now live.

June was pretty strong July was still strong all positive, but just if you look at that.

[Analyst 5]: Hey, thanks. I just want to go back to the top line. A lot of questions, obviously, with going on in the restaurant industry broadly. You talked about strong August. Can you just help unpack sort of what you saw in terms of cadence of comps during the quarter? Any more color on September from that? Any differences in performance that you're seeing across regions?

Thank you. Next question, is coming from Lauren Silverman from Doha Banker Line is now live

Two month July was weaker than July and August and actually like I said August had the biggest gap to the industry.

Hey, thanks.

As far as Regionalisation, there isn't that huge amount of seasonality. It's actually what we're seeing is fairly similar to what we're seeing what do you kind of see it in black box with sudden sudden market still not.

A lot of questions, obviously. What's going on in the restaurant industry? Broadly, you talked about a strong August. Can you just help my back, sort of, with what you saw in terms of cadence of comps during the quarter? Any more color on September from that? And then any differences in performance that you're seeing across regions?

Performing as well such.

Rick Cardenas: Yeah, Lauren. I think, from a cadence of comps, the gap to the industry was the biggest for us in August. In fact, when we look at our own internal comps, July was our weakest. For us, June was pretty strong. July was, it's still strong, all positive, but just if you look at the week month to month, July was weaker than June and August. Actually, like I said, August had the biggest gap to the industry. As far as regionality, there isn't a huge amount of regionality. It's actually what we're seeing is fairly similar to what you see in Black Box with certain markets still not performing as well, such as Texas, and Florida is starting to pick back up. It feels like Florida is getting better. Depending on the brand, California had some decent strength. That's all I can share regionally.

Such as Texas, and Florida is starting to pick back up so it feels like Florida.

It is getting better.

And then you know.

Depending on the brand in California had some decent spend so that's oh, that's all I can share that regionally theres not a lot of all of that stuff to do.

To get into there.

Okay, and then just a follow up on the commodity side. What are you expecting in terms of cadence to get to the 3% to 4% for the year I understand like commodity price dynamic.

Do you expect like to create a peak in terms of actual commodity inflation.

At this point, yes, we think Q2 will probably the peak, but Q3 Q4, probably not that much lower.

At the time, we get to Q4, we expect it to be a little bit better than where.

We'd be about Q1 would be the lowest that we just had right and it was why don't have we're not I think pretty much every quarter going forward is we're expecting to be north of three and that's how you get to that three to four guide.

Yeah, Lauren I think, uh, um, from a Cadence of comps. We actually the, the, the Gap to the industry was, uh, was the biggest for us in August. Um, in fact, uh, when we look at our own internal coms, uh, we were actually, uh, July was our weakest. Uh, and and so, you know that. So for us June was pretty strong July was, uh, is still strong all positive. But just if you look at the week month to month, July was weaker than June and August, and actually, like I said, August had the biggest Gap to the industry. Uh, as far as regionality, uh, this isn't a huge amount of regionality. It's it's actually what we're seeing is fairly similar to what we were. See what you kind of see it in black box with sudden re sudden markets, still not uh performing as well. Uh such as uh Texas. Um and uh, and Florida is starting to pick back up so it feels like Florida is in. The is is getting better. Uh and then um you know uh depending

Rick Cardenas: There's not a lot of other stuff to get into there.

But Q2 is probably the peak.

[Analyst 5]: Okay. Just to follow up on the commodity side, what are you expecting in terms of cadence to get to the 3% to 4% for the year? I understand there's a commodity price dynamic, but do you expect Q2 to peak in terms of actual commodity inflation?

On the brand, California had some decent strength. So that's, uh, that's all I can share regionally. There's not a lot of other stuff to, uh, to get into there.

Okay.

Okay alright, thank you.

Thank you. Your next question is coming from Zillow Godzilla from Bernstein. Your line is now live.

Great. Thank you.

Neil.

Maybe a year ago. So you started talking about the relevance and importance of improving the speed of service and maybe arguably with the increased focus on affordability or or right portion for the right price that could be even more of an overlap between consumers who might be choosing a casual dining holder.

And then, just to follow up on the commodity side, what are you expecting in terms of cadence to get to the 3 to 4 percent for the year? I understand there’s a commodity price dynamic, but do you expect Q2 to peak in terms of actual commodity inflation?

Rick Cardenas: At this point, yes. We think Q2 will probably be the peak. Q3, Q4, probably not that much lower. By the time we get to Q4, we expect it to be a little bit better than where we'd be. Q1 would be the lowest that we just had, right? It was 1.5. I think pretty much every quarter going forward, we're expecting to be north of 3. That's how you get to the 3 to 4 guide. Q2 is probably the peak.

Our fast food and so I'm wondering if you have any early signs or any kpis that are showing some momentum that you're picking up in improvement in dataset. So far.

The Q4, we expect it to be uh a little bit better than where uh we'd be but q1 would be the lowest that we just had, right. It was 1 and a half 1. I think pretty much every quarter going forward is we're expecting to be north of 3. And that's how you get to the 3 to 4 guide. Uh, but Q2 is probably the peak.

[Analyst 5]: Okay. All right. Thank you.

Yeah Danilo.

Okay.

Across our brands, we're seeing some brands with some improvement in the other brands that haven't really made a whole lot of them and so we had a refocus on that this year at our general manager Conference and we would expect to see greater improvement in speed of service in the upcoming years recall when I. When I mentioned that I said this is going to take a while.

Rajesh Vennam: Thank you. Next question is coming from Daniela Cardullo from Bernstein. Your line is now live.

Thank you. Next question, is coming from genealogical from Bernstein. Your line is now live.

[Analyst 6]: Great. Thank you. Maybe a year ago or so, you started talking about the relevance and importance of improving the speed of service. Arguably, with the increased focus on affordability or right portion for the right price, there could be even more of an overlap between consumers who might be choosing casual dining over fast food. I'm wondering if you have any early signs or any KPIs that are showing some momentum that you're picking up in the improvement in speed of service so far.

And it is taking a while but the managers are really getting on board with it over the last year and the reinforcement of our conference.

It gives me great confidence that we're going to get better.

In regards to do we have any data to say that we're that we're taking share from from other categories.

I can say is all of our consumer groups and Oliver income groups were positive year over year and casual dining which is probably the bay that has the best chance.

Courtney Aquilla: Yeah, Daniela. Across our brands, we're seeing some brands with some improvement and other brands that haven't really made a whole lot. We had a refocus on that this year at our General Manager Conference, and we would expect to see greater improvement in speed of service in the upcoming years. As recall, when I mentioned that, I said this was going to take a while. It is taking a while, but the managers are really getting on board with it over the last year. The reinforcement at our conference gives me great confidence that we're going to get better. As in regards to do we have any data to say that we're taking share from other categories?

Great, thank you. Um, we maybe a year ago or so. Um, you started talking about the relevance and importance of uh, improving the speed of service and maybe arguably with uh the increased focus on for the ability or or or right portion for the right price, that could be even more of an overlap between consumers, who might be choosing uh, casual dining over a fast food. And so I'm wondering if you have any early signs or, or any kpis that are showing at some momentum that you're picking up in the Improvement in speed of service so far.

Chance to take share from other categories.

And those other categories.

Have had a little bit more traffic decline. So maybe we're taking share or maybe they're just losing some share.

Thank you and then.

Yeah, Danilo uh, across Our Brands. We're seeing some brands with some improvement and other brands that haven't really made a whole lot. And so we had a refocus on that this year at our general manager conference and we would expect to see greater Improvement in speed of service in the upcoming years. Uh recall when I, when I mentioned that I said this was going to take a while.

It sounds from <unk> response that Theres not a lot of regional differences, maybe with the exception of taxes, maybe pockets in California, So if youre stepping back and analyzing the delta between the top performing stores within the same brand and you know that.

And it is taking a while but the, the the managers are really getting on board with it over the last year and, and the reinforcement at our conference, uh, gives me great confidence that we're going to get better.

Bottom performing stores within the same band what is the one correct me thinking that it's driving the increased by four months, saying how can you make that more standardize across the rest of the group.

Courtney Aquilla: The only thing I can say is, all of our consumer groups and all of our income groups were positive year over year in casual dining, which is probably the best chance to take share from other categories. Those other categories have had a little bit more traffic decline. Maybe we're taking share or maybe they're just losing some share.

I will say this is a tried and true thing in restaurants.

The thing that drives the most performance.

Within a brand is the quality and consistency of the managers in that restaurant and the team.

As we're in regards to do, we have any data to say that? We're that we're taking share from from other categories. The only thing I can say is all of our consumer groups and all of our income groups were positive year-over-year and casual dining, which is probably the best the best, uh, chance to take share from other categories and those other categories.

And so as turnover gets better if you've got a great general manager and a great team of managers that are running things to our standards you have better performance and so that's the that's gonna be restaurants for the rest of our lives.

Uh, have had a little bit more traffic declined. So maybe we're taking share or maybe they're just losing some Cher.

[Analyst 6]: Thank you. It sounds from Rajesh Vennam's response that there's not a lot of regional differences, maybe with the exception of Texas and maybe pockets in California. If you are stepping back and analyzing the delta between the top-performing stores within the same brand and the bottom-performing stores within the same brand, what is the one characteristic that is driving the increased performance? How can you make that more standardized across the rest of the group?

You can have restaurants that are in a market that's doing great, but the restaurants that doing great. It all comes down to leadership.

Yeah.

Thank you.

Thank you. Our next question today is coming from Dennis Geiger from UBS. Your line is now less great. Thanks, guys. Just wanted to ask if anything to note else to note on sort of behaviors that olive garden, longhorn or broadly across the portfolio as it relates to performance across day, part or even kind of within the menu side.

Thank you. And then uh it sounds from Raj's response that there's not a lot of regional differences maybe with the exception of taxes and maybe pockets in California. So if you are a stepping back and analyzing the Delta between the top performing stores within the same brand and you know, the bottom performing stores within the same band, what is the 1 that is driving, the increased performance and how can you make that more standardized across the uh, the rest of the group?

Courtney Aquilla: I will say this is a tried-and-true thing in restaurants. The thing that drives the most performance within a brand is the quality and consistency of the managers in that restaurant and the team. As turnover gets better, if you've got a great general manager and a great team of managers that are running things to our standards, you have better performance. That's going to be restaurants for the rest of our lives. You know, you can have restaurants that are in a market that's doing great, but the restaurant's not doing great. It all comes down to leadership.

I will say this is a tried and true thing in the restaurant.

Desserts alcohol anything to call out there. Thank you.

Yeah look I think we are seeing I mentioned, a little bit about alcohol there is less.

Is some lower preference on alcohol across most of our brands.

The thing that drives the most performance be in within a brand, is the quality and consistency of the managers in that restaurant and the team? And so is turnover gets better. If you've got a great general manager and a great team of managers that are running things to our standards, you have better performance and so that's the that's going to be restaurants for the rest of our lives.

There is a you know.

Some brands at Longhorn for example has grown lunch more than that then our but you know, but that but all day parts are growing their and then it fine dining I think we're seeing a little bit more drop off in the <unk> and the business travel that's leading to some weekday.

Uh, you know, you can have restaurants that are in a market, that's doing great, but the restaurants not doing great. It all comes down to leadership.

[Analyst 6]: Thank you.

Thank you.

Rajesh Vennam: Thank you. Our next question today is coming from Dennis Geiger from UBS. Your line is now live.

[Analyst 2]: Great. Thanks, guys. Just wanted to ask if anything else to note on sort of behaviors at Olive Garden, LongHorn Steakhouse, or broadly across the portfolio as it relates to performance across day part or even kind of within the menu side, desserts, alcohol, anything to call out there. Thank you.

Thank you. Our next question comes from Dennis Kerr from UBS. Your line is now live.

Weakness, but so those are some of the dynamics from a consumer perspective.

That I can share.

Great. Thanks Raj.

Great. Thanks guys. Just wanted to ask if anything to note else to note on sort of behaviors that Olive Garden Longhorn or or broadly across the portfolio as it relates to Performance across Day part or even kind of within the menu side desserts, alcohol. Anything to to call out there. Thank you.

Thank you next question is coming from Chris <unk> from Stifel. Your line is now live.

Rick Cardenas: Yeah, look, I think we are seeing, I mentioned a little bit about alcohol. There is less, you know, we're seeing some lower preference on alcohol across most of our brands. There is, you know, some brands at LongHorn Steakhouse, for example, has grown lunch more than their dinner, but all day parts are growing there. In fine dining, I think we're seeing a little bit more drop-off in the business travel that's leading to some weekday weakness. Those are some of the dynamics from a consumer perspective that I can share.

Yeah, Thanks, Rick the conversation around eliminating the tip wage seems to be ramping up do you believe there's a risk that it could be eliminated and how are you thinking about any potential impact it could have on the business.

Yeah. Look I think we are seeing. Uh, I mentioned a little bit about alcohol. Uh, there is less, uh, you know, we're seeing, uh, some uh, lower preference on alcohol across uh, most of our Brands uh,

Uh, there is, uh, you know,

You know I would start by saying this industry has really diverse business models.

And we believe that the policy environment should reflect the level of event of of diversity in the model.

Is it full service operator, our business model continues to be the best choice for our guests and our team members.

And I will tell you that whatever happens we're gonna be okay with it.

Some brands at Longhorn for example, has has grown lunch more than their dinner, uh, but you know, but that but all day parts are growing there. Um, and then, uh, it's fine dining. I think we're seeing a little bit more drop off in the, uh, in the business travel. Uh, that's leading to some, uh, weekday, uh, weakness. Um, but so those are some of the Dynamics from a consumer perspective, um, that that I can share.

[Analyst 2]: Great. Thanks, Raj.

Great. Thanks. Raj.

Okay.

Rajesh Vennam: Thank you. Next question is coming from Chris O'Call from Stifel. Your line is now live.

And the way we react.

So I don't foresee a big change.

[Analyst 7]: Yeah, thanks. Rick, the conversation around eliminating the tip wage seems to be ramping up. Do you believe there's a risk that it could be eliminated? How are you thinking about any potential impact it could have on the business?

Thank you. Next question is coming from Chris a call from steeple. Your line is now live.

In that.

But if it does we will we will work through those things and come out okay.

Great. Thanks.

Okay.

Yeah, thanks. Um, Rick, the conversation around eliminating the tip wage seems to be ramping up. Do you believe there's a risk that it could be eliminated? And how are you thinking about any potential impact it could have on the business?

Thank you next question is coming from Brian Vaccaro from Raymond James Your line is now.

Courtney Aquilla: I would start by saying this industry has really diverse business models. We believe that the policy environment should reflect the level of diversity in the model. As a full-service operator, our business model continues to be the best choice for our guests and our team members. I will tell you that whatever happens, we're going to be okay with it. We are okay in the way we react. I don't foresee a big change in that. If it does, we will work through those things and come out okay.

Thank you just two quick ones if I could first on the housekeeping side Raj could you break out the olive garden comps between traffic and check and and as we think about check at Olive Garden I think it's been exceeding pricing for the last several quarters is it still reasonable to expect check take seed prices as you think about the next few quarters.

So, I would start by saying this industry has really diverse business models.

And we believe that the policy environment should reflect the level of of, of diversity in the model.

You know, it's a full-service operator. Our business model continues to be the best choice for our guests.

And our team members.

Yeah, Brian let me start with the breakdown Olive garden same restaurant sales was five nine their traffic as we measure was two eight but then they also had catering up 80 basis points. So I I would categorize that as 3.6% traffic growth and then when you think about the check pricing was one nine.

Uh, you know, I and I will tell you that whatever happens, we're going to be okay with it. Uh, we are okay in the way we react.

So, I don't foresee a big change.

In that.

But if it does, we will we will work through those things and and come out. Okay.

[Analyst 7]: Great. Thanks.

Great, thanks.

And <unk> fees basically the delivery service fees net of the discount was about 40 basis points.

Rajesh Vennam: Thank you. Next question is coming from Brian Vaccaro from Raymond James. Your line is now live.

[Analyst 7]: Thank you. Just two quick ones if I could. First, on the housekeeping side, Raj, could you break out the Olive Garden comps between traffic and check? As we think about check at Olive Garden, I think it's been exceeding pricing for the last several quarters. Is it still reasonable to expect check to exceed price as you think about the next few quarters?

Thank you. Next question comes from Brian Vaccaro from Raymond James. Your line is now live.

So yeah as we go.

Go into the future do we expect.

Check to be a little bit higher than pricing, yes, but it will be because of the delivery fee and service fee. That's really the driver yes. Okay. Thank you and then just as a follow up.

Obviously talking about investing in the guest experience as you've been doing for a while but thinking about fiscal 'twenty six specifically as well when you look at labor in the first quarter. It looks like labor per operating week as we look at it was up four and a half maybe closer to 5% you talked about the higher incentive comp and obviously you have higher traffic, which takes more labor to serve.

Thank you. Just 2, quick ones. If I could, uh, first on the housekeeping side Raj, could you uh, break out? The Olive Garden comps, uh, between traffic and check and, and as we think about check at Olive Garden, I think it's been exceeding pricing for the last several quarters, is it still reasonable to expect chat to exceed price as as you think about the next few quarters?

Rick Cardenas: Yeah, Brian, let me start with the breakdown. Olive Garden same-restaurant sales were 5.9%. The traffic, as we measured, was 2.8%, but they also had catering of 80 basis points. I would categorize that as 3.6% traffic growth. When you think about the check, the pricing was 1.9%, and Uber fees, basically the delivery service fee net of the discount, was about 40 basis points. As we go into the future, do we expect check to be a little bit higher than pricing? Yes, but it will be because of the delivery fee and service fee. That's really the driver. Yeah.

But I'm curious to what degree that also reflects some reinvestments that you're making in the guest experience and maybe you could provide a few examples of the specifics on those reinvestments. Thank you.

Yeah, Brian, uh, let me start with the breakdown of Olive Garden. Same restaurant sales for 59, uh, the traffic, uh, as we measure was 28, but then they also had catering of 80 basis points. So, I would categorize that as 3.6% traffic growth. And then when you think about the check, the pricing was 1.9, and Uber fees, basically the delivery service fee, net of the discount was about 40 basis points.

So Brian let me just start by saying from a labor perspective, our total inflation was three one right. So if you look at you mentioned four and a half.

Our increase on dollars, but if you take that three one that is that is part of it that it was up about a point or so but all our traffic was up closer to 3% once you take into consideration the catering for the at the Darden level. So that means we're actually getting some leverage on that traffic and so that's really what's happening and that's why I mentioned in the script that we weren't.

[Analyst 7]: Okay. Thank you. Just as a follow-up, obviously talking about investing in the guest experience, as you've been doing for a while, thinking about fiscal 2026 specifically as well. When you look at labor in the first quarter, it looks like labor per operating week, as we look at it, was up 4.5%, maybe closer to 5%. You talked about the higher intensive comp, and obviously you have higher traffic, which takes more labor to service. I'm curious to what degree that also reflects some reinvestments that you're making in the guest experience, and maybe you could provide a few examples of the specifics on those reinvestments. Thank you.

So yeah, as we go, as we go into the future, do we expect uh, uh, check to be a little bit higher than pricing? Yes. But it will be because of the delivery fee and service fee. Um, that's really the driver. Yeah.

We had productivity improve actually year over here.

We continue to look at ways to invest in labor.

I don't think we need to get into specifics, but some of the things that are Oh that Rick mentioned aboard speed. Those are the those are places where we're looking at how do we help ensure that but that doesn't pass late necessarily into our labor deleverage because you actually get more throughput when we make those investments.

Rick Cardenas: Brian, let me just start by saying from a labor perspective, our total inflation was 3.1%, right? If you look at, you mentioned 4.5% increase on dollars, but if you take the 3.1%, that is part of it. It was up about a point or so, but our traffic was up closer to 3% once you take into consideration the catering for the Darden level. That means we're actually getting some leverage on that traffic. That's really what's happening. That's why I mentioned in the script that we had productivity improve, actually, year over year. We continue to look at ways to invest in labor. I don't think we need to get into specifics, but some of the things that Rick mentioned about speed, those are places where we're looking at how do we help ensure that.

Okay, thank you. And then just as a, a follow up, um, obviously talking about investing in the guest experience as you've been doing for a while, but but thinking about fiscal 26 specifically as well. When you look at Labor in the first quarter it looks like labor, you know, per operating week as we look at it was up 4 and a half, maybe closer to 5%. You talked about the higher incentive comp and obviously you have higher traffic which takes more labor to service. But I'm curious to what degree that also reflects some reinvestments that you're making in the guest experience and maybe you could provide a few examples of the specifics on those reinvestments. Thank you.

Alright Thats helpful. Thank you.

Thank you. Your next question today is coming from Andrew Charles from TD Cowen. Your line is now live.

Yeah.

Andrew perhaps your phone is on mute please pickup your handset.

Hey, good trials with TD Cowen. Your line is now live perhaps your phone is on mute.

Yeah.

Our next question is coming from Jim Sanderson from Northcoast Research. Your line is now live.

Hey, Thanks for the question. The time just had a few follow up questions going back to the delivery segment have you discussed what percentage of sales mix was incremental I think that's been a little bit of a moving target, especially given the promotions maybe you could update us on what you expect incrementally out of delivery for both Olive Garden Cheddars.

Rick Cardenas: That doesn't translate necessarily into a labor deleverage because you actually get more throughput when we make those investments.

Hello, Brian. Let me just start by saying from a labor perspective, our total inflation was 31, right? So if you look at, you mentioned, 4 and a half uh, uh, increase on on dollars. But if you take the 31 that is, that is part of it. Then it was after about a point or so, but our traffic was up closer to 3%. Uh, once you take in the consideration, the catering for the, for the, the darn level. So that means we're actually getting some leverage on that traffic and so that's really what's happening? And that's why I mentioned in the script that we were, we had, uh, productivity, uh, improved actually year over year, uh, you know, we, we continue to look at ways to invest in Labor. Uh, you know, I don't think we need to get into specifics, but some of the things that, uh, uh, you know, that Rick mentioned about speed. Uh, those are those are places where we're looking at, how do we, you know, help ensure that but that doesn't translate necessarily into the labor de leverage because you actually get more throughput when we make those Investments.

[Analyst 7]: All right, that's helpful. Thank you.

All right, that's helpful. Thank you.

Rajesh Vennam: Thank you. Next question today is coming from Andrew Charles from TD Cowen. Your line is now live. Andrew, perhaps your phone is on mute. Please pick up your handset. Andrew Charles with TD Cowen. Your line is now live. Perhaps your phone is on mute. Our next question is coming from Jim Sanderson from North Coast Research. Your line is now live.

Yeah, Jim I'll speak specifically outside of the the promotion, it's about 50% incremental.

Thank you. Next question comes from Andrew Charles from TD Cowen. Your line is now live.

During the promotion when you get free deliveries some of the people that would've gotten normal to go probably shifted into delivery, but outside of that it's about 50% both the chatters in olive garden.

Andrew, perhaps your phone is on mute, please pick up your handset.

Okay, so relatively stable with what it has been let's say yes.

Andrew Charles with TD cow and your line is now live. Perhaps, your phone is on mute.

And then just a follow up question on Olive Garden, when you were talking about the breakdown.

Our next question is coming from Jim Sanderson from North Coast Research. Your line is now live.

[Analyst 2]: Hey, thanks for the question and the time. Just had a few follow-up questions. Going back to the delivery segment, have you discussed what % of sales mix was incremental? I think that's been a little bit of a moving target, especially given the promotions. Maybe you could update us on what you expect incrementally out of delivery for both Olive Garden and Cheddar’s Scratch Kitchen.

Same store sales I didnt really detect any negative mix and I was wondering does that mean that the you know the smaller.

<unk> and the promotions arent, having any meaningful impact on check is that the right way to look at that.

Well they have that that specifically has a negative impact, but it was offset by other mix. So we are seeing a we had a I think we mentioned on the call. We had a we had the calibration steak and shrimp that had a higher price, but we actually had some pretty strong preference there that helped so it was mostly entre.

Courtney Aquilla: Yeah, Jim, I'll speak specifically outside of the promotion. It's about 50% incremental. During the promotion, when you get free delivery, some of the people that would have gotten normal to go probably shifted into delivery. Outside of that, it's about 50%, both at Cheddar’s Scratch Kitchen and Olive Garden.

Hey, thanks for the question and the time. Just had a few follow-up questions going back to the delivery segments. Have you discussed what percentage of sales mix was incremental? I think that's been a little bit of a moving target, especially given the promotions. Maybe you could update us on what you expect incrementally in delivery for both Olive Garden and Cheddar's.

Mix itself tended towards higher value, sometimes maybe higher price items.

[Analyst 2]: Okay, relatively stable with what it has been, let's say.

Yeah, Jim, I'll speak specifically outside of the promotion. It's about 50% incremental during the promotion when you get free delivery. Some of the people that would have gotten normal to-go probably shifted into delivery, but outside of that, it's about 50%. Both the Chatters and Olive Garden.

That's it thank you very much for that.

Courtney Aquilla: Yes.

[Analyst 2]: Just a follow-up question on Olive Garden. When we were talking about the breakdown of same-restaurant sales, I didn't really detect any negative mix, and I was wondering, does that mean that the smaller portions and the promotions aren't having any meaningful impact on check? Is that the right way to look at that?

Okay, so relatively stable with what it has been. Let's say yes.

Thank you next question is coming from Andrew Charles from TD counter your line is now live.

Yeah.

Yeah. Thank you. This is Zach Ogden on for Andrew could you just elaborate on where the strength is coming from for other businesses are there certain brands that are outperforming others and what would be leading to that.

Portions. And the promotions aren't having any meaningful impact on check? Is that the right way to look at that.

Rick Cardenas: That specifically has a negative impact, but it was offset by other mix. We are seeing, I think we mentioned on the call, we had the Calabrian steak and shrimp that had a higher price, but we actually had a pretty strong preference there that helped. It was mostly entree mix itself, tended towards higher value, sometimes maybe higher price items.

Do you mean any other business or other business I just want to make sure I understand the question.

Yes, so the other businesses segment, so the three 3% in <unk>.

What was the strength coming from there.

Well, we mentioned that three of those brands were all positive.

Some more positive than others I think cheddars was the most positive and then yard house after that and potentially seasons or right around there, but I think cheddar has had the highest comp in that segment.

Well the they have the the that that specifically has a negative impact, but it was offset by other mix. Uh, so we are seeing uh we had uh, I think we mentioned on the call. We had a, we had the calibran uh, steak and shrimp that had a higher price, but we actually had saw a pretty strong preference there that helped, so it was mostly on trade mix itself. Tended towards higher value sometimes maybe higher price items

[Analyst 2]: That's it. Thank you very much for that.

Okay got it. Thank you and then can you just comment on what Youre seeing from the younger cohort more broadly maybe just beyond delivery are you seeing certain or I guess relative strength or weakness among gen Z.

That's it. Thank you very much for that.

Rajesh Vennam: Thank you. Next question is coming from Andrew Charles from TD Cowen. Your line is now live.

Thank you. Next question, is coming from Andrew Charles from TD. Calendar Line is now live.

[Analyst 8]: Thank you. This is Zach Ogden on for Andrew. Could you just elaborate on where the strength is coming from for other businesses? Are there certain brands that are outperforming others, and what would be leading to that?

Where they're they're fairly similar to the rest of our consumer group.

Yeah, thank you. This is Zach Ogden on for Andrew. Could you just elaborate on where the strength is coming from for other businesses? Are there certain brands that are outperforming others, and what would be leading to that?

Alright, thank you.

Courtney Aquilla: Do you mean in the other business or other business? I just want to make sure I understand the question.

Okay. Thanks.

Thank you we reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.

[Analyst 8]: Yeah. The other businesses segment, the 3.3% in Q1, what was the strength coming from there?

Do you mean in the other business or other business? I just want to make sure I understand the question.

This concludes our call I want to remind you that we plan to release second quarter results on Thursday December 18th before the market opens with a conference call to follow thank you for participating.

Courtney Aquilla: Three of those brands were all positive. Some were positive than others. I think Cheddar’s Scratch Kitchen was the most positive, and then Yard House after that, and potentially Seasons 52 are right around there, but I think Cheddar’s Scratch Kitchen had the highest comp in that segment.

Yeah, so the other businesses segments, so the 3.3% in 1 Q. Uh what, what was the strength coming from there?

Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.

[Analyst 8]: Oh, wow. Got it. Thank you. Could you just comment on what you're seeing from the younger cohort more broadly, maybe just beyond delivery? Are you seeing certain, or I guess, relative strength or weakness among Gen Z?

Well, we we we mentioned that 3 of those Brands were all positive. Um, some more positive than others. I think Cheddars was the most positive and then yard house after that and potentially seasons are right around there, but I think Cheddar's had the highest comp in that segment. Now

All right, got it. Thank you. And then could you just comment on what you're seeing from the younger cohort, more broadly, maybe just beyond delivery. Are you seeing certain, or I guess, relative strength or weakness among Gen Z?

Courtney Aquilla: They're fairly similar to the rest of our consumer group.

Uh, they're fairly similar to the rest of our consumer group.

[Analyst 8]: Okay, thank you.

Courtney Aquilla: Okay. Thanks.

Okay, thank you.

Rajesh Vennam: Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

Okay, thanks.

Thank you. We will now open the floor for our question and answer session. I'd like to turn the floor over to further closing comments.

[Company Representative]: This concludes our call. I want to remind you that we plan to release second quarter results on Thursday, December 18, before the market opens, with a conference call to follow. Thank you for participating.

This concludes our call. I want to remind you that we plan to release second quarter results. On Thursday, December 18th before the Market opens with a conference call to follow. Thank you for participating.

Rajesh Vennam: Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.