Q4 2026 Darden Restaurants Inc Earnings Call

June 25, 2026

Speaker #1: Not in fiscal year 2026, 4th quarter earnings call. Your line has been placed on a listen-only mode until the question-and-answer session. To ask a question, you may press star 1 on your touch-tone phone.

Speaker #1: This conference is being recorded, and if you have any objections, you may disconnect at this time. I will now turn the call over to Ms. Courtney Aquila.

Speaker #1: Thank you. You may begin.

Speaker #2: Thank you, Kevin. Good morning, and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's president and CEO, and Raj Menon, CFO.

Speaker #2: 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.

Speaker #2: 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. A supplemental materials presentation containing information shared on today's call is available on the financials tab in the investor section of our website, at darden.com.

Speaker #2: Today's discussion includes certain non-GAAP measurements and reconciliations of these measurements are included in the presentation. Looking ahead, we plan to release fiscal 2027 1st quarter earnings on Thursday, September 24, before the market opens, followed by a conference call.

Speaker #1: Greetings, and welcome to the Darden fiscal year 2026 fourth quarter earnings call. Your line has been placed in listen-only mode until the question and answer session. To ask a question, you may press star 1 on your touch-tone phone.

Speaker #2: During today's call, I'll references to industry results refer to the black box intelligence casual dining benchmark excluding Darden. Black box intelligence updated its benchmarks in early May following changes to the underlying brand set.

Speaker #1: This conference is being recorded, and if you have any objections, you may disconnect at this time. I will now turn the call over to Ms. Courtney Aquilla.

Speaker #1: Thank you. You may begin.

Speaker #2: This restatement had an outsized impact on the casual dining benchmarks. The change moved the average benchmarks up by 150 basis points for same restaurant sales and 25 basis points for same restaurant guest counts.

Speaker #2: Thank you, Kevin. Good morning, and thank you for participating on today's call. Joining me are Ricardo Cardenas, Darden's President and CEO, and Rajesh Vennam, CFO.

Speaker #2: 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.

Speaker #2: Incorporating this restatement, average same restaurant sales for the industry increased 1.4% and average same restaurant guest counts decreased 1.8% during our 4th quarter. This morning, we will share some brief remarks on the quarter and full year, as well as the details of our financial results.

Speaker #2: 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. A supplemental materials presentation containing information shared on today's call is available on the Financials tab in the investor section of our website at darden.com.

Speaker #2: Discuss the power of Darden's portfolio and share our fiscal 2027 financial outlook. Now we'll turn the call over to Rick.

Speaker #1: Thank you, Courtney. Good morning, everyone. The 4th quarter was a strong finish to an excellent year. One in which we significantly outperformed the industry.

Speaker #2: Today's discussion includes certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation. Looking ahead, we plan to release fiscal 2027 first quarter earnings on Thursday, September 24, before the market opens, followed by a conference call.

Speaker #1: Our restaurant teams continued to execute at a high level, and their commitment to operational excellence helped each of our brands deliver positive same restaurant sales for the quarter.

Speaker #1: We know guests choose the brands they trust for key occasions. Several of our brands enjoyed record performance on Mother's Day. Including the highest ever traffic day at Olive Garden and Longhorn Steakhouse, and our guest satisfaction results continued to be at or near all-time highs.

Speaker #2: During today's call, all references to industry results refer to the Black Box Intelligence casual dining benchmark excluding Darden. Black Box Intelligence updated its benchmarks in early May following changes to the underlying brand set.

Speaker #2: This restatement had an outsized impact on the casual dining benchmarks. The change moved the average benchmarks up by 150 basis points for same-restaurant sales and 25 basis points. Incorporating this restatement, average same-restaurant sales for the industry increased 1.4%, and average same-restaurant guest counts decreased 1.8% during our fourth quarter.

Speaker #1: It was an especially strong year for our 3 largest brands, Olive Garden, Longhorn, and Yardhouse. Olive Garden met our heightened expectations for the year, delivering 4% same restaurant sales growth, which is above the high end of Darden's long-term framework.

Speaker #1: Longhorn delivered same restaurant sales growth of over 7% for the year, reflecting their focus on food quality and execution. They ended the year by conducting their 9th annual Steakmaster series.

Speaker #2: This morning, we will share some brief remarks on the quarter and full year, as well as the details of our financial results. We will discuss the power of Darden's portfolio and share our fiscal 2027 financial outlook.

Speaker #1: Congratulations to Jesse Montalva from the Longhorn Steakhouse in Riverview, Florida, who claimed the championship trophy. Yardhouse grew total sales by 95 million dollars compared to last year, driven in part by same restaurant sales growth of 5.6% for the year.

Speaker #2: Now we'll turn the call over to Ric.

Speaker #3: Thank you, Courtney. Good morning, everyone. The fourth quarter was a strong finish to an excellent year—one in which we significantly outperformed the industry.

Speaker #1: Performance of Olive Garden, Longhorn, and Yardhouse this year is extremely impressive. Marking the 5th consecutive year that all 3 brands have delivered positive same restaurant sales.

Speaker #3: Our restaurant teams continued to execute at a high level, and their commitment to operational excellence helped each of our brands deliver positive same-restaurant sales for the quarter.

Speaker #1: With our focus on growing our brands, we opened 71 new restaurants during the fiscal year. 6 more than initially planned at the beginning of the year.

Speaker #3: We know guests choose the brands they trust for key occasions. Several of our brands enjoyed record performance on Mother's Day, including the highest-ever traffic day at Olive Garden and LongHorn Steakhouse. Our guest satisfaction results continued to be at or near all-time highs.

Speaker #1: And our development team has built a strong pipeline of sites to support new restaurant growth. Raj will share more details about our growth plans in his remarks.

Speaker #1: Additionally, our newest international franchising partners in Spain and India opened their first locations during the year. And our new partner in Canada plans to open their first new restaurant next week.

Speaker #3: It was an especially strong year for our three largest brands: Olive Garden, LongHorn, and Yard House. Olive Garden met our heightened expectations for the year, delivering 4% same-restaurant sales growth, which is above the high end of Darden's long-term framework.

Speaker #1: Our franchising and international team has helped our new partners open restaurants more quickly, and they are on pace to open the most international locations in a single year in fiscal 2027.

Speaker #3: LongHorn delivered same-restaurant sales growth of over 7% for the year, reflecting their focus on food quality and execution. They ended the year by conducting their ninth annual Steakmaster Series.

Speaker #1: Fiscal 2026 marks our 31st year as a publicly traded company. And Darden has achieved an average annualized total shareholder return of 10% or greater for any 10 fiscal year period, when considering Darden's stock price appreciation plus dividend yield.

Speaker #3: Congratulations to Jesse Montalva from Longhorn Steakhouse in Riverview, Florida, who claimed the championship trophy. Yard House grew total sales by $95 million compared to last year, driven in part by same-restaurant sales growth of 5.6% for the year.

Speaker #1: This morning, I want to focus my comments on how we are able to do this and what gives me confidence for the future. Full-service dining is a variety-seeking category.

Speaker #3: The performance of Olive Garden, LongHorn, and Yard House this year is extremely impressive, marking the fifth consecutive year that all three brands have delivered positive same-restaurant sales.

Speaker #1: And we have a collection of brands that give us reach across multiple dining occasions guest demographics, price points, geographies, and cuisine types. While reducing reliance on any one brand, consumer segment, region, or cuisine.

Speaker #3: With our focus on growing our brands, we opened 71 new restaurants during the fiscal year—six more than we initially planned at the beginning of the year.

Speaker #1: Our brands play distinct and valuable roles. Olive Garden and Longhorn are the 2 most dominant brands in our portfolio. With strong guest relevance and additional room for growth.

Speaker #3: And our development team has built a strong pipeline of sites to support new restaurant growth. Raj will share more details about our growth plans in his remarks.

Speaker #1: Yardhouse, Cheddar Scratch Kitchen, and Chewy's are incredibly popular brands with significant runway for capital grill, ADVs, and Season 52 are differentiated brands with strong positions in their respective categories and should have balanced growth over time.

Speaker #3: Additionally, our newest international franchising partners in Spain and India opened their first locations during the year. And our new partner in Canada plans to open their first new restaurant next week.

Speaker #3: Our franchising and international team has helped our new partners open restaurants more quickly, and they are on pace to open the most international locations in a single year in fiscal 2027.

Speaker #1: Our portfolio creates the scale that enables our brands to benefit from our strategic platform. We have a shared operations philosophy anchored in food service and atmosphere, enabled by the best people in the industry.

Speaker #3: Fiscal 2026 marks our 31st year as a publicly traded company. Darden has achieved an average annualized total shareholder return of 10% or greater for any 10 fiscal year period, when considering Darden's stock price appreciation plus dividend yield.

Speaker #1: And our 4 competitive advantages allow our brands to compete more effectively and provide even greater value for their guests. One of these competitive advantages, the power of our scale, is demonstrated in our supply chain and technology stack, which enable our brands to deliver stronger performance than they could do on their own.

Speaker #3: This morning, I want to focus my comments on how we are able to do this and what gives me confidence for the future. Full-service dining is a variety-seeking category.

Speaker #1: For example, we source directly from producers and have our own dedicated food distribution network. This creates cost advantages for our brands and ensures an uninterrupted supply to our restaurants.

Speaker #3: And we have a collection of brands that give us reach across multiple dining occasions, guest demographics, price points, geographies, and cuisine types, while reducing reliance on any one brand, consumer segment, region, or cuisine.

Speaker #1: Our proprietary POS system serves as a nerve center of our integrated restaurant technology ecosystem. Applications including payroll, guest forecasting, labor management, and much more provide key data, improve operations, and make our restaurant managers' jobs easier so they can spend more time focused on their guests and their team members.

Speaker #3: Our brands play distinct and valuable roles. Olive Garden and LongHorn are the two most dominant brands in our portfolio, with strong guest relevance and additional room for growth.

Speaker #3: Yard House, Cheddar's Scratch Kitchen, and Chewy's are incredibly popular brands with significant runway for growth. And Ruth's Chris Steak House, The Capital Grille, Eddie V's, and Seasons 52 are differentiated brands with strong positions in their respective categories and should have balanced growth over time.

Speaker #1: Our scale also helps from a marketing perspective. Across all our brands, we use digital marketing in a targeted, cost-effective way to build brand equity and support incremental sales.

Speaker #3: Our portfolio creates the scale that enables our brands to benefit from our strategic platform. We have a shared operations philosophy anchored in food service and atmosphere, enabled by the best people in the industry.

Speaker #1: Our smaller brands benefit from the learnings generated from our larger brands. And because of our platform, they can tailor sophisticated media plans to their specific business needs.

Speaker #3: And our four competitive advantages allow our brands to compete more effectively and provide even greater value for their guests. One of these competitive advantages—the power of our scale—is demonstrated in our supply chain and technology stack, which enable our brands to deliver stronger performance than they could do on their own.

Speaker #1: Another one of our advantages, our extensive data and insights, ensures we continually meet our guest expectations and allows us to identify opportunities to improve the guest experience and drive incremental sales through continuous menu innovation across our brands.

Speaker #1: Olive Garden's new lighter portions menu is a good example. As is their new protein-forward Calabrian steak and shrimp bucatini that has quickly become a guest favorite.

Speaker #3: For example, we source directly from producers and have our own dedicated food distribution network. This creates cost advantages for our brands and ensures an uninterrupted supply to our restaurants.

Speaker #1: Data and insights have also grounded all the great work Yardhouse has done on menu optimization. The new burger, pizza, and taco platforms, they have rolled out over the past 3 years, are easier to execute and receive higher guest satisfaction scores.

Speaker #3: Our proprietary POS system serves as the nerve center of our integrated restaurant technology ecosystem. Applications including payroll, guest forecasting, labor management, and much more provide key data and improve operations, making our restaurant managers' jobs easier so they can spend more time focused on their guests and their team members.

Speaker #1: Rigorous strategic planning is another one of our advantages. Planning at the Darden Enterprise level determines each brand's strategic role to ensure we have the right portfolio of brands, we align strategies and coordinate operations to maximize our portfolio's value, and we capture, available synergies across our brands.

Speaker #3: Our scale also helps from a marketing perspective. Across all our brands, we use digital marketing in a targeted, cost-effective way to build brand equity and support incremental sales.

Speaker #1: At the brand level, the strategic planning process helps us identify each brand's distinct advantages and cultivate differentiated positioning, develop a deep understanding of each brand's guests and competitive landscape, and ensure our brands adhere to their strategy so they can compete effectively and grow share.

Speaker #3: Our smaller brands benefit from the learnings generated from our larger brands. And because of our platform, they can tailor sophisticated media plans to their specific business needs.

Speaker #3: Another one of our advantages—our extensive data and insights—ensures we continually meet our guests' expectations and allows us to identify opportunities to improve the guest experience and drive incremental sales through continuous menu innovation across our brands.

Speaker #1: We put significant emphasis on this work. And the teams of our acquired brands consistently share that they have even greater clarity about the essence of their brand because of the time and level of rigor involved.

Speaker #1: The 5-year business plans are brands completed last year, are also an important part of this process. And our teams continue to execute against those plans to drive shareholder value.

Speaker #3: Olive Garden's new lighter portions menu is a good example, as is their new protein-forward Calabrian steak and shrimp bucatini that has quickly become a guest favorite.

Speaker #3: Data and insights have also grounded all the great work Yard House has done on menu optimization. The new burger, pizza, and taco platforms they have rolled out over the past three years are easier to execute and receive higher guest satisfaction scores.

Speaker #1: Of course, our brands and our platform only matter because of our final advantage. The people who bring them to life every day. Our founder, Bill Darden, said, "The greatest edge we have on our competitors is the quality of our employees, reflected each day in the job they do." And that is still true today.

Speaker #3: Rigorous strategic planning is another one of our advantages. Planning at the Darden enterprise level determines each brand's strategic role to ensure we have the right portfolio of brands, we align strategies and coordinate operations to maximize our portfolio's value, and we capture available synergies across our brands.

Speaker #1: We have outstanding teams across our 2200 restaurants, backed by our incredible restaurant support center teams. We have built a compelling employment proposition that is evidenced by our industry-leading retention and to preserve this advantage, we leverage our unique ability to provide robust development opportunities, given the breadth of our portfolio.

Speaker #3: At the brand level, the strategic planning process helps us identify each brand's distinct advantages and cultivate differentiated positioning, develop a deep understanding of each brand's guests and competitive landscape, and ensure our brands adhere to their strategy so they can compete effectively and grow share.

Speaker #1: Across operations and the restaurant support center, we can provide opportunities in brand-specific roles, shared support functions, and restaurants across the country. This gives us this gives us the ability to move proven talent across brands and support new restaurant growth, and gives us multiple options to develop high-potential talent.

Speaker #3: We put significant emphasis on this work, and the teams of our acquired brands consistently share that they have even greater clarity about the essence of their brand because of the time and level of rigor involved.

Speaker #1: One of the most powerful things about Darden is our ability to change our team members' lives. We give people the opportunity to grow and progress, regardless of their first role with us.

Speaker #3: The five-year business plans our brands completed last year are also an important part of this process. And our teams continue to execute against those plans to drive shareholder value.

Speaker #1: Many of our senior leaders, including me, began as hourly team members. That's why I'm extremely proud that we promoted 1,375 hourly team members into management roles in fiscal 26.

Speaker #3: Of course, our brands and our platform only matter because of our final advantage: the people who bring them to life every day. Our founder, Bill Darden, said, "The greatest edge we have on our competitors is the quality of our employees, reflected each day in the job they do." And that is still true today.

Speaker #1: Darden has a tremendous track record of success. And it reflects the strength of our brands, the discipline of our strategy, and the quality of our teams.

Speaker #1: With the right brands, strategy, and teams in place, I am confident we are well positioned to continue growing the business and creating long-term shareholder value.

Speaker #3: We have outstanding teams across our 2,200 restaurants, backed by our incredible Restaurant Support Center teams. We have built a compelling employment proposition that is evidenced by our industry-leading retention. To preserve this advantage, we leverage our unique ability to provide robust development opportunities, given the breadth of our portfolio.

Speaker #1: In closing, I want to thank our over 200,000 team members for everything they do. I'm proud of the engagement across our teams, and the impressive retention levels that help drive our success.

Speaker #1: I look forward to connecting with many of you during our general manager and managing partner conferences over the next 6. Now I'll turn it over to Rush.

Speaker #3: Across operations and the Restaurant Support Center, we can provide opportunities in brand-specific roles, shared support functions, and restaurants across the country. This gives us the ability to move proven talent across brands and support new restaurant growth, and gives us multiple options to develop high-potential talent.

Speaker #2: Thank you, Rick. And good morning, everyone. We delivered a strong 4th quarter to close out a great year, with total sales exceeding our expectations and annual earnings above the midpoint of our initial guidance.

Speaker #2: Results for the year reflect stronger-than-expected same restaurant sales and faster new restaurant openings despite significant macro pressures including beef inflation that was higher than expected for the year.

Speaker #3: One of the most powerful things about Darden is our ability to change our team members' lives. We give people the opportunity to grow and progress, regardless of their first role with us.

Speaker #2: Throughout the year, we remained focused on what was within our control, balancing investments in the business with a measured approach to pricing, approach to inflation.

Speaker #3: Many of our senior leaders, including me, began as hourly team members. That's why I'm extremely proud that we promoted 1,375 hourly team members into management roles in fiscal '26.

Speaker #2: Stronger-than-expected sales allowed us to fund targeted investment to support growth and maintain pricing discipline by only partially offsetting elevated commodity costs preserving our ability to provide strong value to our guests.

Speaker #3: Darden has a tremendous track record of success, and it reflects the strength of our brands, the discipline of our strategy, and the quality of our teams.

Speaker #3: With the right brands, strategy, and teams in place, I am confident we are well-positioned to continue growing the business and creating long-term shareholder value.

Speaker #2: That balance is reflected in our 4th quarter performance where margin expansion came through in line with our expectations. In the 4th quarter, we generated 3.7 billion dollars of total sales, 13.7% higher than last year.

Speaker #3: In closing, I want to thank our over 200,000 team members for everything they do. I'm proud of the engagement across our teams and the impressive retention levels that help drive our success.

Speaker #2: This was driven by same restaurant sales growth of 4.6% with positive traffic growth, the addition of 43 net new restaurants, which includes the permanent closure of 15 Bahama Bridge locations, and the benefit of the 14th fiscal week.

Speaker #3: I look forward to connecting with many of you during our General Manager and Managing Partner conferences over the next six months. Now, I'll turn it over to Rush.

Speaker #2: Thank you, Rick. And good morning, everyone. We delivered a strong fourth quarter to close out a great year, with total sales exceeding our expectations and annual earnings above the midpoint of our initial guidance.

Speaker #2: Same restaurant sales and same restaurant guest counts each exceeded the industry benchmark by over 300 basis points for the quarter. Adjusted diluted net earnings per share from continuing operations increased 22.8% to $3.66.

Speaker #2: Results for the year reflect stronger-than-expected same-restaurant sales and faster new restaurant openings, despite significant macro pressures, including beef inflation that was higher than expected for the year.

Speaker #2: This includes a 25-cent contribution from the extra fiscal week. We generated 678 million dollars of adjusted EBITDA and returned 310 million dollars to shareholders through 172 million dollars in dividends and 138 million dollars of share repurchases.

Speaker #2: Throughout the year, we remained focused on what was within our control, balancing investments in the business with a measured approach to pricing and approach to inflation.

Speaker #2: Stronger-than-expected sales allowed us to fund targeted investment to support growth and maintain pricing discipline by only partially offsetting elevated commodity costs, preserving our ability to provide strong value to our guests.

Speaker #2: Turning to the 4th quarter P&L compared to last year, food and beverage expenses were flat as commodities inflation of approximately 3% and unfavorable mix was fully offset by pricing.

Speaker #2: That balance is reflected in our fourth quarter performance, where margin expansion came through in line with our expectations. In the fourth quarter, we generated $3.7 billion of total sales, 13.7% higher than last year.

Speaker #2: Restaurant labor was 40 basis points lower driven by productivity improvements and sales leverage even with total labor inflation of 3.2%. Restaurant expenses were flat.

Speaker #2: This was driven by same-restaurant sales growth of 4.6%, with positive traffic growth, the addition of 43 net new restaurants—which includes the permanent closure of 15 Bahama Breeze locations—and the benefit of the 14th fiscal week.

Speaker #2: Marketing expenses were 10 basis points lower due to sales leverage. We had incremental marketing activity in the quarter that was funded by cost savings.

Speaker #2: This all resulted in restaurant-level EBITDA for the quarter improving 50 basis points to 22.1% consistent with our expectations. Adjusted G&A expenses were flat, adjusted depreciation and amortization was 30 basis points lower due to sales leverage from the extra fiscal week.

Speaker #2: Same-restaurant sales and same-restaurant guest counts each exceeded the industry benchmark by over 300 basis points for the quarter. Adjusted diluted net earnings per share from continuing operations increased 22.8% to $3.66.

Speaker #2: And our adjusted effective tax rate for the quarter was 12.8%. In total, our adjusted earnings from continuing operations were 422 million dollars, which was 11.3% of sales.

Speaker #2: This includes a $0.25 contribution from the extra fiscal week. We generated $678 million of adjusted EBITDA and returned $310 million to shareholders through $172 million in dividends and $138 million of share repurchases.

Speaker #2: In the 4th quarter, on a 13-week basis, all of our segments grew total sales and segment profit margin driven by positive same restaurant sales.

Speaker #2: Turning to the fourth quarter P&L compared to last year, food and beverage expenses were flat as commodities inflation of approximately 3% and unfavorable mix was fully offset by pricing.

Speaker #2: Olive Garden increased total sales for the quarter by 11.4% with 7.5% from the extra fiscal week the addition of 14 net new restaurants and same restaurant sales growth of 2.4%.

Speaker #2: Restaurant labor was 40 basis points lower, driven by productivity improvements and sales leverage, even with total labor inflation of 3.2%. Restaurant expenses were flat.

Speaker #2: Traffic was positive outpacing the industry by 200 basis points. The lighter portion section of the menu created an 80 basis point mixed advantage check.

Speaker #2: Marketing expenses were 10 basis points lower due to sales leverage. We had incremental marketing activity in the quarter that was funded by cost savings.

Speaker #2: On a 2-year basis, Olive Garden same restaurant sales increased 9.3% demonstrating continued strong performance as they lapped high-growth quarter last year. Olive Garden continues to have industry-leading segment profit margin, delivering 24.3% for the quarter which is 50 basis points higher than last year this includes approximately 50 basis points of margin investment related to the addition of lighter portion section to the menu.

Speaker #2: This all resulted in restaurant-level EBITDA for the quarter improving 50 basis points to 22.1%, consistent with our expectations. Adjusted G&A expenses were flat. Adjusted depreciation and amortization was 30 basis points lower due to sales leverage from the extra fiscal week.

Speaker #2: And our adjusted effective tax rate for the quarter was 12.8%. In total, our adjusted earnings from continuing operations were $422 million, which was 11.3% of sales.

Speaker #2: At long haul, total sales increased 21.9% driven by same restaurant sales growth of 9.5% and the addition of 27 net new restaurants and 8% from the extra fiscal week.

Speaker #2: In the fourth quarter, on a 13-week basis, all of our segments grew total sales and segment profit margin, driven by positive same-restaurant sales.

Speaker #2: Long haul continues to increase market share with strong and sustained sales growth exceeding the industry's same restaurant sales benchmark by 810 basis points this quarter.

Speaker #2: Olive Garden increased total sales for the quarter by 11.4%, with 7.5% from the extra fiscal week, the addition of 14 net new restaurants, and same-restaurant sales growth of 2.4%.

Speaker #2: Over the past 3 years, long haul has grown same restaurant sales by more than 20% resulting in average unit volumes of 5.6 million dollars.

Speaker #2: Segment profit margin for the quarter was 21.2%, 110 basis points above last year. Total sales for the fine dining segment increased 10.9% driven by 6.6% from the extra fiscal week positive same restaurant sales of 1.9% and the addition of 6 net new restaurants.

Speaker #2: Traffic was positive, outpacing the industry by 200 basis points. The lighter portion section of the menu created an 80 basis point mix advantage check.

Speaker #2: On a two-year basis, Olive Garden same-restaurant sales increased 9.3%, demonstrating continued strong performance as they lapped a high-growth quarter last year. Olive Garden continues to have an industry-leading segment profit margin, delivering 24.3% for the quarter, which is 50 basis points higher than last year.

Speaker #2: Segment profit margin was 20 basis points lower than last year. The inclusion of memorial day in the quarter is a significant drag on the segment profit margin for fine dining as its traditionally a low-volume week for this segment.

Speaker #2: This includes approximately 50 basis points of margin investment related to the addition of the Lighter Portion section to the menu. At LongHorn, total sales increased 21.9%, driven by same-restaurant sales growth of 9.5%, the addition of 27 net new restaurants, and 8% from the extra fiscal week.

Speaker #2: On a 13-week basis, segment profit margin for fine dining was actually 20 basis points higher than last year. Total sales for the other business segment increased 9.8% with 7.7% from the extra fiscal week and positive same restaurant sales of 4.6% which was partially offset by the permanent closure of Bahama Bridge restaurants.

Speaker #2: LongHorn continues to increase market share with strong and sustained sales growth, exceeding the industry's same-restaurant sales benchmark by 810 basis points this quarter.

Speaker #2: Positive sales momentum and continued productivity improvements contributed to a 17.9% segment profit margin for the other business segment 40 basis points higher than last year.

Speaker #2: Over the past three years, LongHorn has grown same-restaurant sales by more than 20%, resulting in average unit volumes of $5.6 million.

Speaker #2: As we look at our annual results for fiscal 2026, we had same restaurant sales growth of 4.5% exceeding our expectations and outperforming the industry.

Speaker #2: Segment profit margin for the quarter was 21.2%, 110 basis points above last year. Total sales for the fine dining segment increased 10.9%, driven by 6.6% from the extra fiscal week, positive same-restaurant sales of 1.9%, and the addition of 6 net new restaurants.

Speaker #2: Total sales increased 9.4% surpassing 13 billion dollars for the first time in Darden's history. Adjusted diluted net earnings per share from continuing operations increased 11.4% to $10.64.

Speaker #2: We delivered 2.2 billion dollars in adjusted EBITDA from continuing operations driven by strong sales growth. And we returned 1.4 billion dollars to shareholders with 693 million dollars in dividends and 675 million dollars of share repurchases.

Speaker #2: Segment profit margin was 20 basis points lower than last year. The inclusion of Memorial Day in the quarter was a significant drag on the segment profit margin for fine dining, as it’s traditionally a low-volume week for this segment.

Speaker #2: On a 13-week basis, segment profit margin for Fine Dining was actually 20 basis points higher than last year. Total sales for the Other Business segment increased 9.8%, with 7.7% from the extra fiscal week and positive same-restaurant sales of 4.6%, which was partially offset by the permanent closure of Bahama Breeze restaurants.

Speaker #2: Looking at our fiscal 2026 full-year P&L, restaurant-level EBITDA compressed 20 basis points caused by the significant headwind of elevated commodity costs and our deliberate approach to not fully price for these costs.

Speaker #2: This unfavorability was fully offset by the sales leverage on G&A and depreciation and amortization expenses resulting in earnings after tax margin that was flat to last year.

Speaker #2: Positive sales momentum and continued productivity improvements contributed to a 17.9% segment profit margin for the Other business segment, 40 basis points higher than last year.

Speaker #2: Stepping back, our performance reflects the strength and durability of our business model. At the core of our model, is a portfolio of differentiated brands supported by disciplined execution, and a focus on delivering value to the guest.

Speaker #2: As we look at our annual results for fiscal 2026, we had same-restaurant sales growth of 4.5%, exceeding our expectations and outperforming the industry.

Speaker #2: Which allows us to generate balanced and sustainable growth over time. Our 5-year plan reflects this with all of our segments contributing to sales growth.

Speaker #2: Total sales increased 9.4%, surpassing $13 billion for the first time in Darden's history. Adjusted diluted net earnings per share from continuing operations increased 11.4% to $10.64.

Speaker #2: Olive Garden will continue to grow as a steady and balanced contributor while the rest of our segments are expected to grow faster and play an increasingly meaningful role in driving incremental growth.

Speaker #2: We delivered $2.2 billion in adjusted EBITDA from continuing operations, driven by strong sales growth. And we returned $1.4 billion to shareholders, with $693 million in dividends and $675 million of share repurchases.

Speaker #2: Over the past 7 years, our portfolio has become more balanced and more diversified. In fiscal 2019, Olive Garden represented 50% of sales and 55% of segment profit.

Speaker #2: Looking at our fiscal 2026 full-year P&L, restaurant-level EBITDA compressed 20 basis points, caused by the significant headwind of elevated commodity costs and our deliberate approach to not fully price for these costs.

Speaker #2: By fiscal 2026, that mix has shifted to 42% of sales and 47% of segment profit. This change reflects the success of our portfolio strategy with roughly half of the shift driven by consistent growth at long haul and the other half from the rest of the brands in the portfolio including acquisition.

Speaker #2: This unfavorability was fully offset by the sales leverage on G&A and depreciation and amortization expenses, resulting in earnings after-tax margin that was flat to last year.

Speaker #2: Importantly, Olive Garden remains a strong and steady contributor while a broader set of brands now play a larger role in driving sales and earnings growth for Darden.

Speaker #2: Stepping back, our performance reflects the strength and durability of our business model. At the core of our model is a portfolio of differentiated brands, supported by disciplined execution and a focus on delivering value to the guest.

Speaker #2: We expect new restaurant growth across Darden to remain within the 3% to 4% range over time which is consistent with our long-term framework. Olive Garden would trend toward the lower end of that range long haul toward the higher end and our smaller brands growing at or above that range as they expand their footprint with fine dining continuing to grow opportunistically.

Speaker #2: This allows us to generate balanced and sustainable growth over time. Our five-year plan reflects this, with all of our segments contributing to sales growth.

Speaker #2: Olive Garden will continue to grow as a steady and balanced contributor, while the rest of our segments are expected to grow faster and play an increasingly meaningful role in driving incremental growth.

Speaker #2: We believe this mixed shift over time can support a more diversified and resilient growth profile. Another important element of the model is our approach to pricing.

Speaker #2: Over the past seven years, our portfolio has become more balanced and more diversified. In fiscal 2019, Olive Garden represented 50% of sales and 55% of segment profit.

Speaker #2: While we have the ability to price, we have consistently taken a measured approach pricing below inflation over time to preserve our value proposition and support traffic.

Speaker #2: By fiscal 2026, that mix has shifted to 42% of sales and 47% of segment profit. This change reflects the success of our portfolio strategy, with roughly half of the shift driven by consistent growth at LongHorn and the other half from the rest of the brands in the portfolio, including acquisitions.

Speaker #2: This discipline helps us maintain guest relevance, support long-term traffic growth, and strengthen the durability of the business across different operating environments. Looking at our performance since fiscal '19 relative to our long-term framework, we generated earnings after tax growth of 7.5% and cash returns of 4.2%.

Speaker #2: Importantly, Olive Garden remains a strong and steady contributor, while a broader set of brands now play a larger role in driving sales and earnings growth for Darden.

Speaker #2: This resulted in total shareholder returns of 11.7% as measured by EPS growth plus dividend yield. A strong operating model generates significant and durable cash flows since fiscal 2019.

Speaker #2: We expect new restaurant growth across Darden to remain within the 3% to 4% range over time, which is consistent with our long-term framework. Olive Garden would trend toward the lower end of that range long-term, LongHorn toward the higher end, and our smaller brands growing at or above that range as they expand their footprint, with fine dining continuing to grow opportunistically.

Speaker #2: We have delivered 9% annualized adjusted EBITDA growth. This also reflects balanced execution across each component of the framework and a total shareholder return that is within our target range despite the issuance of 9 million shares of common stock in fiscal 20 and other business disruptions from COVID.

Speaker #2: We believe this mix shift over time can support a more diversified and resilient growth profile. Another important element of the model is our approach to pricing.

Speaker #2: Our consistent cash generation is expected to provide more than sufficient capacity each year to fund the core requirements of the business including maintenance capital to sustain our existing asset base continued growth of our dividend and investment in new restaurant development.

Speaker #2: While we have the ability to price, we have consistently taken a measured approach, pricing below inflation over time to preserve our value proposition and support traffic.

Speaker #2: The remaining cash flow is generally returned to shareholders through share repurchases. While preserving our financial flexibility and maintaining a strong balance sheet. Our adjusted debt to EBITDA at the end of fiscal 2026 of 2.1 times is within our targeted range of 2 to 2.5 times and consistent with maintaining an investment-grade credit profile.

Speaker #2: This resulted in total shareholder returns of 11.7%, as measured by EPS growth plus dividend yield. A strong operating model has generated significant and durable cash flows since fiscal 2019.

Speaker #2: Now turning to our financial outlook for fiscal 2027, we expect total sales of 13.6 billion to 13.75 billion dollars driven by same restaurant sales growth of 2.5% to 3.5%, 75 to 80 gross new restaurant openings, and 11 Bahama Breeze conversions during the year.

Speaker #2: We have delivered 9% annualized adjusted EBITDA growth. This also reflects balanced execution across each component of the framework and a total shareholder return that is within our target range, despite the issuance of 9 million shares of common stock in fiscal '20 and other business disruptions from COVID.

Speaker #2: Capital spending of approximately 875 million dollars total inflation of approximately 3% which includes commodities inflation of approximately 3% and labor inflation of approximately 3.5%.

Speaker #2: In annual effective tax rate of approximately 13.5% and approximately 114 million diluted average shares outstanding for the year. All of this results in EBITDA of 2.26 billion dollars to 2.29 billion dollars and diluted net earnings per share between 11 dollars 10 cents and 11 dollars 35 cents.

Speaker #2: Our consistent cash generation is expected to provide more than sufficient capacity each year to fund the core requirements of the business, including maintenance capital to sustain our existing asset base, continued growth of our dividend, and investment in new restaurant development.

Speaker #2: The remaining cash flow is generally returned to shareholders through share repurchases, while preserving our financial flexibility and maintaining a strong balance sheet. Our adjusted debt to EBITDA at the end of fiscal 2026 of 2.1 times is within our targeted range of 2.0 to 2.5 times and consistent with maintaining an investment-grade credit profile.

Speaker #2: Additionally, our board approved an 8% increase to our regular quarterly dividend to 1 dollar 62 cents per share implying an annual dividend of 6 dollars and 48 cents.

Speaker #2: In closing, we delivered a strong year supported by continued sales momentum. Over the last 5 fiscal years, we have consistently delivered earnings at or above the midpoint of our initial guidance demonstrating our ability to deliver on our commitment.

Speaker #2: Now turning to our financial outlook for fiscal 2027, we expect total sales of $13.6 billion to $13.75 billion, driven by same-restaurant sales growth of 2.5% to 3.5%, 75 to 80 gross new restaurant openings, and 11 Bahama Breeze conversions during the year.

Speaker #2: That consistency reflects the strength and resilience of our teams and their focus on controlling what we can control as we navigate changing environments. Together these factors give us confidence in our ability to continue delivering consistent growth and long-term shareholder returns.

Speaker #2: Capital spending of approximately $875 million, total inflation of approximately 3%, which includes commodities inflation of approximately 3% and labor inflation of approximately 3.5%.

Speaker #2: With that, we'll take your questions.

Speaker #1: Thank you. And I'll be conducting a question and answer session and if you'd like to be placed into question queue please press star 1 on your telephone keypad.

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Speaker #2: Additionally, our board approved an 8% increase to our regular quarterly dividend to 1 dollar 62 cents per share implying an annual dividend of 6 dollars and 48 cents.

Speaker #1: Our first question today is coming from Lawrence Huberman from Deutsche Bank. Your line is now live.

Speaker #3: Hey. Thanks a lot and congratulations on the year. I wanted to just ask about the overall consumer environment. Obviously a lot going on. Do any color you can give on cadence of comms as you move through the quarter?

Speaker #2: In closing, we delivered a strong year supported by continued sales momentum. Over the last five fiscal years, we have consistently delivered earnings at or above the midpoint of our initial guidance, demonstrating our ability to deliver on our commitment.

Speaker #3: Anything you're willing to say on June? Any impact from like the rising gas prices? Thoughts there? Thank you.

Speaker #2: That consistency reflects the strength and resilience of our teams and their focus on controlling what we can control as we navigate changing environments. Together, these factors give us confidence in our ability to continue delivering consistent growth and long-term shareholder returns.

Speaker #1: Hey Lauren. Thanks for the feedback on the quarter and the year. In regards to consumer, we really haven't seen a whole lot of change.

Speaker #1: Based on what we've been saying for the last couple of quarters, consumer spending remains pretty resilient. Overall the mood with consumers is still a little cautious.

Speaker #2: With that, we'll take your questions.

Speaker #1: But as we've said a couple of times before, the weaker consumer sentiment hasn't necessarily translated into reduced spending. A little bit different this quarter, our casual brands saw an increase in visits year over year from all income groups.

Speaker #1: Thank you. I will be conducting a question and answer session. If you'd like to be placed into the question queue, please press star one. A confirmation tone will indicate your line is in the question queue.

Speaker #1: Including the bottom quintile. Some of that might have been tax refunds but they did see some increase year over year from all income groups.

Speaker #1: You may press star two if you'd like to remove your question from the queue. We ask that you please ask one question and one follow-up, then return to the queue.

Speaker #1: We did see a little softness in guests under 35. But we're going to continue to control what we control as Raj said. In regards to the cadence across the quarter, it was pretty consistent.

Speaker #1: Our same restaurant sales across the quarters by month were fairly consistent and in the two-year stack it's almost the exact same number. So we felt pretty good about where we were.

Speaker #1: Not necessarily going to comment on the quarter to date so far. It's only three weeks. And there's a little choppy because of our 53rd week and shifting calendar.

Speaker #1: So we're not going to comment on that right now.

Speaker #3: Okay. Thanks very much. Understood. And any thoughts I guess more broadly in terms of how we should be thinking about the cadence of comp or EPS growth throughout fiscal 27?

Speaker #1: Yeah Lauren. I think I would say as we get look at the year, I would expect that because of some of the cost situation we're in in terms of year over year, we would expect that first quarter that would be kind of low to mid single digit EPS growth and then the rest of the quarters fairly balanced on a 52-week basis from a growth perspective.

Speaker #1: And it's really a function of some of the factors that are impacting year over year specifically in the first quarter. Because that's when we expect to have the highest commodities inflation I think we're expecting roughly 4% in the first quarter.

Speaker #1: And then there's some other near-term costs that are just more one-time in nature that we'll have. A little bit more pressure on the first quarter.

Speaker #1: But for the full year, for the rest of the quarter should be fairly even. Thank you. Our next question today is coming from Gregory Frankfort from Guggenheim Partners.

Speaker #1: Your line is now live.

Speaker #4: Hey. Hey. Thanks for the question. I just wanted to ask maybe a little bit about Longhorn's comp performance. I mean, it keeps putting up really good numbers.

Speaker #4: And what do you think is driving that? And I guess how much of what's driving that can be applied to the other brands? I think the five-year outlook has you guys maybe moving some of the portion investments into the other brands.

Speaker #4: But is there anything else that's going on there that you think is a big part of the business and that can or cannot be taken over to the other brands you have?

Speaker #4: Thanks.

Speaker #1: Hey Greg. Thanks for the great feedback on Longhorn too. So Longhorn had a nine and a half comp. What a great quarter. And Laura and her team are doing an excellent job driving that business.

Speaker #1: A lot of that has been things that we've been doing for years. As we mentioned, we've made investments in food quality, probably for the last 10 years.

Speaker #1: Several in those investments continue to pay off. Service is improving. The guests know they're getting high-quality steaks when they come to Longhorn. Our steaks go correctly.

Speaker #1: Scores are highest ever levels. And they get a great value. And it doesn't hurt that there's a high beef inflation. In the market. And so the relative value looks a little bit better for Longhorn.

Speaker #1: So and then specifically in Q4, we use a little social media. That we do all the time. But we had a post that went very viral and that was their tease on bringing back lamb.

Speaker #1: And so they do lamb usually in Q4. Their guests have been asking about it all year. All they did was tease and say what you're looking for is coming.

Speaker #1: And then they sold more lamb. We bought more lamb this year than last year and we sold out in half the time. So it was a strong performance.

Speaker #1: There are things that we can learn at Longhorn that take to other brands. But Longhorn has learned things from other brands to take to Longhorn.

Speaker #1: So not all of our brands are going to do a nine comp every quarter. But we've got a framework. We're going to portfolio. Of brands that will let us meet that framework and hopefully exceed it every once in a while.

Speaker #1: But we'll continue to learn. Longhorn, as you mentioned, has multiple sizes of most of their steaks. Olive Garden has a little bit on that.

Speaker #1: Protein is a little bit more important. And Olive Garden just introduced or in a year a pretty protein-forward dish. And we might see some more kind of protein communication at Olive Garden.

Speaker #1: But Longhorn is just doing a great job right now. And we're going to keep them going. Thank you. Next question is coming from Chris Carroll from KeyBank Capital Markets.

Speaker #1: Your line is now live.

Speaker #5: Hi. Good morning. So just on the commodity basket guidance of 3%, can you expand a little bit more on that and touch on some of the specific drivers, specifically beef?

Speaker #5: And then I think you mentioned, Raj, 4% inflation. In the one Q, so any more on the cadence of commodity inflation expectations that would be great.

Speaker #5: Thank you.

Speaker #1: Yeah. Chris, I'd just say from a commodities perspective, as you look at the fiscal 27, one of the things that you're going to see we expect to see in the first quarter primarily is beef is going to be somewhere in that mid to high single digit.

Operator: Darden Fiscal year 2026 Q4 earnings call. Your line has been placed in a listen-only mode until the question-and-answer session. To ask a question, you may press star one on your touch-tone phone. This conference is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to Ms. Courtney Aquila. Thank you. You may begin.

Speaker #1: You know, we'll continue to learn. LongHorn, as you mentioned, has multiple—multiple sizes of most of their steaks. Olive Garden has a little bit on that.

Rick Cardenas: We'll continue to learn. LongHorn, as you mentioned, has multiple sizes of most of their steaks. Olive Garden has a little bit on that. Protein is a little bit more important, and Olive Garden just introduced, in a year, a pretty protein-forward dish, and we might see some more protein communication at Olive Garden. LongHorn is just doing a great job right now, and we're going to keep them going.

Speaker #1: Because we're wrapping on pretty low inflation a year ago. We started to experience significantly higher inflation for beef in the starting in the second quarter last year.

Speaker #1: Protein is a little bit more important, and Olive Garden just introduced, in a year, a pretty protein-forward dish, and—we might see some more kind of protein communication at Olive Garden.

Speaker #1: And for the full year, we ended up in the close to 12-ish percent for beef on the fiscal 2026. As we look at 27, we expect beef to be in the low single digits for the full year.

Speaker #1: But Longhorn is just doing a great job right now, and we're going to keep them going.

Speaker #1: In fact, we would expect somewhat deflation in the second quarter. So for the first half, I think we signal low single digit inflation. But that includes mid to high in the first quarter and basically slight deflation in the second quarter.

Courtney Aquila: Thank you, Kevin. Good morning, and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's President and CEO, and Raj 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. A supplemental materials presentation containing information shared on today's call is available on the Financials tab in the Investors section of our website at darden.com. Today's discussion includes certain non-GAAP measurements and reconciliations of these measurements are included in the presentation.

Speaker #2: Thank you. Next question is coming from Chris Carrell from KeyBank Capital Markets. Your line is now live.

Operator: Thank you. Next question is com`ing from Chris Carrol from KeyBanc Capital Markets. Your line is now live.

Operator: Thank you. Next question is com`ing from Chris Carril from KeyBanc Capital Markets. Your line is now live.

Speaker #1: As far as other items, one of the things I know a lot of you are looking at is the chicken. We do a contract and actually what happens for us is over time, we are actually doing our contracts help protect us from the volatility in the market.

Speaker #3: Hi, good morning. So, just on the commodity basket guidance of 3%, can you expand a little bit more on that and touch on some of the specific drivers, specifically beef?

Chris Carrol: Hi. Good morning. Just on the commodity basket guidance of 3%, can you expand a little bit more on that and touch on some of the specific drivers, specifically beef? I think you mentioned, Raj, 4% inflation in the Q1, so any more on the cadence of commodity inflation expectations, that'd be great. Thank you.

Chris Carril: Hi. Good morning. Just on the commodity basket guidance of 3%, can you expand a little bit more on that and touch on some of the specific drivers, specifically beef? I think you mentioned, Raj, 4% inflation in the Q1, so any more on the cadence of commodity inflation expectations, that'd be great. Thank you.

Speaker #3: And then, I think you mentioned, Raj, 4% inflation in Q1. So, any more on the cadence of commodity inflation expectations? That would be great.

Speaker #1: So we have been able to have much more stable pricing and if you look at the last three years, our costs on chicken have been fairly flat.

Speaker #3: Thank you.

Speaker #4: Yeah, Chris, I—I'd just say from a commodities perspective, as you look at the fiscal, 27, you know, one of the things that you're going to see, we—we expect to see in the first quarter primarily is beef is going to be somewhere in that mid to high single digit.

Speaker #1: Whereas there's been a roughly 5% annual inflation in the broader market. And so those are some of the big drivers I'd say. I think seafood is still we expect seafood to be high single digits in the front half.

Rajesh Vennam: Yeah, Chris, I'd just say from a commodities perspective, as you look at the fiscal 2027, one of the things that we expect to see in the Q1 primarily is beef is going to be somewhere in that mid to high single digit, because we're wrapping on pretty low inflation a year ago. We started to experience significantly higher inflation for beef starting in the Q2 last year. For the full year, we ended up close to 12% for beef on the fiscal 2026. As we look at 2027, we expect beef to be in the low single digits for the full year. In fact, we would expect somewhat deflation in the Q2. For the H1, I think we signaled low single digit inflation, but that includes mid to high in the Q1 and basically slight deflation in the Q2.

Raj Vennam: Yeah, Chris, I'd just say from a commodities perspective, as you look at the fiscal 2027, one of the things that we expect to see in the Q1 primarily is beef is going to be somewhere in that mid to high single digit, because we're wrapping on pretty low inflation a year ago. We started to experience significantly higher inflation for beef starting in the Q2 last year. For the full year, we ended up close to 12% for beef on the fiscal 2026. As we look at 2027, we expect beef to be in the low single digits for the full year. In fact, we would expect somewhat deflation in the Q2. For the H1, I think we signaled low single digit inflation, but that includes mid to high in the Q1 and basically slight deflation in the Q2.

Speaker #1: But normalize as we get to the back half. Thank you. Our next question today is coming from Andrew Charles from TD Calvin. Your line is now live.

Courtney Aquila: Looking ahead, we plan to release fiscal 2027 Q1 earnings on Thursday, 24 September, before the market opens, followed by a conference call. During today's call, all references to industry results refer to the Black Box Intelligence casual dining benchmark, excluding Darden. Black Box Intelligence updated its benchmarks in early May following changes to the underlying brand set. This restatement had an outsized impact on the casual dining benchmark. The change moved the average benchmarks up by 150 basis points for same restaurant sales and 25 basis points for same restaurant guest counts. Incorporating this restatement, average same restaurant sales for the industry increased 1.4% and average same restaurant guest counts decreased 1.8% during our Q4.

Speaker #4: Because we're wrapping on pretty low inflation a year ago, we started to experience significantly higher inflation for beef starting in the second quarter last year.

Speaker #4: Great. Thank you. I'm curious if the same sort of sales guidance embedded expansion of delivery, either via more brands adopting first party or perhaps brands with first party adopting third party.

Speaker #4: And for the full year, we ended up close to 12-ish percent for beef on the fiscal 2026. As we look at 2027, we expect beef to be in the low single digits for the full year.

Speaker #4: In fact, we would expect some deflation in the second quarter. So for the first half, I think we signaled low single-digit inflation, but that includes mid to high in the first quarter and basically slight deflation in the second quarter.

Speaker #1: In regards to delivery, right now we're still focused on the brands that have first party delivery. Olive Garden, Cheddar's, and Yardhouse. Chewy's already has third party.

Speaker #1: In regards to third party delivery, as we've mentioned, many times, there's a few things that we don't like about third party delivery. That model.

Speaker #4: As far as other items, you know, one of the things I know a lot of you are looking at is the chicken. We do a contract, and actually what happens for us is, over time, we are actually doing well—our contracts help protect us from the volatility in the market.

Rajesh Vennam: As far as other items, one of the things I know a lot of you are looking at is the chicken. We do a contract, actually what happens for us is, over time, our contracts help protect us from the volatility in the market. We've been able to have much more stable pricing. If you look at the last three years, our costs on chicken have been fairly flat, whereas there's been a roughly 5% annual inflation in the broader market. Those are some of the big drivers, I'd say. I think seafood is still. We expect seafood to be high single digits in H1, but normalize as we get to the H2.

Raj Vennam: As far as other items, one of the things I know a lot of you are looking at is the chicken. We do a contract, actually what happens for us is, over time, our contracts help protect us from the volatility in the market. We've been able to have much more stable pricing. If you look at the last three years, our costs on chicken have been fairly flat, whereas there's been a roughly 5% annual inflation in the broader market. Those are some of the big drivers, I'd say. I think seafood is still. We expect seafood to be high single digits in H1, but normalize as we get to the back half.

Speaker #1: But some of it's solved. Others, we'd have to see addressed before we get into that. And I'll give you some examples. Price transparency. For our consumers so they know exactly what their entree costs in our restaurant versus getting it delivered.

Courtney Aquila: This morning, we will share some brief remarks on the quarter and full year, as well as the details of our financial results, discuss the power of Darden's portfolio, and share our fiscal 2027 financial outlook. I will now turn the call over to Rick.

Speaker #4: So we have been able to have much more stable pricing, and if you look at the last three years, our costs on chicken have been fairly flat, whereas there's been roughly 5% annual inflation in the broader market.

Speaker #1: Control of the data. And tips for our employees. Those are just three things. We've got others. And with the acquisition of Chewy's, we have greater insight into the third party model.

Rick Cardenas: Thank you, Courtney. Good morning, everyone. The Q4 was a strong finish to an excellent year, one in which we significantly outperformed the industry. Our restaurant teams continued to execute at a high level, and their commitment to operational excellence helped each of our brands deliver positive same restaurant sales for the quarter. We know guests choose the brands they trust for key occasions. Several of our brands enjoyed record performance on Mother's Day, including the highest ever traffic day at Olive Garden and LongHorn Steakhouse, and our guest satisfaction results continued to be at or near all-time highs. It was an especially strong year for our three largest brands, Olive Garden, LongHorn, and Yard House. Olive Garden met our heightened expectations for the year, delivering 4% same restaurant sales growth, which is above the high end of Darden's long-term framework.

Speaker #4: And so those are some of the big drivers, I'd say. I think seafood is still—we expect seafood to be high single digits in the front half.

Speaker #1: And how that can impact restaurant sales, both positively and negatively. So right now we continue to focus on that first party. In those restaurants that we have and the brands we have it with Uber Direct.

Speaker #4: but normalize as we get to the back half.

Speaker #3: Thank you. Our next

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

Speaker #2: The question today is coming from Andrew Charles from TD Cowen. Your line is now live.

Speaker #1: But if third party is ever going to be part of our business model, it must be sustainable for us in the long term. And our guidance does not contemplate any third party delivery.

Andrew Charles [Managing Director, Consumer: Great. Thank you. I'm curious if the same-store sales guidance embeds expansion delivery, either via more brands adopting first party or perhaps brands with first party adopting third party.

Andrew Charles: Great. Thank you. I'm curious if the same-store sales guidance embeds expansion delivery, either via more brands adopting first party or perhaps brands with first party adopting third party.

Speaker #5: Great, thank you. I'm curious if the same sort of sales guidance embedded expansion of delivery, either via more brands adopting first-party or perhaps brands with first-party adopting third-party.

Speaker #4: Thank you. That's helpful. And then my follow-up was just around marketing spend. Sooner we saw in the fourth quarter, should we expect another year in 27 of increased activity but less of an increase in costs as you find efficiencies?

Speaker #1: in—in regards to delivery, right now we're still focused on the brands that have first-party delivery. Olive garden, Cheddar's, and—and Yardhouse. Chewy's already has third-party.

Rick Cardenas: In regards to delivery, right now we're still focused on the brands that have first-party delivery, Olive Garden, Cheddar's, and Yard House. Chuy's already has third party. In regards to third-party delivery, as we've mentioned many times, there's a few things that we don't like about third-party delivery, that model, but some have been solved. Others we'd have to see addressed before we get into that. I'll give you some examples, price transparency for our consumers, so they know exactly what their entrée costs in our restaurant versus getting it delivered, control of the data, and tips for our employees. Those are just three things. We've got others. With the acquisition of Chuy's, we have greater insight into the third-party model and how that can impact restaurant sales, both positively and negatively.

Speaker #1: Yeah. I think so from a marketing perspective, we expect to make some investment even with some cost is most of the cost is we receive this year, next year.

Speaker #1: In regards to third-party delivery, there—as we've mentioned many times—there's a few things that we don't like about the third-party delivery model, but some of it's solved.

Rick Cardenas: LongHorn delivered same restaurant sales growth of over 7% for the year, reflecting their focus on food quality and execution. They ended the year by conducting their ninth annual Steak Master Series. Congratulations to Jesse Montalva from the LongHorn Steakhouse in Riverview, Florida, who claimed the championship trophy. Yard House grew total sales by $95 million compared to last year, driven in part by same restaurant sales growth of 5.6% for the year. Performance of Olive Garden, LongHorn, and Yard House this year is extremely impressive, marking the fifth consecutive year that all three brands have delivered positive same restaurant sales. With our focus on growing our brands, we opened 71 new restaurants during the fiscal year, six more than initially planned at the beginning of the year. Our development team has built a strong pipeline of sites to support new restaurant growth.

Speaker #1: I think there's probably another five, six million dollars of cost is but we expect marketing expense to go up roughly 10 basis points. It would be from a dollars perspective, think of it as about a 25 million dollar investment year over year.

Speaker #1: Others, we'd have to see addressed before we get into that. And I'll give you some examples: price transparency for our consumers, so they know exactly what their entree costs in our restaurant versus getting it delivered.

Speaker #1: And that's contemplated in the guidance. Thank you. Our next question today is coming from Danilo Gargiola from Bernstein. Your line is now live.

Speaker #1: Control of the data, and tips for our employees—those are just three things. We've got others. And, you know, with the acquisition of Chewy's, we have greater insight into the third-party model, and how that can impact restaurant sales, both positively and negatively.

Speaker #6: Thank you. First of all, at a very high level, I was wondering if you can give us some puts and takes of your guidance and perhaps where you have the highest conviction and where instead you're monitoring a little bit more closely and what will take you to the higher end of the guidance, what will take you to the lower end of the guidance for 27.

Speaker #1: So right now, we continue to focus on that first-party in those restaurants that we have, and the brands we have it with Uber Direct.

Rick Cardenas: Right now, we continue to focus on that first party in the restaurants that we have and the brands we have it with Uber Direct. If third party is ever going to be part of our business model, it must be sustainable for us in the long term. Our guidance does not contemplate any third-party delivery.

Speaker #1: but if third-party is ever going to be part of our business model, it must be sustainable for us in the long term. And our guidance does not help contemplate any third-party delivery.

Speaker #1: Yeah. Danilo, so let's start with our guidance of two and a half to three and a half for the year, which implies flat to positive traffic with check in the mid to high mid to high 2% range.

Rick Cardenas: Raj will share more details about our growth plans in his remarks. Additionally, our newest international franchising partners in Spain and India opened their first locations during the year. Our new partner in Canada plans to open their first new restaurant next week. Our franchising and international team has helped our new partners open restaurants more quickly, and they are on pace to open the most international locations in a single year in fiscal 2027. Fiscal 2026 marks our 31st year as a publicly traded company. Darden has achieved an average annualized total shareholder return of 10% or greater for any 10 fiscal year period when considering Darden stock price appreciation plus dividend yield. This morning, I want to focus my comments on how we are able to do this and what gives me confidence for the future.

Speaker #5: Thank you, that's helpful. And then my follow-up was just around marketing spend. Similar to what we saw in the fourth quarter, should we expect another year in '27 of increased activity, but less of an increase in costs?

Andrew Charles [Managing Director, Consumer: Thank you. That's helpful. My follow-up was just around marketing spend. Similar we saw in Q4, should we expect another year in 2027 of increased activity, less of an increase in cost as you find efficiencies?

Andrew Charles: Thank you. That's helpful. My follow-up was just around marketing spend. Similar we saw in Q4, should we expect another year in 2027 of increased activity, less of an increase in cost as you find efficiencies?

Speaker #1: So with that as a starting point, you think about we're looking out 12 months. There are a lot of factors that can impact what can happen with the traffic.

Speaker #5: Did you find deficiencies?

Speaker #1: But we expect our pricing to be closer to inflation. So I mentioned we mentioned I mentioned that we expect our total inflation to be approximately 3%.

Speaker #4: Yeah, I think, so from a marketing perspective, we are—uh, we expect to make some investment, even with some cost is, you know, most of the cost is we receive this year, next year.

Rajesh Vennam: From a marketing perspective, we expect to make some investment even with some CAS. Most of the CAS we received this year, next year, I think there's probably another five, $6 million of CAS. We expect marketing expense to go up roughly 10 basis points. It will be, from a dollars perspective, think of it as about a $25 million investment year over year, and that's contemplated in the guidance.

Raj Vennam: From a marketing perspective, we expect to make some investment even with some CAS. Most of the CAS we received this year, next year, I think there's probably another $5 million, $6 million of CAS. We expect marketing expense to go up roughly 10 basis points. It will be, from a dollars perspective, think of it as about a $25 million investment year over year, and that's contemplated in the guidance.

Speaker #1: Our pricing should be fairly close to that. And our check would be in that mid to high twos. And so that is the background.

Speaker #4: I think there's probably another, you know, 5, 6 million dollars of cost is, but we expect marketing expense to go up roughly 10 basis points.

Speaker #1: As we think about the puts and takes, there's obviously the broader macro that plays into that range. And if the macro ends up being much better, we'll end up on the higher end.

Speaker #4: It would be, you know, from a dollars perspective, think of it as about a $25 million investment year over year, and that's contemplated in the guidance.

Speaker #1: And then there are initiatives that our brands have. That is again, I want to I don't want to harp on it for too long.

Speaker #2: Thank you. Our next question today is coming from Danilo Gargiola from Barnes Sr. Line is now live.

Operator: Thank you. Our next question today is coming from Danilo Gargiulo from Bernstein. Your line is now live.

Rick Cardenas: Full service dining is a variety-seeking category. We have a collection of brands that give us reach across multiple dining occasions, guest demographics, price points, geographies, and cuisine types while reducing reliance on any one brand, consumer segment, region, or cuisine. Our brands play distinct and valuable roles. Olive Garden and LongHorn are the two most dominant brands in our portfolio with strong guest relevance and additional room for growth. Yard House, Cheddar's Scratch Kitchen, and Chuy's are incredibly popular brands with significant runway for growth. Ruth's Chris Steak House, The Capital Grille, Eddie V's, and Seasons 52 are differentiated brands with strong positions in their respective categories and should have balanced growth over time. Our portfolio creates the scale that enables our brands to benefit from our strategic platform.

Speaker #1: But the reality is the portfolio of brands is a huge advantage when you think about planning and forecasting ahead. And how we can pull different levers within across our portfolio to get to our commitments.

Speaker #6: Thank you. first of all, at a very high level, I was wondering if you can give us input and takes of your guidance, and perhaps where you have the highest conviction and, you know, where instead you're monitoring a little bit more closely, and what will take you to the higher end of the guidance, what will take you to the lower end of the guidance for 27.

Danilo Gargiulo: Thank you. First of all, at a very high level, I was wondering if you can give us some put and takes of your guidance and perhaps where you have the highest conviction and where instead you are monitoring a little bit more closely, and what will take you to the higher end of the guidance, what will take you to the low end of the guidance for 2027?

Speaker #1: And so broadly speaking, those are the things. One thing I want to point out that I think might have been may not be as clear is we have a pretty big step up in growth.

Speaker #4: Yeah, Danilo, so let's start with, you know, our guidance of 2.5 to 3.5 for the year, which implies flat to positive traffic, with check in the mid to high, you know, mid to high 2% range.

Rajesh Vennam: Yeah, Danilo. Let's start with our guidance of 2.5% to 3.5% for the year, which implies flat to positive traffic, with check in the mid to high 2% range. That as a starting point, you think about we're looking out 12 months. There are a lot of factors that can impact what can happen with the traffic. We expect our pricing to be closer to inflation. I mentioned that we expect our total inflation to be approximately 3%. Our pricing should be fairly close to that, and our check would be in that mid to high 2s. That is the background. As we think about the puts and takes, there's obviously the broader macro that plays into that range. If the macro ends up being much better, we'll end up in the higher end.

Raj Vennam: Yeah, Danilo. Let's start with our guidance of 2.5% to 3.5% for the year, which implies flat to positive traffic, with check in the mid to high 2% range. That as a starting point, you think about we're looking out 12 months. There are a lot of factors that can impact what can happen with the traffic. We expect our pricing to be closer to inflation. I mentioned that we expect our total inflation to be approximately 3%. Our pricing should be fairly close to that, and our check would be in that mid to high 2s. That is the background. As we think about the puts and takes, there's obviously the broader macro that plays into that range. If the macro ends up being much better, we'll end up in the higher end.

Speaker #1: So if you think about the fact that we're guiding to 75 to 80 gross openings, last year we opened 71. But then you also have in addition to that 75 to 80 gross openings, we also have 11 Bahama Breeze conversions.

Speaker #4: So with that as a starting point, you think about, you know, we're looking out 12 months. There are a lot of factors that can impact what can happen with the traffic, but, you know, we expect our pricing to be closer to inflation. So if, you know, I—I mentioned, we mentioned, I mentioned that we expect our total inflation to be approximately 3%.

Speaker #1: So when you add those two up, it's really from a development perspective and from a pre-opening perspective, we're actually going to have roughly 20 more openings.

Rick Cardenas: We have a shared operations philosophy anchored in food service and atmosphere enabled by the best people in the industry. Our four competitive advantages allow our brands to compete more effectively and provide even greater value for their guests. One of these competitive advantages, the power of our scale, is demonstrated in our supply chain and technology stack, which enable our brands to deliver stronger performance than they could do on their own. For example, we source directly from producers and have our own dedicated food distribution network. This creates cost advantages for our brands and ensures an uninterrupted supply to our restaurants. Our proprietary POS system serves as a nerve center of our integrated restaurant technology ecosystem.

Speaker #1: Year over year. So that will lead to some incremental pre-opening costs. And so when you take all that into consideration, that's roughly a 15 cent 15 million dollar impact on our profit and a 10 cent EPS drag on the year.

Speaker #4: Our pricing should be fairly close to that, and our check would be in that mid to high single high 2s. and so that is the background.

Speaker #4: As we think about the puts and takes, there's obviously the broader macro that plays into that range, and if the macro ends up being much better, we'll end up at the higher end.

Speaker #1: And this is really growth cost, right? Which are because there's a step change in the number of openings. And it includes the pre-opening costs and some year one inefficiencies.

Speaker #4: and then there are initiatives that our brands have. that is the again, I—I want to, you know, not for I don't want to harp on it for too long, but the—the—the reality is the portfolio of brands is a huge advantage when you think about planning and forecasting ahead, and how we can pull different levers within the with within across our portfolio, to get to our commitments.

Rajesh Vennam: There are initiatives that our brands have. Again, I don't want to harp on it for too long, the reality is, the portfolio of brands is a huge advantage when you think about planning and forecasting ahead and how we can pull different levers across our portfolio to get to our commitments. Broadly speaking, those are the things. One thing I want to point out that I think may not be as clear is we have a pretty big step up in growth. If you think about the fact that we're guiding to 75 to 80 gross openings. Last year, we opened 71. You also have, in addition to that 75 to 80 gross openings, we also have 11 Bahama Breeze conversions.

Raj Vennam: There are initiatives that our brands have. Again, I don't want to harp on it for too long, the reality is, the portfolio of brands is a huge advantage when you think about planning and forecasting ahead and how we can pull different levers across our portfolio to get to our commitments. Broadly speaking, those are the things. One thing I want to point out that I think may not be as clear is we have a pretty big step up in growth. If you think about the fact that we're guiding to 75 to 80 gross openings. Last year, we opened 71. You also have, in addition to that 75 to 80 gross openings, we also have 11 Bahama Breeze conversions.

Speaker #1: And so when you actually look at that and still see that even with that headwind, our guidance implies EAT margin flat to positive. And if you will add that back, that would actually put EAT margin 10 plus basis points expanding.

Speaker #1: So those are really the big components of how we're thinking about for the full year.

Speaker #4: and so, you know, broader broadly speaking, those are the things. One thing I want to point out that I think might have been, you know, may not be as clear, is we have a pretty big, step-up in, growth.

Rick Cardenas: Applications including payroll, guest forecasting, labor management, and much more provide key data, improve operations, and make our restaurant managers' jobs easier so they can spend more time focused on their guests and their team members. Our scale also helps from a marketing perspective. Across all our brands, we use digital marketing in a targeted, cost-effective way to build brand equity and support incremental sales. Our smaller brands benefit from the learnings generated from our larger brands, and because of our platform, they can tailor sophisticated media plans to their specific business needs. Another one of our advantages, our extensive data and insights, ensures we continually meet our guests' expectations and allows us to identify opportunities to improve the guest experience and drive incremental sales through continuous menu innovation across our brands.

Speaker #6: Great. Thank you. And actually, you went on my follow-up question which was on development. But more from a international standpoint. And I see that it's quite interesting that you're highlighting also in your presentation the relevance of international within your strategic planning.

Speaker #4: So if you think about the fact that we're open we're guiding to 75 to 80 gross openings, last year we opened 71, but then you also have, in addition to that 75 to 80 gross openings, we also have 11 Bahama Breeze conversions.

Speaker #6: So I'm wondering if you can maybe help us understand when we will be see the highest in the next two to three years, when we will receive the highest impact coming from the international expansion.

Speaker #4: So when you add those two up, it's really, from a development perspective and from a pre-opening perspective, we're actually going to have roughly 20 more openings.

Rajesh Vennam: When you add those two up, it's really from a development perspective and from a pre-opening perspective, we're actually going to have roughly 20 more openings year over year. That will lead to some incremental pre-opening costs. When you take all that into consideration, that's roughly a $15 million impact on our profit and a $0.10 EPS drag on the year. This is really growth cost, right? Which are because there's a step change in the number of openings, and it includes the pre-opening costs and some year one inefficiencies. When you actually look at that and still see that even with that headwind, our guidance implies EBIT margin flat to positive. If you add that back, I would actually put EBIT margin 10-plus basis points expanding.

Raj Vennam: When you add those two up, it's really from a development perspective and from a pre-opening perspective, we're actually going to have roughly 20 more openings year over year. That will lead to some incremental pre-opening costs. When you take all that into consideration, that's roughly a $15 million impact on our profit and a $0.10 EPS drag on the year. This is really growth cost, right? Which are because there's a step change in the number of openings, and it includes the pre-opening costs and some year one inefficiencies. When you actually look at that and still see that even with that headwind, our guidance implies EBIT margin flat to positive. If you add that back, I would actually put EBIT margin 10-plus basis points expanding.

Speaker #6: And maybe if you can give us some sort of boundaries from EAT standpoint of the contribution that we could be expanding that we could be expecting from an expansion in international markets.

Speaker #4: Year over year. So that will lead to some incremental pre-opening costs, and so when you take all that into consideration, that's roughly a $15 million impact on our profit, and a $0.10 EPS drag on the year. And this is really growth cost, right, which is because there's a step change in the number of openings, and it includes the pre-opening costs and some year one inefficiencies.

Speaker #6: And thank you.

Speaker #1: Yeah. Danilo, just remember that our international expansion is franchising. So while it's not the same as opening an existing restaurant for us, we do get a good percentage of the sales from that.

Rick Cardenas: Olive Garden's new lighter portions menu is a good example, as is their new protein-forward Calabrian Steak & Shrimp Bucatini that has quickly become a guest favorite. Data and insights have also grounded all the great work Yard House has done on menu optimization. The new burger, pizza, and taco platforms they have rolled out over the past three years are easier to execute and receive higher guest satisfaction scores. Rigorous strategic planning is another one of our advantages. Planning at the Darden enterprise level determines each brand's strategic role to ensure we have the right portfolio of brands, we align strategies and coordinate operations to maximize our portfolio's value, and we capture available synergies across our brands.

Speaker #1: But EAT should grow. As we continue to add franchise restaurants. But we're talking single digit pennies. A year, a low end of that. A year because you're talking 20 restaurants, 25 restaurants maybe in a good year for openings.

Speaker #4: And so when you actually look at that and still see that even with that headwind, our guidance implies EAT margin flat to positive, and if you will add that back, that would actually actually put EAT margin 10-plus basis points grow expanding.

Speaker #1: But it's a significant business for us. And Brad Smith and his team are doing a great job finding partners. I would say, as I said in my prepared remarks, this will be the most international openings we've ever had at Darden.

Speaker #4: So those are really the big components of how we're thinking about it for the full year.

Rajesh Vennam: Those are really the big components of how we're thinking about for the full year.

Raj Vennam: Those are really the big components of how we're thinking about for the full year.

Danilo Gargiulo: Great. Thank you. Actually, you went on my follow-up question, which was on development, but more from an international standpoint. I see that it's quite interesting that you're highlighting also in your presentation the relevance of international within your strategic planning. I'm wondering if you can maybe help us understand when will we see the highest, in the next 2 to 3 years, when will we see the highest impact coming from the international expansion? Maybe if you can give us some sort of boundaries from an EAC standpoint of the contribution that we could be expecting from an expansion in international markets. Thank you.

Danilo Gargiulo: Great. Thank you. Actually, you went on my follow-up question, which was on development, but more from an international standpoint. I see that it's quite interesting that you're highlighting also in your presentation the relevance of international within your strategic planning. I'm wondering if you can maybe help us understand when will we see the highest, in the next two to three years, when will we see the highest impact coming from the international expansion? Maybe if you can give us some sort of boundaries from an EAC standpoint of the contribution that we could be expecting from an expansion in international markets. Thank you.

Speaker #2: Great. Thank you. And actually, you went on my follow-up question, which is on which was on, on development, but more from a from an international standpoint.

Speaker #1: And we would expect to keep doing that every year for the next for the next few years. And then we'll continue to find new partners.

Speaker #2: And, and I see that, you know, it's quite interesting that you're highlighting also in your presentation the relevance of international within your, strategic planning.

Speaker #1: When we sign these last three deals, we sign them in June of last year. So basically a year ago. We signed 40 restaurants in part of India, 40 restaurants in Spain, and 30 restaurants in Canada.

Speaker #2: So I'm wondering if you can maybe help us understand when we will be see the highest, you know, in the next two to three years, when we will be see the highest impact coming from the international expansion, and maybe if you can give us some sort of, you know, boundaries from, EAT standpoint of the contribution that we could be expanding that we could be expecting from an expansion in international markets.

Rick Cardenas: At the brand level, the strategic planning process helps us identify each brand's distinct advantages and cultivate differentiated positioning, develop a deep understanding of each brand's guests and competitive landscape, and ensure our brands adhere to their strategy so they compete effectively and grow share. We put significant emphasis on this work, and the teams of our acquired brands consistently share that they have even greater clarity about the essence of their brand because of the time and level of rigor involved. The five-year business plans our brands completed last year are also an important part of this process, and our teams continue to execute against those plans to drive shareholder value. Of course, our brands and our platform only matter because of our final advantage, the people who bring them to life every day.

Speaker #1: And we had never signed a development deal for a country and opened it within 12 months. And all three of them pretty much are going to open with 12 months within 12 months.

Speaker #1: And we have more openings in those countries already coming. So we feel really good about where we are. But it's not going to be a monster driver of EAT growth.

Speaker #2: And thank you.

Speaker #1: Yeah, Danilo, just remember that our international expansion is franchising. So, while it's not the same as opening an existing restaurant for us, we do get a good percentage of the sales from that.

Rick Cardenas: Ed Danilo, just remember that our international expansion is franchising. While it's not the same as opening an existing restaurant for us, we do get a good percentage of the sales from that. The EBIT should grow as we continue to add franchise restaurants. We're talking single-digit pennies a year, a low end of that a year, because you're talking 20 restaurants, 25 restaurants maybe in a good year for openings. It's a significant business for us, and Brad Smith and his team are doing a great job finding partners. I would say, as I said in my prepared remarks, this will be the most international openings we've ever had at Darden. We would expect to keep doing that every year for the next few years, and then we'll continue to find new partners.

Speaker #1: It will be a driver of EPS, but pretty small. But it's still positive.

Speaker #2: Thank you. Our next question today is coming from David Palmer from Evercore ISI. Your line is now live.

Speaker #1: But EAT should grow as we continue to add franchise restaurants, but we're talking single-digit pennies a year, at the low end of that, because you're talking 20 restaurants, 25 restaurants maybe, in a good year, for openings.

Speaker #7: Thanks. And congratulations on your year. I wanted to ask you about on the same sort of sales guidance for fiscal 27 and two and a half to three and a half.

Rick Cardenas: Our founder, Bill Darden, said, "The greatest edge we have on our competitors is the quality of our employees reflected each day in the job they do." That is still true today. We have outstanding teams across our 2,200 restaurants, backed by our incredible Restaurant Support Center teams. We have built a compelling employment proposition that is evidenced by our industry-leading retention. To preserve this advantage, we leverage our unique ability to provide robust development opportunities given the breadth of our portfolio. Across operations and the Restaurant Support Center, we can provide opportunities in brand-specific roles, shared support functions, and restaurants across the country. This gives us the ability to move proven talent across brands and support new restaurant growth and gives us multiple options to develop high-potential talent. One of the most powerful things about Darden is our ability to change our team members' lives.

Speaker #7: How are you generally thinking about that for all of Garden? It's safe to say you're thinking slightly below, but still positive. And if so, how are you thinking about restaurant level margin for that brand this you're doing with the small plates?

Speaker #1: But it's a significant business for us, and Brad Smith and his team are doing a great job finding partners. I would say, as I mentioned in my prepared remarks, this will be the most international openings we've ever had at Darden.

Speaker #1: And we would expect to keep doing that every year for the next few years, and then we'll continue to find new partners.

Speaker #7: It seems like you're leaning in there. And do you think you can keep those margins stable this year and have a quick follow-up?

Speaker #1: When we signed these last three deals, we signed them in June of last year, so basically a year ago. We signed 40 restaurants in part of India, 40 restaurants in Spain, and 30 restaurants in Canada.

Rick Cardenas: When we signed these last three deals, we signed them in June of last year, so basically a year ago. We signed 40 restaurants in part of India, 40 restaurants in Spain, and 30 restaurants in Canada. We had never signed a development deal for a country and opened it within 12 months. All three of them pretty much are going to open within 12 months, and we have more openings in those countries already coming. We feel really good about where we are, but it's not going to be a monster driver of EBIT growth. It will be a driver of EPS, but pretty small. It's still positive.

Speaker #1: Yeah, David. Great question. I'll start by saying, first of all, thank you for acknowledging we did have a great year. So we're excited and happy about it.

Speaker #1: And we had never signed a, a, a development deal for a country and opened it within 12 months, and all three of them pretty much are going to open with 12 month in within 12 months.

Speaker #1: From a you can imagine when we look at the portfolio of and we're saying two and a half to three and a half, you would expect we expect Olive Garden to be closer to the lower end of that.

Speaker #1: And we have more openings in those countries already coming. So we feel really good about where we are, but it's not going to be a monster driver of EAT growth.

Speaker #1: And for the year. But that we're still expect Olive Garden to have decent growth. And especially considering where the industry would be. And the way to think about it from a margin perspective is I just talked about how in Q4, they actually had a 50 basis point increase in segment profit margin.

Speaker #1: It will be a driver of EPS, but pretty small. But it's still positive.

Rick Cardenas: We give people the opportunity to grow and progress regardless of their first role with us. Many of our senior leaders, including me, began as hourly team members. That's why I'm extremely proud that we promoted 1,375 hourly team members into management roles in fiscal 2026. Darden has a tremendous track record of success, and it reflects the strength of our brands, the discipline of our strategy, and the quality of our teams. With the right brands, strategy, and teams in place, I am confident we are well-positioned to continue growing the business and creating long-term shareholder value. In closing, I want to thank our over 200,000 team members for everything they do. I'm proud of the engagement across our teams and the impressive retention levels that help drive our success.

Speaker #2: Thank you. Our next question today is coming from David Palmer from Evercore ISI. Your line is now live.

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

Speaker #5: thanks, and, congratulations on, on your year. you know, wanted to ask you about, on, on the same sort of sales guidance for fiscal 27 and 2.5 to 3.5.

David Palmer: Thanks. Congratulations on your year. I wanted to ask you about on the same-store sales guidance for fiscal 2027, 2.5% to 3.5%. How are you generally thinking about that for Olive Garden? Is it safe to say you're thinking slightly below but still positive? If so, how are you thinking about restaurant-level margin for that brand this year, especially with what you're doing with the small plates? It seems like you're leaning in there. Do you think you can keep those margins stable this year? I have a quick follow-up.

Speaker #1: Even with the headwind of the lighter portion investment of 50 basis point. As we look at the full year for next year, I would expect their margins to be flat to positive.

Speaker #5: How are you generally thinking about that for all of Darden? Is it safe to say you're thinking slightly below, but still positive? And if so, how are you thinking about restaurant-level margin for that brand this year, especially with what you're doing with the small plates?

Speaker #1: So we don't expect the margins to go backwards. They've done a great job of managing costs in the rest of the P&L to be able to fund investments.

Speaker #1: And that's really what's great about Olive Garden. This is an engine that has been fueling growth for Darden. Through the cash generation that it does.

Speaker #5: It seems like you're leaning in there. Do you think you can keep those margins stable this year? And I have a quick follow-up.

Speaker #1: And so it plays a big role in helping Darden portfolio be as successful as it's been.

Rick Cardenas: I look forward to connecting with many of you during our general manager and managing partner conferences. Now I will turn it over to Raj.

Speaker #7: Yep. Now, just to follow up on Olive Garden, there's been a lot of things happening with that brand. You guys have had maybe with Longhorn, there's initiatives, but we don't see them as much.

Speaker #4: Yeah, David, great question. I'll start by saying, first of all, thank you for acknowledging we did have a great year. So, you know, we're excited and happy about it.

Rajesh Vennam: David, great question. I'll start by saying, first of all, thank you for acknowledging we did have a great year. We're excited and happy about it. You can imagine when we look at the portfolio, we're saying 2.5% to 3.5%, we would expect Olive Garden to be closer to the lower end of that for the year. We still expect Olive Garden to have decent growth, especially considering where the industry would be. The way to think about it from a margin perspective is, I just talked about how in Q4, they actually had a 50 basis point increase in segment profit margin, even with the headwind of the lighter portion investment of 50 basis points. As we look at the full year for next year, I would expect their margins to be flat to positive.

Raj Vennam: David, great question. I'll start by saying, first of all, thank you for acknowledging we did have a great year. We're excited and happy about it. You can imagine when we look at the portfolio, we're saying 2.5% to 3.5%, we would expect Olive Garden to be closer to the lower end of that for the year. We still expect Olive Garden to have decent growth, especially considering where the industry would be. The way to think about it from a margin perspective is, I just talked about how in Q4, they actually had a 50 basis point increase in segment profit margin, even with the headwind of the lighter portion investment of 50 basis points. As we look at the full year for next year, I would expect their margins to be flat to positive.

Raj Vennam: Thank you, Rick, and good morning, everyone. We delivered a strong Q4 to close out a great year, with total sales exceeding our expectations and annual earnings above the midpoint of our initial guidance. Results for the year reflect stronger than expected same restaurant sales and faster new restaurant openings, despite significant macro pressures, including beef inflation that was higher than expected for the year. Throughout the year, we remained focused on what was within our control, balancing investments in the business with a measured approach to pricing, approach to inflation. Stronger than expected sales allowed us to fund targeted investment to support growth and maintain pricing discipline by only partially offsetting elevated commodity costs, preserving our ability to provide strong value to our guests. That balance is reflected in our Q4 performance, where margin expansion came through in line with our expectations.

Speaker #4: that the from a, you, you can imagine when we look at the portfolio of, you know, and we're saying 2.5 to 3.5, you would expect you know, we expect Olive Garden to be, closer to the lower end of that, you know, for the year.

Speaker #7: I mean, with Olive Garden, they've been highly visible initiatives of small plates. You've leaned in with delivery. What are you kind of leaning into into fiscal 27?

Speaker #7: I'm sure you don't want to be doing much worse than the exit rate comp in the mid twos. Going into this year, what's the team going to be really focusing on?

Speaker #4: But, you know, we're still, you know, expecting Olive Garden to have decent growth. And, you know, especially considering where the industry would be. And the way to think about it from a margin perspective is, I just talked about how in Q4, they actually had a 50 basis point increase in segment profit margin, even with the headwind of the lighter portion investment of 50 basis points.

Speaker #7: What will be the story of 27 for that brand? Thank you.

Speaker #1: Yeah, David. Raj kind of mentioned the story of the brand a little bit is their comps are going to be some somewhere in the two and a half to three and a half range, but probably closer to the bottom.

Speaker #4: As we look at the full year for next year, I would expect their margins to be flat to positive, so we don't expect the margins to go backwards.

Speaker #1: And we're okay with that. We think that that's a good place for Olive Garden to be, as long as they continue to make investments for the long term so they can be running those comps for the next 20 years instead of doing something for a year and a half.

Rajesh Vennam: We don't expect the margins to go backwards. They've done a great job of managing costs in the rest of the P&L to be able to fund investments. That's really what's great about Olive Garden. This is an engine that has been fueling growth for Darden through the cash generation that it does. It plays a big role in helping Darden portfolio be as successful as it's been.

Raj Vennam: We don't expect the margins to go backwards. They've done a great job of managing costs in the rest of the P&L to be able to fund investments. That's really what's great about Olive Garden. This is an engine that has been fueling growth for Darden through the cash generation that it does. It plays a big role in helping Darden portfolio be as successful as it's been.

Speaker #4: They've done a great job of managing costs in the rest of the P&L to be able to fund investments, and that's really what's great about Olive Garden.

Speaker #1: Marketing, Olive Garden's a brand that's well positioned to leverage news to drive traffic. And they're continuing to work on some news. And you see that.

Speaker #4: This is a this is an engine that has been fueling growth for DARDEN, through the through the, cash generation that it does. And so it plays a big role in helping DARDEN portfolio be as successful as it's been.

Raj Vennam: In Q4, we generated $3.7 billion of total sales, 13.7% higher than last year. This was driven by same-restaurant sales growth of 4.6% with positive traffic growth, the addition of 43 net new restaurants, which includes the permanent closure of 15 Bahama Breeze locations, and the benefit of the 14th fiscal week. Same-restaurant sales and same-restaurant guest counts each exceeded the industry benchmark by over 300 basis points for the quarter. Adjusted diluted net earnings per share from continuing operations increased 22.8% to $3.66. This includes a $0.25 contribution from the extra fiscal week. We generated $678 million of adjusted EBITDA and returned $310 million to shareholders through $172 million in dividends and $138 million of share repurchases.

Speaker #1: Longhorn is a little less about using news to drive traffic. But Olive Garden is using. News to drive traffic. And one of the ways we do that is we've got several initiatives to continue appealing to core guests.

David Palmer: Yeah. Now, just to follow up on Olive Garden, there's been a lot of things happening with that brand. You guys have had, maybe with LongHorn, there's initiatives, but we don't see them as much. With Olive Garden, there's been highly visible initiatives, those small plates. You've leaned in with delivery. What are you kind of leaning into into fiscal 2027? I'm sure you don't want to be doing much worse than the exit rate comp in the mid twos, going into this year. What's the team going to be really focusing on? What will be the story of 2027 for that brand? Thank you.

Speaker #5: Yeah. Now, just to follow up on Olive Garden—there's been a lot of things happening with that brand. You guys have had, you know, maybe with LongHorn there's initiatives, but we don't see them as much.

Speaker #1: And Olive Garden's core guests were the fastest growing part of Olive Garden. In the last quarter. And that's important to us. But we're going to continue to follow our marketing filters.

Speaker #5: I mean, with Olive Garden, they've been high, highly visible initiatives, small plates, you've leaned in with, with delivery, you know, what, what are you kind of leaning into into fiscal 27?

Speaker #1: And you'll see some of that stuff over the next year. But remember, there's got to be simple at execute. Can't be at a deep discount.

Speaker #5: I'm sure you don't want to be doing much worse than the exit rate comp in the mid-twos. Going into this year, what's the team going to be really focusing on?

Speaker #1: And it's going to elevate brand equity. But at the end of the day, Olive Garden's about profitable sales growth. And Raj has mentioned that we're going to be somewhere in the flat to up to flat to positive segment profit for Olive Garden.

Speaker #5: What will be the story of '27 for that brand? Thank you.

Speaker #1: Even with the growth. So without getting into too many competitive things, you'll see some things that Olive Garden that you may have seen years ago.

Speaker #1: Yeah, David, Raj kind of mentioned the story of the brand a little bit is they're, they're comps are going to be some, you know, somewhere in the 2.5 to 3.5 range, but probably closer to the bottom, and we-we're okay with that.

Rick Cardenas: Yeah, David. Raj kind of mentioned the story of the brand a little bit is their comps are going to be somewhere in the 2.5% to 3.5% range, but probably closer to the bottom, and we're okay with that. We think that that's a good place for Olive Garden to be, as long as they continue to make investments for the long term so they can be running those comps for the next 20 years instead of doing something for one and a half years. Olive Garden's a brand that's well-positioned to leverage news to drive traffic, and they're continuing to work on some news. You see that. LongHorn is a little less about using news to drive traffic, but Olive Garden is using news to drive traffic.

Raj Vennam: Turning to the Q4 P&L compared to last year, food and beverage expenses were flat as commodity inflation of approximately 3% and unfavorable mix was fully offset by pricing. Restaurant labor was 40 basis points lower, driven by productivity improvement and sales leverage, even with total labor inflation of 3.2%. Restaurant expenses were flat. Marketing expenses were 10 basis points lower due to sales leverage. We had incremental marketing activity in the quarter that was funded by cost savings. This all resulted in restaurant level EBITDA for the quarter improving 50 basis points to 22.1%, consistent with our expectations. Adjusted G&A expenses were flat. Adjusted depreciation and amortization was 30 basis points lower due to sales leverage from the extra fiscal week. Our adjusted effective tax rate for the quarter was 12.8%. In total, our adjusted earnings from continuing operations were $422 million, which was 11.3% of sales.

Speaker #1: Or some people may have never seen. And so I think it's important to know that we're not going to just sit back and let Olive Garden do nothing.

Speaker #1: We think that that's a good place for Olive Garden to be, as long as they continue to make investments for the long term so they can be running those comps for the next 20 years, instead of doing something for a year and a half.

Speaker #1: And have a very low comp. We're going to have make sure they're doing the right things for Olive Garden in the long term. And to help the other brands in the long term as well.

Speaker #1: Olive Garden's a brand that's well-positioned to leverage news to drive traffic, and they're continuing to work on some news. And you see that.

Speaker #1: So you should see some things this year that you may not have seen before. Or may haven't seen in a while.

Speaker #1: LongHorn is a little less about using news to drive traffic, but Olive Garden is using news to drive traffic. And one of the ways we do that is we've got several initiatives to continue appealing to core guests, and Olive Garden's core guests were the fastest-growing part of Olive Garden.

Speaker #2: Thank you. Next question today is coming from Sarah Senator from Bank of America. Your line is now live.

Speaker #8: Oh, thank you. I have a quick question and then about guidance and then a question about the quarter. But for the guidance, I just was wondering about the CapEx outlook.

Rick Cardenas: One of the ways we do that is we've got several initiatives to continue appealing to core guests, and Olive Garden's core guests were the fastest-growing part of Olive Garden in the last quarter, and that's important to us. We're going to continue to follow our marketing filters, and you'll see some of that stuff over the next year. Remember, it's got to be simple to execute, can't be at a deep discount, and it's got to elevate brand equity. At the end of the day, Olive Garden's about profitable sales growth, and Raj just mentioned that we're going to be somewhere in the flat to positive segment profit for Olive Garden, even with the growth. Without getting into too many competitive things, you'll see some things at Olive Garden that you may have seen years ago, or some people may have never seen.

Speaker #1: In the last quarter, and that's important to us. But we're going to continue to follow our marketing filters, and you'll see some of that stuff over the next year.

Speaker #8: It looks like a bigger jump than the number of new units. Is that related to the I'm sorry, the conversions? Or is there something else going on there?

Speaker #1: But remember, it's got to be simple to execute. It can't be too deep a discount, and it's got to elevate brand equity. But at the end of the day, Olive Garden is about profitable sales growth, and Raj has mentioned that we're going to be somewhere in the flat to up, flat to positive segment profit for Olive Garden, even with the growth.

Speaker #8: Just trying to understand if it has to do with maybe the shift in where your unit growth is coming from or more to do with the Bahama Breeze conversions.

Speaker #8: Thanks.

Speaker #1: Yeah, Sarah. Let me start by breaking down the CapEx a little bit and then talk about the new units. That is where you're seeing the biggest increase.

Raj Vennam: In Q4, on a 13-week basis, all of our segments grew total sales and segment profit margin driven by positive same-restaurant sales. Olive Garden increased total sales for the quarter by 11.4%, with 7.5% from the extra fiscal week, the addition of 14 net new restaurants, and same-restaurant sales growth of 2.4%. Traffic was positive, outpacing the industry by 200 basis points. The lighter portion section of the menu created an 80 basis point mix headwind to check. On a two-year basis, Olive Garden same-restaurant sales increased 9.3%, demonstrating continued strong performance as they lapped high growth quarter last year. Olive Garden continues to have industry-leading segment profit margin, delivering 24.3% for the quarter, which is 50 basis points higher than last year. This includes approximately 50 basis points of margin investment related to the addition of lighter portion section to the menu.

Speaker #1: So, would that without getting into too many competitive things, you'll, you'll see some things that Olive Garden that you may have seen years ago, or some people may have never seen.

Speaker #1: But if you look at the guidance of 875, roughly 25 million is related to the conversions. So then we're talking about 850. Close to 350 is maintenance/IT investment.

Speaker #1: And so, I think it's important to know that we're not going to just sit back, and let Olive Garden do nothing. and, and have a very low comp.

Rick Cardenas: I think it's important to know that we're not going to just sit back and let Olive Garden do nothing, and have a very low comp. We're going to make sure they're doing the right things for Olive Garden in the long term and to help the other brands in the long term as well. You should see some things this year that you may not have seen before or may haven't seen in a while.

Speaker #1: So it's basically maintaining our buildings, technology investments, all of that. And roughly 500 is related to new unit growth. So we talked about opening 75 to 80 this year.

Speaker #1: We're going to have to make sure they're doing the right things for Olive Garden in the long term, and to help the other brands in the long term as well.

Speaker #1: So, you should see some things this year that you may not have seen before, or may not have seen in a while.

Speaker #1: But we're also talked about trying to get into that three to four percent and building the pipeline for next year. So there is a pretty strong pipeline for next year.

Speaker #2: Thank you. The next question today is coming from Sarah Senator from Bank of America. Your line is now live.

Operator: Thank you. Next question today is coming from Sara Senatore from Bank of America. Your line is now live.

Speaker #1: And some of those costs come into this year. So that's really part of the reason why we're ending up where we are ending up.

Sara Senatore: Thank you. I have a quick question about guidance and then a question about the quarter. For the guidance, I just was wondering about the CapEx outlook. It looks like a bigger jump than the number of new units. Is that related to the, I'm sorry, the conversions, or is there something else going on there? Just trying to understand if it has to do with maybe the shift in where your unit growth is coming from or more to do with the Bahama Breeze conversions. Thanks.

Speaker #6: Oh, thank you. I have a quick question, and then, about guidance, and then, and then a, a, a question about the quarter. But, for the guidance, I just was wondering about the CapEx outlook.

Speaker #1: But trust us, we have a pretty strong filter for how we spend capital here at Darden. And we hold our brands and our development team to a pretty high standard.

Speaker #6: It looks like a, you know, a bigger jump than the number of new units. Is that related to the, the, the con—I'm sorry, the conversions, or is there something else going on there?

Speaker #1: And our returns on new restaurants have been stellar. So we feel like this is good use of capital.

Speaker #6: I'm just trying to understand if it has to do with maybe the shift in where your unit growth is coming from, or if it's more to do with the Bahama Breeze conversions.

Speaker #8: Thank you. And then I wanted to go back to the comment about seeing some growth from in spending from lower income consumers. I think that cohort had been declining in terms of traffic in prior quarters.

Raj Vennam: At LongHorn, total sales increased 21.9%, driven by same-restaurant sales growth of 9.5% and the addition of 27 net new restaurants and 8% from the extra fiscal week. LongHorn continues to increase market share with strong and sustained sales growth, exceeding the industry same-restaurant sales benchmark by 810 basis points this quarter. Over the past three years, LongHorn has grown same-restaurant sales by more than 20%, resulting in average unit volumes of $5.6 million. Segment profit margin for the quarter was 21.2%, 110 basis points above last year. Total sales for the fine dining segment increased 10.9%, driven by 6.6% from the extra fiscal week, positive same-restaurant sales of 1.9%, and the addition of six net new restaurants. Segment profit margin was 20 basis points lower than last year.

Speaker #6: Thanks.

Speaker #4: Yeah, Sarah, let me start by breaking down the CapEx a little bit, and then talk about the new units. That is where you're seeing the biggest increase. But, you know, if you look at the guidance of $875 million, roughly $25 million is related to the conversions.

Rajesh Vennam: Yeah, Sara. Let me start by breaking down the CapEx a little bit. Talk about the new units. That is where you're seeing the biggest increase. If you look at the guidance of $875, roughly $25 million is related to the conversions. We're talking about $850. Close to $350 is maintenance/IT investment. It's basically maintaining our buildings, technology investments, all of that. Roughly $500 is related to new unit growth. We talked about opening 75 to 80 this year, we also talked about trying to get into that 3% to 4% and building the pipeline for next year. There is a pretty strong pipeline for next year and some of those costs come into this year. That's really part of the reason why we're ending up where we are ending up.

Raj Vennam: Yeah, Sara. Let me start by breaking down the CapEx a little bit. Talk about the new units. That is where you're seeing the biggest increase. If you look at the guidance of $875, roughly $25 million is related to the conversions. We're talking about $850. Close to $350 is maintenance/IT investment. It's basically maintaining our buildings, technology investments, all of that. Roughly $500 is related to new unit growth. We talked about opening 75 to 80 this year, we also talked about trying to get into that 3% to 4% and building the pipeline for next year. There is a pretty strong pipeline for next year and some of those costs come into this year. That's really part of the reason why we're ending up where we are ending up.

Speaker #8: I know you mentioned refunds. But is there anything was the if you think about kind of what brought them in, was it smaller portions of that play a role?

Speaker #8: Because obviously, it's also smaller price points. I guess as you think about maybe value, a messaging perhaps more broadly. If anything changed in the quarter, we had heard that perhaps the Italian category, maybe it was a little bit more promotional or more focused on value.

Speaker #4: So then we're talking about $850. Close to $350 is maintenance and IT investment, so it's basically maintaining our buildings, technology investments, all of that, and roughly $500 is related to new unit growth.

Speaker #4: So we talked about opening 75 to 80 this year, but we also talked about trying to get into that 3 to 4 percent and building the pipeline for next year.

Speaker #8: So I'm just trying to kind of reconcile all of what I think I know about the industry, but maybe isn't the case.

Speaker #1: I think you've said all the things, right? So there could be a lot of different things. I do believe that the tax refunds were a little bit of that.

Speaker #4: So, there is a pretty strong pipeline for next year, and some of those costs come into this year. So that's really part of the reason why we're ending up where we are ending up.

Speaker #1: Not saying that that's the only reason. I think there are other reasons. The Italian category being more promotional, I'm not sure I necessarily saw that.

Speaker #4: But it's—we, you know, trust us—we have a pretty strong filter for how we spend capital here at Darden, and we hold our brands and our development team to a pretty high standard. Our returns on new restaurants have been stellar.

Raj Vennam: The inclusion of Memorial Day in the quarter is a significant drag on the segment profit margin for fine dining, as it's traditionally a low volume week for this segment. On a 13-week basis, segment profit margin for fine dining was actually 20 basis points higher than last year. Total sales for the other business segment increased 9.8%, with 7.7% from the extra fiscal week and positive same-restaurant sales of 4.6%, which was partially offset by the permanent closure of Bahama Breeze restaurant. Positive sales momentum and continued productivity improvements contributed to a 17.9% segment profit margin for the other business segment, 40 basis points higher than last year. As we look at our annual results for fiscal 2026, we had same-restaurant sales growth of 4.5%, exceeding our expectations and outperforming the industry. Total sales increased 9.4%, surpassing $13 billion for the first time in Darden's history.

Rajesh Vennam: Trust us, we have a pretty strong filter for how we spend capital here at Darden, and we hold our brands and our development team to a pretty high standard, and our returns on new restaurants have been stellar. We feel like this is good use of capital.

Raj Vennam: Trust us, we have a pretty strong filter for how we spend capital here at Darden, and we hold our brands and our development team to a pretty high standard, and our returns on new restaurants have been stellar. We feel like this is good use of capital.

Speaker #1: I think Olive Garden did what they did the year before. But maybe others did. But again, we have a big portfolio. So we said the entire casual dining all of casual dining did pretty well across all the cohorts.

Speaker #4: So, we feel like this is a good use of capital.

Speaker #6: Thank you. And then I, I wanted to go back, to, the, the comment about, you know, seeing some growth from, you know, in spending from e lower-income consumers.

Sara Senatore: Thank you. I wanted to go back to the comment about seeing some growth in spending from lower-income consumers. I think that cohort has been declining in terms of traffic in prior quarters. I know you mentioned refunds. Is there anything, as you think about what brought them in, was it smaller portions? Did that play a role? Because obviously it is also smaller price points. I guess as you think about maybe value messaging perhaps more broadly, if anything changed in the quarter. We had heard that perhaps the Italian category maybe was a little bit more promotional or more focused on value. I'm just trying to kind of reconcile all of what I think I know about the industry, but maybe isn't the case.

Speaker #1: It's just that the bottom quintile was positive year over year where the past they weren't. So that's why we wanted to highlight that. And we'll see if there's more reasons.

Speaker #6: I think that cohort had been declining in terms of traffic in, in prior quarters. I know you mentioned refunds. but i-is there anything, you know, was the it if you think about kind of what brought them in, was it with a smaller portions of that play a role?

Speaker #1: But it's still early to determine exactly what the reasons were. But we feel pretty good about it.

Speaker #2: Thank you. My next question today is coming from Brian Harbor from Morgan Stanley. Your line is now live.

Speaker #6: You know, because obviously, it's also a smaller price point. you know, I guess as you think about maybe, value, messaging, perhaps more broadly, if, if anything changed in, in the quarter, you know, we had heard that perhaps the, Italian category maybe was a little bit more promotional or more focused on value.

Speaker #9: Yeah. Thanks. Good morning, guys. I guess select 3% commodity inflation seems pretty good in this environment where some things are really moving around a lot.

Speaker #6: So, I'm just trying to, kind of, reconcile all of what I think I know about the industry, but maybe that isn't the case.

Speaker #9: I guess is this sort of a prime example of where your scale really benefits things? And I guess sort of the distribution model you have, does that kind of reduce some of the cost versus what you might otherwise see or what some peers might see in this sort of environment?

Raj Vennam: Adjusted diluted net earnings per share from continuing operations increased 11.4% to $10.64. We delivered $2.2 billion in adjusted EBITDA from continuing operations, driven by strong sales growth. We returned $1.4 billion to shareholders with $693 million in dividends and $675 million of share repurchases. Looking at our fiscal 2026 full-year P&L, restaurant level EBITDA compressed 20 basis points caused by the significant headwind of elevated commodity costs and our deliberate approach to not fully price for these costs. This unfavorability was fully offset by the sales leverage on G&A and depreciation and amortization expenses, resulting in earnings after tax margin that was flat to last year. Stepping back, our performance reflects the strength and durability of our business model.

Speaker #1: Yeah, thank you. You've said all the things, right? So, there could be a lot of different things. I do believe that the tax refunds were a little bit of that.

Rick Cardenas: I think you've said all the things, right? There could be a lot of different things. I do believe that the tax refunds were a little bit of that. I'm not saying that that's the only reason. I think there are other reasons. The Italian category being more promotional, I'm not sure I necessarily saw that. I think Olive Garden did what they did the year before, but maybe others did. Again, we have a big portfolio. We said that all of casual dining did pretty well across all the cohorts. It's just that the bottom quintile was positive year-over-year where the past they weren't. That's why we wanted to highlight that. We'll see if there's more reasons, but it's still early to determine exactly what the reasons were, but we feel pretty good about it.

Speaker #1: I'm not saying that's the only reason. I think there are other reasons. The Italian category being more promotional—I'm not sure I necessarily saw that.

Speaker #1: Yeah, absolutely. We've talked about the benefit of scale. And I think Rick actually is prepared to mark specifically talked about the benefit of having our own distribution network and owning our own inventory and actually working directly with our suppliers.

Speaker #1: I think Olive Garden did what they did the year before, but maybe others did. But again, we have a big portfolio, so we said the entire casual dining— all of casual dining— did pretty well across all the cohorts.

Speaker #1: And the scale benefit is meaningful, especially helps us protect us from a lot of volatility. And we're going to get because we can guarantee certain volumes and that helps the suppliers feel about good about committing to certain prices.

Speaker #1: It's just that the bottom quintile was positive year-over-year, whereas in the past they weren't. So that's why we wanted to highlight that.

Speaker #1: And we'll see if there's more reasons, but it's still early to determine exactly what the reasons were. But we feel pretty good about it.

Speaker #1: So and I don't want to take away from our supply chain team does a great job. I mean, they have done excellent job outperforming the market by mid to high single digit percentage points in multiple years.

Speaker #2: Thank you. Our next question today is coming from Brian Harbor from Morgan Stanley. Your line is now live.

Operator: Thank you. Our next question today is coming from Brian Harbour from Morgan Stanley. Your line is now live.

Speaker #1: So that's a part of it is how good our team is at negotiating and getting great deals for Darden. But the scale is really a factor.

Raj Vennam: At the core of our model is a portfolio of differentiated brands supported by disciplined execution and a focus on delivering value to the guest, which allows us to generate balanced and sustainable growth over time. Our five-year plan reflects this, with all of our segments contributing to sales growth. Olive Garden will continue to grow as a steady and balanced contributor, while the rest of our segments are expected to grow faster and play an increasingly meaningful role in driving incremental growth. Over the past seven years, our portfolio has become more balanced and more diversified. In fiscal 2019, Olive Garden represented 50% of sales and 55% of segment profits. By fiscal 2026, that mix has shifted to 42% of sales and 47% of segment profits.

Speaker #7: Yeah, thanks. Good morning, guys. I guess, you know, so like 3% commodity inflation seems pretty good in this environment where some things are, you know, really moving around a lot.

Brian Harbour: Yeah. Thanks. Good morning, guys. I guess, 3% commodity inflation seems pretty good in this environment where some things are really moving around a lot. I guess, is this sort of a prime example of where your scale really benefits things and I guess, sort of the distribution model you have, does that kind of reduce some of the cost versus what you might otherwise see or what some peers might see in this sort of environment?

Speaker #1: Absolutely.

Speaker #9: Right. Your count about more pre-opening and a little bit of kind of margin inefficiency from new units. I mean, I guess it doesn't sound like that's necessarily one time.

Speaker #7: I guess, you know, i-is this, is this sort of a, a prime example of where, you know, where your scale really benefits things? And I guess, y-you know, sort of the, the distribution model you have, does that kind of, you know, reduce some of the cost versus what you, what you might otherwise see or what some peers might see in this sort of environment?

Speaker #9: And I mean, in future years, if you still saw a little bit of acceleration in unit growth, I assume that's not necessarily something that goes away.

Speaker #9: Are we suggesting that that was more just related to the conversions this year and so therefore it's not something you'd have in future years?

Speaker #4: Yeah, absolutely. We've talked about the benefit of scale, and I think Rick actually, in his prepared remarks, specifically talked about the benefit of having our own distribution network and owning our own inventory, and actually working directly with our suppliers.

Rajesh Vennam: John, absolutely. I think Rick actually, in his prepared remarks, specifically talked about the benefit of having our own distribution network and owning our own inventory and actually working directly with our suppliers. The scale benefit is meaningful, especially protects us from a lot of volatility. We can guarantee certain volumes, and that helps the suppliers feel good about committing to certain prices. I don't want to take away from our supply chain team, does a great job. They have done an excellent job outperforming the market by mid to high single-digit percentage points in multiple years. A part of it is how good our team is at negotiating and getting great deals for Darden. The scale is really a factor. Absolutely.

Raj Vennam: John, absolutely. I think Rick actually, in his prepared remarks, specifically talked about the benefit of having our own distribution network and owning our own inventory and actually working directly with our suppliers. The scale benefit is meaningful, especially protects us from a lot of volatility. We can guarantee certain volumes, and that helps the suppliers feel good about committing to certain prices. I don't want to take away from our supply chain team, does a great job. They have done an excellent job outperforming the market by mid to high single-digit percentage points in multiple years. A part of it is how good our team is at negotiating and getting great deals for Darden. The scale is really a factor. Absolutely.

Speaker #1: Yeah, John, great point. Yeah. So if you look at what I was suggesting is we're opening or stepping up basically because of conversions, it ends up being a 20 unit step up roughly.

Speaker #4: And, and the scale benefit, is meaningful, especially, helps us protect, you know, protects us from a lot of volatility. and we're going to get, you know because we're, we're, we're, we're we can guarantee certain volumes, and that helps the suppliers feel about good about, you know, committing to certain prices.

Speaker #1: Whereas when you look at year over year from now to next year, even if you assume mid to high percent of that target range, we have for units, it will not be as big of a step up.

Raj Vennam: This change reflects the success of our portfolio strategy, with roughly half of the shift driven by consistent growth at LongHorn and the other half from the rest of the brands in the portfolio, including acquisitions. Importantly, Olive Garden remains a strong and steady contributor, while a broader set of brands now play a larger role in driving sales and earnings growth for Darden. We expect new restaurant growth across Darden to remain within the 3% to 4% range over time, which is consistent with our long-term framework. Olive Garden would trend towards the lower end of that range, LongHorn toward the higher end, and our smaller brands growing at or above that range as they expand their footprint, with fine dining continuing to grow opportunistically. We believe this mix shift over time can support a more diversified and resilient growth profile.

Speaker #1: So this is a one this will be in the P&L. But a year over year, you won't have the same headwind.

Speaker #4: So, and I—I don't want to take away from our supply chain team, which does a great job. I mean, they have done an excellent job, outperforming the market by mid to high single-digit percentage points.

Speaker #2: Thank you. Our next question today is coming from John Tower from City. Your line is now live.

Speaker #4: You know, in multiple years. So that's a part of it—how good our team is at negotiating and getting great deals for Darden.

Speaker #9: Great. Thanks for taking the question. Maybe just starting on Olive Garden. I know we talked a lot about it, but right now, you're featuring smaller plates and now they're part of the menu core.

Speaker #4: But the scale is really a factor, absolutely.

Speaker #7: Mm-hmm. Right. You're talking about, you know, more pre-opening and a little bit of, you know, kind of margin inefficiency from new units. I mean, I guess it doesn't sound like that's necessarily one-time.

Speaker #9: And it looks like protein is becoming a bigger piece of the menu at Olive Garden, I think, at the moment. You're focusing on a hot honey chicken bite, at least from an appetizer standpoint.

Brian Harbour: Raj, you're talking about more pre-opening and a little bit of kind of margin inefficiency from new units. I guess, it doesn't sound like that's necessarily one time, and in future years, if you still saw a little bit of acceleration in unit growth, I assume, that's not necessarily something that goes away. Were you suggesting that was more just related to the conversions this year, and so therefore, it's not something you'd have in future years?

Speaker #9: So can you speak to how you're thinking about balancing what the consumer wants against these strong margins that the brand has had historically? It seems like some of these new items or LTOs, which might be more protein-centric, end up costing a little bit more.

Speaker #7: And I mean, in future years, if you still saw a little bit of acceleration in unit growth, I assume, you know, that's not necessarily something that goes away.

Speaker #7: Are we suggesting that that was more just related to the conversions this year, and so therefore it's not something you'd have in future years?

Raj Vennam: Another important element of the model is our approach to pricing. While we have the ability to price, we have consistently taken a measured approach, pricing below inflation over time, to preserve our value proposition and support traffic. This discipline helps us maintain guest relevance, support long-term traffic growth, and strengthen the durability of the business across different operating environments. Looking at our performance in fiscal 2019 relative to our long-term framework, we generated earnings after tax growth of 7.5% and cash returns of 4.2%. This resulted in total shareholder returns of 11.7%, as measured by EPS growth plus dividend yield. A strong operating model generates significant and durable cash flows. Since fiscal 2019, we have delivered 9% annualized adjusted EBITDA growth.

Speaker #9: So how we should think about margins longer term for that segment.

Speaker #1: Hey, John. I just want to make sure it's clear that we're we have the lighter portions menu, but we're not featuring anywhere. It's not like we're marketing it or doing anything.

Speaker #4: Yeah, John, great point. Yeah. So if you look at what I was suggesting is we're opening, we're stepping up basically because of conversions. It ends up being a 20, 20-unit step-up, roughly.

Rajesh Vennam: Yeah, John, great point. If you look at what I was suggesting is we're stepping up basically because of conversions, it ends up being a 20-unit step-up roughly. Whereas when you look at year over year from now to next year, even if you assume mid to high percent of that target range we have for units, it will not be as big of a step up. This will be in the P&L, but year over year, you won't have the same headwind.

Raj Vennam: Yeah, John, great point. If you look at what I was suggesting is we're stepping up basically because of conversions, it ends up being a 20-unit step-up roughly. Whereas when you look at year over year from now to next year, even if you assume mid to high percent of that target range we have for units, it will not be as big of a step up. This will be in the P&L, but year over year, you won't have the same headwind.

Speaker #1: It's the guests are finding it as they go. So but in terms of the protein, yes, we have a little bit more protein on some of these items on the menu.

Speaker #4: Whereas when you look at year over year from now to next year, even if you assume you know, mid to mid perce m-mid to high percent of that target range, we have for units, it will not be as big of a step-up.

Speaker #1: They're still at a good margin. And as we mentioned, next year, with these investments that we made and the lighter portions, and even in some of the protein, we expect our margins to be flat to positive.

Speaker #4: So this is one, you know, this will be in the P&L, but year over year, you won't have the same headwind.

Speaker #2: Thank you. Our next question today is coming from John Tower from Citi. Your line is now live.

Operator: Thank you. Our next question today is coming from Jon Tower from Citi. Your line is now live.

Speaker #1: And we'll continue to find other ways to help fund these things. But Olive Garden is going to be we believe a viable brand for a very long time.

Speaker #7: Great. Thanks for taking the question. maybe just starting on, on Olive Garden. I know we've talked a lot about it, but the you know, the right now, you're featuring smaller plates and now they're part of the menu core, and it looks like protein is becoming a bigger piece of the menu at Olive Garden, I think, at the moment.

Jon Tower: Great. Thanks for taking the question. Maybe just starting on Olive Garden. I know we've talked a lot about it. Right now you're featuring smaller plates, and now they're part of the menu core. It looks like protein is becoming a bigger piece of the menu at Olive Garden, I think, at the moment. You're focusing on a honey chicken bite, at least from an appetizer standpoint. Can you speak to how you're thinking about balancing what the consumer wants against these strong margins that the brand has had historically? It seems like some of these new items or LTOs, which might be more protein-centric, end up costing a little bit more. How we should think about margins longer term for that segment.

Speaker #1: And in order to do that, we have to continue to make investments. We have to continue to evolve with what the consumer is looking for.

Speaker #1: And they're looking for a little bit more protein. Right now, who knows how long that'll be, but they're looking for a little bit protein right now.

Speaker #7: You're focusing on a hot honey chicken bite, at least from an appetizer standpoint. So, can you speak to how you're thinking about balancing what the consumer wants against these strong margins that the brand has had historically?

Raj Vennam: This also reflects balanced execution across each component of the framework and a total shareholder return that is within our target range, despite the issuance of 9 million shares of common stock in fiscal 2020 and other business disruptions from COVID. Our consistent cash generation is expected to provide more than sufficient capacity each year to fund the core requirements of the business, including maintenance capital to sustain our existing asset base, continued growth of our dividend, and investment in new restaurant development. The remaining cash flow is generally returned to shareholders through share repurchases while preserving our financial flexibility and maintaining a strong balance sheet. Our adjusted debt to EBITDAR at the end of fiscal 2026 of 2.1x is within our targeted range of 2x to 2.5x and consistent with maintaining an investment-grade credit profile.

Speaker #1: And we can find ways to give them that at Olive Garden and at all of our other brands. Again, that is the value of the portfolio that we have.

Speaker #7: It seems like some of these new items, or LTOs, might be more protein-centric and end up costing a little bit more. So, how should we think about margins longer term for that segment?

Speaker #1: We're not relying on any one brand. And we're not relying on any one cuisine. And so you think about Longhorn, you think about Yardhouse, Cheddars, Chewies.

Speaker #1: Hey, John. I just want to make sure it's clear that we have the lighter portions menu, but we're not featuring it anywhere. It's not like we're marketing it or doing anything.

Rick Cardenas: Hey, John. I just want to make sure it's clear that we have the lighter portions menu, but we're not featuring anywhere. It's not like we're marketing it or doing anything. It's the guests are finding it as they go. In terms of the protein, yes, we have a little bit more protein on some of these items on the menu. They're still at a good margin. As we mentioned, next year, with these investments that we made and the lighter portions, and even in some of the protein, we expect our margins to be flat to positive. We'll continue to find other ways to help fund these things. Olive Garden is going to be, we believe, a viable brand for a very long time. In order to do that, we have to continue to make investments.

Speaker #1: Very protein-centric in those brands. So and all of our other brands. So it's let's not go too far in saying Olive Garden needs to be Longhorn.

Speaker #1: The guests are finding it as they go. So, but in terms of the protein, yes, we have a little bit more protein on some of these items on the menu.

Speaker #1: With protein. But they are going to have some protein on their menu. And they always do with promotions. They have some proteins. The chicken appetizer that you mentioned is doing really well for them.

Speaker #1: And we'll see how we can keep that going.

Speaker #9: Great. Thank you. And then you did just hit on the idea that the advantages you have as a portfolio company and I think throughout the presentation and the call today, you spoke to, frankly, the strength of scale.

Speaker #1: And, you know, as well, we'll continue to find other ways to help fund these things. But Olive Garden is going to be, we believe, a viable brand for a very long time.

Raj Vennam: Now turning to our financial outlook for fiscal 2027, we expect total sales of $13.6 billion to $13.75 billion, driven by same-restaurant sales growth of 2.5% to 3.5%, 75 to 80 gross new restaurant openings, and 11 Bahama Breeze conversions during the year. Capital spending of approximately $875 million. Total inflation of approximately 3%, which includes commodities inflation of approximately 3% and labor inflation of approximately 3.5%. An annual effective tax rate of approximately 13.5% and approximately 114 million diluted average shares outstanding for the year. All of this results in EBITDA of $2.26 billion to $2.29 billion and diluted net earnings per share between $11.10 and $11.35. Additionally, our board approved an 8% increase to our regular quarterly dividend to $1.62 per share, implying an annual dividend of $6.48. In closing, we delivered a strong year supported by continued sales momentum.

Speaker #9: So I'm curious if you could kind of refresh our thought your thoughts around the M&A environment and specifically how you see your portfolio growing over time outside of the existing brands that you have today.

Speaker #1: And in order to do that, we have to continue to make investments. We have to continue to evolve with what the consumer is looking for.

Rick Cardenas: We have to continue to evolve with what the consumer is looking for. They're looking for a little bit more protein right now. Who knows how long that'll be, but they're looking for a little bit of protein right now. We can find ways to give them that at Olive Garden and at all of our other brands. Again, that is the value of the portfolio that we have. We're not reliant on any one brand, and we're not reliant on any one cuisine. You think about LongHorn, you think about Yard House, Cheddar's, Chuy's, very protein-centric in those brands, and all of our other brands. Let's not go too far in saying Olive Garden needs to be LongHorn with protein, but they are going to have some protein on their menu, and they always do. With promotions, they have some proteins.

Speaker #1: And they're looking for a little bit more protein. Right now, who knows how long that'll be, but they're looking for a little bit more protein right now.

Speaker #1: Yeah, John, I want to first start by saying that our long-term framework does not need acquisitions. To help us hit that. So M&A doesn't have to be part of that framework.

Speaker #1: And we can find ways to give them that at Olive Garden and at all of our other brands. Again, that is the value of the portfolio that we have.

Speaker #1: M&A could give top spin to that framework. We love the brands we have right now. We're focusing on the organic growth of these brands.

Speaker #1: We're not relying on any one brand, and we're not relying on any one cuisine. And so, you think about LongHorn, you think about Yard House, Cheddar's, Chewy's.

Speaker #1: And building scale that way. If something comes up and our board will discuss it. But right now, we work with what we have in front of us, which is the brands we have today and converting those remaining behind.

Speaker #1: Very, very protein-centric in those brands, and all of our other brands. So let's not go too far in saying Olive Garden needs to be LongHorn.

Speaker #1: Breezes. That's not a little bit of work. That's quite some work for our teams. It's going to be very valuable to us. But we're going to focus on the brands we have until there's another brand.

Speaker #1: with protein, but they are going to have some protein on their menu. And they always do with promotions. They have some proteins, the, the chicken appetizer that you mentioned is doing really well for them.

Rick Cardenas: The chicken appetizer you mentioned is doing really well for them. We'll see how we can keep that going.

Speaker #2: Thank you. Next question today is coming from Dennis Geiger from UBS. Your line is now live.

Speaker #1: And, and we'll see how we can keep that going.

Speaker #3: Great. Thanks, guys. Two on Olive Garden, if I may. The first one, just on value, perceptions of the brand, any change in the scores there?

Speaker #7: Great, thank you. And then, you did just touch on the idea of the advantages you have as a portfolio company. I think throughout the presentation, Nicole, today you spoke to, frankly, the strength of scale.

Jon Tower: Great. Thank you. You did just hit on the idea that the advantages you have as a portfolio company, and I think throughout the presentation, Nicole, today, you spoke to, frankly, the strength of scale. I'm curious if you could kind of refresh your thoughts around the M&A environment and specifically how you see your portfolio growing over time outside of the existing brands that you have today.

Raj Vennam: Over the last 5 fiscal years, we have consistently delivered earnings at or above the midpoint of our initial guidance, demonstrating our ability to deliver on our commitment. That consistency reflects the strength and resilience of our teams and their focus on controlling what we can control as we navigate changing environments. Together, these factors give us confidence in our ability to continue delivering consistent growth and long-term shareholder returns. With that, we'll take your questions.

Speaker #3: I don't know if smaller plates has helped on the value side of things or some of the other initiatives. You've had in place. But just any updates on where value sits if you've observed any changes there of late.

Speaker #7: So, I'm curious if you could kind of refresh our thoughts—your thoughts—around the M&A environment, and specifically how you see your portfolio growing over time, outside of the existing brands that you have today.

Speaker #1: Yeah. Value is still pretty strong at Olive Garden. It's always been a strong brand for value, and it still is a strong brand for value.

Speaker #1: Yeah, John, I want to first start by saying that our long-term framework does not need acquisitions to help us hit that, so M&A doesn't have to be part of that framework.

Rick Cardenas: Yeah, John. I want to first start by saying that our long-term framework does not need acquisitions to help us hit that. M&A doesn't have to be part of that framework. M&A could give top spin to that framework. We love the brands we have right now. We're focusing on the organic growth of these brands, and building scale that way. If something comes up, then our board will discuss it. Right now, we work with what we have in front of us, which is the brands we have today and converting those remaining Bahama Breezes. That's not a little bit of work. That's quite some work for our teams. It's going to be very valuable to us, but we're going to focus on the brands we have until there's another brand.

Speaker #1: The lighter portions have very strong value. And again, it's not like half of our guests are ordering that lighter portion. I'm not going to tell you the preference.

Operator: Thank you. We'll now be conducting a question-and-answer session. 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 remove a question from the queue. We ask you please ask one question and one follow-up, then return to the queue. Once again, that's star one to be placed into question queue. Please ask one question and one follow-up, then return to the queue. Our first question today is coming from Lauren Silberman from Deutsche Bank. Your line is now live.

Speaker #1: M&A could give top spin to that framework. We love the brands we have right now. We're focusing on the organic growth of these brands.

Speaker #1: It's not anywhere near that. But those guests that are ordering the lighter portions menu, are coming back more frequently than they were before. And that frequency is continuing to build.

Speaker #1: And building scale that way. If something comes up, then our board will discuss it. But right now, we work with what we have in front of us, which is the brands we have today and converting those remaining Bahama Breezes.

Speaker #1: So we believe that in the long term, we'll get even more value with whatever we put on the menu. That is one of the biggest filters we have at Olive Garden with whatever we try to add, what is the value rate what is the value rating when we test it?

Speaker #1: That's, that's not a little bit of work. That's, that's quite some work for our teams. It's going to be very va very valuable to us, but we're going to focus on the brands we have until the until there's another brand.

Speaker #1: Does that improve value or detract from value? And if the detraction value, we won't put it on the menu. So we feel really good about where Olive Garden's value is.

Lauren Silberman: Hey, thanks a lot. Congratulations on the year. I want to just ask about the overall consumer environment. Obviously, a lot going on. Any color you can give on cadence of comps as we move through the quarter, anything you're willing to say on June, any impact from the rise in gas prices? Thoughts there? Thank you.

Speaker #3: Great. Thanks, Rick. And just to slip in one on Olive Garden and the operational efforts, just kind of the latest there. Operational efforts overall, speed of service.

Speaker #2: Thank you. Our next question today is coming from Dennis Geiger from UBS. Your line is now live.

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

Speaker #3: I know you've got some longer-term focused initiatives on this, but just any updates there. And I'm not sure you can find better service anywhere relative to Olive Garden, at least relative to restaurant side.

Dennis Geiger: Great. Thanks, guys. Two on Olive Garden, if I may. The first one just on value perceptions of the brand, any change in the scores there? I don't know if smaller plates has helped on the value side of things or some of the other initiatives you've had in place, just any updates on where value sits, if you've observed any changes there of late.

Speaker #6: Great. Thanks, guys. two on, on Olive Garden, if I may. The, the first one, just on, on value, perceptions of the brand, you know, any change in, in the scores there?

Speaker #6: I don't know if smaller plates have helped on the value side of things or some of the other initiatives you've had in place, but just any updates on where value sits, if you've observed any changes there of late.

Rick Cardenas: Hey, Lauren. Thanks for the feedback on the quarter and the year. In regards to consumer, we really haven't seen a whole lot of change based on what we've been saying for the last couple of quarters. Consumer spending remains pretty resilient. Overall, the mood with consumers is still a little cautious. As we've said a couple of times before, the weaker consumer sentiment hasn't necessarily translated into reduced spending. A little bit different this quarter, our casual brands saw an increase in visits year-over-year from all income groups, including the bottom quintile. Some of that might have been tax refunds, but they did see some increase year-over-year from all income groups. We did see a little softness in guests under 35. We're going to continue to control what we control, as Raj said.

Speaker #3: So I'm just curious if you think you're getting credit from the guests on the operation side of things. And maybe just what that opportunity looks like on the off side of things for the brand in '27.

Speaker #1: Yeah. Value is still pretty strong at Olive Garden. It's always been a strong brand for value, and it still is a strong brand for value.

Rick Cardenas: Yeah. Value is still pretty strong at Olive Garden. It's always been a strong brand for value, and it still is a strong brand for value. The lighter portions have very strong value. Again, it's not like half of our guests are ordering that lighter portion. I'm not going to tell you the preference. It's not anywhere near that. Those guests that are ordering the lighter portions menu are coming back more frequently than they were before, and that frequency is continuing to build. We believe that in the long term, we'll get even more value with whatever we put on the menu. That is one of the biggest filters we have at Olive Garden with whatever we try to add. What is the value rating when we test it? Does that improve value or detract from value?

Speaker #3: Thank you.

Speaker #1: Yeah, Dennis. I would agree with you. I think Olive Garden gives some of the best service in casual dining. So thanks for that. Olive Garden has made a pretty meaningful change in the last quarter in their speed.

Speaker #1: The lighter portion has very strong value. But again, it's not like half of our guests are ordering that lighter portion. I'm not going to tell you the preference.

Speaker #1: And they're focusing on it. They're doing a great job. John Wilkerson and his team of operators with Shane Elrod are doing an amazing job getting the message out to their team members.

Speaker #1: It's not anywhere near that. But those guests that are ordering from the lighter portions menu are coming back more frequently than they were before.

Speaker #1: And that frequency has continued to build. So, we believe that in the long term, we'll get even more value with whatever we put on the menu.

Speaker #1: On the importance of speed and what's happening. And they are seeing a very quick change in their speed. And they're seeing great feedback from their guests.

Speaker #1: That is one of the biggest filters we have at Olive Garden with whatever we try to add. What is the value rate—what is the value rating when we test it?

Rick Cardenas: In regards to the cadence across the quarter, it was pretty consistent. Our same restaurant sales across the quarters by month were fairly consistent. Then the two-year stack, it's almost the exact same number. We felt pretty good about where we were. Not necessarily going to comment on the quarter to date so far. It's only 3 weeks, and it's a little choppy because of our 53rd week and shifting calendar. We're not going to comment on that right now.

Speaker #1: Does that improve value or detract from value? And if it detracts from value, we won't put it on the menu. So we feel really good about where Olive Garden's value is.

Rick Cardenas: If it detracts from value, we won't put it on the menu. We feel really good about where Olive Garden's value is.

Speaker #1: They're service scores and their pace of meal scores have gone up significantly. And they still have a lot more to do, by the way.

Dennis Geiger: Great. Thanks, Rick. Just to slip in one on Olive Garden and the operational efforts, just kind of the latest there. Operational efforts, overall speed of service. I know you've got some longer-term focused initiatives on this, but just any updates there. I'm not sure you can find better service anywhere, relative to Olive Garden, at least relative to restaurant side visits. I'm just curious if you think you're getting credit from the guests on the operations side of things, and maybe just what that opportunity looks like on the ops side of things for the brand in 2027. Thank you.

Speaker #6: Great, thanks, Rick. And just to slip in one on Olive Garden and the operational efforts—could you share the latest on those overall, and on speed of service?

Speaker #1: So we believe Olive Garden can continue to move the needle on the speed. Along with our other brands. But Olive Garden is leading the way for Garden.

Speaker #6: I know you've got some longer-term focused initiatives on this, but just any updates there? And I, I'm not sure you can find better service anywhere, you know, relative to Olive Garden—at least relative to restaurant side visits.

Speaker #1: And we're going to continue to learn from them. And help see what other brands can do from that.

Speaker #2: Thank you. Our next question is coming from Drew North from Baird. Your line is now live.

Speaker #6: So, I'm just curious if you think you're getting credit from the guests on the operations side of things, and maybe just what that opportunity looks like on the op side of things for the brand in '27.

Lauren Silberman: Okay, thanks very much. Understood. Any thoughts, I guess, more broadly in terms of how we should be thinking about the cadence of comp or EPS growth throughout fiscal 2027?

Speaker #10: Great. Thanks for taking the question. A lot of mine have been asked, but maybe one on pricing. Can you walk through some of the pricing figures by brand, at least Olive Garden and Longhorn in the fourth quarter?

Speaker #6: Thank you.

Speaker #1: Yeah, Dennis. I would agree with you. I think Olive Garden gives some of the best service in casual dining, so thanks for that. Olive Garden has made a pretty meaningful change in the last quarter in their speed.

Rick Cardenas: Yeah, Dennis. I would agree with you. I think Olive Garden gives some of the best service in casual dining. Thanks for that. Olive Garden has made a pretty meaningful change in the last quarter in their speed. They're focusing on it. They're doing a great job. John Wilkerson and his team of operators with Shane Elrod are doing an amazing job getting the message out to their team members on the importance of speed and what's happening. They are seeing a very quick change in their speed. They're seeing great feedback from their guests. Their service scores and their pace of meal scores have gone up significantly. They still have a lot more to do, by the way. We believe Olive Garden can continue to move the needle on the speed, along with our other brands.

Speaker #10: And then how you're thinking about the cadence of pricing through 2027, either on a blended level or a little bit of perspective by brand as we think about the relationship between pricing and inflation.

Raj Vennam: Yeah, Lauren, I would say as we look at the year, I would expect that because of some of the cost situation we're in in terms of year-over-year, we would expect that Q1, that would be low to mid-single-digit EPS growth, then the rest of the quarters fairly balanced on a 52-week basis from a growth perspective. It's really a function of some of the factors that are impacting year-over-year, specifically in Q1, because that's when we expect to have the highest commodities inflation. I think we're expecting roughly 4% in Q1. There's some other near-term costs that are just more one-time in nature that will have a little bit more pressure on Q1. For the full year, for the rest of the quarters should be fairly even.

Speaker #1: And they're focusing on it. They're doing a great job. John Wilkerson and his team of operators, with Shane L. Rod, are doing an amazing job getting the message out to their team members on the importance of speed and what's happening.

Speaker #10: And then I have a follow-up.

Speaker #1: Sure, Drew. So from for a Q4 pricing was basically the blender pricing for Garden was 3.8%. Olive Garden was 2.8. Longhorn was just over 5.3 or 5.4.

Speaker #1: And they are seeing a very quick change in their speed. And they're seeing great, great feedback from their guests. Their service scores and their pace of meal scores have gone up significantly.

Speaker #1: As we look at next year, I mentioned we expect pricing to be about 3%, which is we expect that to be more in line with inflation.

Speaker #1: From a quarterly cadence, we expect it to be slightly higher in the first half, higher than 3% in the first half and lower than 3 in the back half.

Speaker #1: And they still have a lot more to do, by the way. So, we believe Olive Garden can continue to move the needle on the speed.

Speaker #1: And then I mentioned earlier already from an inflation, we expect first quarter to be the highest and we expect Olive Garden to be lower pricing than Garden's pricing.

Speaker #1: Along with our other brands, but Olive Garden's leading the way for Darden. And we're going to continue to learn from them, and help see what other brands can do from that.

Rick Cardenas: Olive Garden is leading the way for Darden, and we're going to continue to learn from them and help see what other brands can do from that.

Operator: Thank you. Our next question today is coming from Gregory Francfort from Guggenheim Partners. Your line is now live.

Speaker #1: Yeah.

Gregory Francfort: Hey, thanks for the question. I just wanted to ask maybe a little bit about LongHorn's comp performance. It keeps putting up really good numbers. What do you think is driving that? I guess how much of what's driving that can be applied to the other brands? I think the five-year outlook has you guys maybe moving some of the portion investments into the other brands, is there anything else that's going on there that you think is a big part of the business and that can or cannot be taken over to the other brands you have? Thanks.

Speaker #10: Very helpful. And then one on development. As we think about 2027 unit openings, I guess what are you seeing in terms of development costs or inflation there?

Speaker #2: Thank you. Our next question is coming from Drew North from Baird. Your line is now live.

Operator: Thank you. Our next question is coming from Drew Norris from Baird. Your line is now live.

Drew Norris: Great. Thanks for taking the question. A lot of mine have been asked, maybe one on pricing. Can you walk through some of the pricing figures by brand, at least Olive Garden and LongHorn in Q4, then how you're thinking about the cadence of pricing through 2027, either on a blended level or a little bit of perspective by brand as we think about the relationship between pricing and inflation? I have a follow-up.

Drew North: Great. Thanks for taking the question. A lot of mine have been asked, maybe one on pricing. Can you walk through some of the pricing figures by brand, at least Olive Garden and LongHorn in Q4, then how you're thinking about the cadence of pricing through 2027, either on a blended level or a little bit of perspective by brand as we think about the relationship between pricing and inflation? I have a follow-up.

Speaker #5: Great. Thanks for taking the question. A lot of mine have been asked, but maybe one on pricing. Can you walk through some of the pricing figures by brand, at least Olive Garden and Longhorn in the fourth quarter, and then how you're thinking about the cadence of pricing through 2027, either on a blended level or a little bit of perspective by brand as we think about the relationship between pricing and inflation?

Speaker #10: And perhaps you can give us an update on how cash on cash returns are coming in for new openings relative to your targets as you've ramped up growth.

Speaker #10: Thanks.

Speaker #1: Yeah, Drew. The inflation is actually holding up. I would say if our construction costs in total have I would say fairly flattered and actually as we are opening going out to bid, we're finding that the bids are coming in a little bit better than our projection, our estimate that we approved.

Speaker #5: And then I have a follow-up.

Rick Cardenas: Hey, Greg. Thanks for the great feedback on LongHorn, too. LongHorn had a 9.5 comp. What a great quarter. Laura and her team are doing an excellent job driving that business. A lot of that has been things that we've been doing for years. As we mentioned, we've made investments in food quality probably for the last 10 years. Those investments continue to pay off. Service is improving. The guests know they're getting high-quality steaks when they come to LongHorn. Our steaks rolled correctly scores are at highest ever levels. They get a great value. It doesn't hurt that there's a high beef inflation in the market. The relative value looks a little bit better for LongHorn.

Speaker #1: Sure, Drew. so from for a Q4, pricing was basically, the blended pricing for DARDEN was 3.8%. Olive Garden was 2.8. Longhorn was, you know, just over 5, 5, 5.3 or 5.4.

Rajesh Vennam: Sure, Drew. For Q4, the blended pricing for Darden was 3.8%. Olive Garden was 2.8%. LongHorn was just over 5.3% or 5.4%. As we look at next year, I mentioned we expect pricing to be about 3%, which we expect that to be more in line with inflation. From a quarterly cadence, we expect it to be slightly higher in H1, higher than 3% in H1, and lower than 3% in H2. I mentioned earlier already from an inflation, we expect Q1 to be the highest. We expect Olive Garden to be lower pricing than Darden's pricing. Yeah.

Raj Vennam: Sure, Drew. For Q4, the blended pricing for Darden was 3.8%. Olive Garden was 2.8%. LongHorn was just over 5.3% or 5.4%. As we look at next year, I mentioned we expect pricing to be about 3%, which we expect that to be more in line with inflation. From a quarterly cadence, we expect it to be slightly higher in H1, higher than 3% in H1, and lower than 3% in H2. I mentioned earlier already from an inflation, we expect Q1 to be the highest. We expect Olive Garden to be lower pricing than Darden's pricing. Yeah.

Speaker #1: So that's a good sign. So costs are holding up. I'm not going to say they're going down meaningfully, but they're not going up. From a return perspective, we feel really good.

Speaker #1: As we look at next year, I mentioned we expect pricing to be about 3%, which we expect to be more in line with inflation.

Speaker #1: Cash on cash is a metric that can vary depending on how you choose to invest, whether you take TI or not and you do make your own capital, that kind of stuff.

Speaker #1: From a quarterly cadence, we expect it to be slightly higher in the first half—higher than 3% in the first half—and lower than 3% in the back half.

Speaker #1: Use your own capital. However, when we look at it, even with all that, and we look on average, our cash on cash is really strong.

Speaker #1: And then, I mentioned earlier already, from an inflation perspective, we expect the first quarter to be the highest, and we expect Olive Garden to have lower pricing than Darden's overall pricing.

Speaker #1: It's actually coming in ahead of our expectations. And then more importantly, when you look at the IRR and the net present value of these projects, these are significantly positive.

Rick Cardenas: Specifically in Q4, we use a little social media that we do all the time. We had a post that went very viral, and that was their tease on bringing back lamb. They do lamb usually in Q4. Their guests have been asking about it all year. All they did was tease and say, What you're looking for is coming. We bought more lamb this year than last year, and we sold out in half the time. It was a strong performance. There are things that we can learn at LongHorn that take to other brands. LongHorn has learned things from other brands to take to LongHorn.

Speaker #1: Yeah.

Speaker #5: Very helpful. And then one on development: as we think about 2027 unit openings, what are you seeing in terms of development costs or inflation there?

Drew Norris: Very helpful. One on development. As we think about 2027 unit openings, I guess, what are you seeing in terms of development costs or inflation there? Perhaps you can give us an update on how cash-on-cash returns are coming in for new openings relative to your targets as you've ramped up growth. Thanks.

Drew North: Very helpful. One on development. As we think about 2027 unit openings, I guess, what are you seeing in terms of development costs or inflation there? Perhaps you can give us an update on how cash-on-cash returns are coming in for new openings relative to your targets as you've ramped up growth. Thanks.

Speaker #1: And the IRR exceeding our cost of capital by multiple hundreds of basis points. So we feel really good about the growth portfolio, the performance of the new restaurants.

Speaker #5: And perhaps you can give us an update on how cash-on-cash returns are coming in for new openings, relative to your targets, as you've ramped up growth.

Speaker #5: Thanks.

Speaker #2: Thank you. Our next question today is coming from Jim Solero from Stevens. Your line is now live.

Speaker #1: Yeah, Drew. The inflation, is actually holding up. I, I, I would say if our construction costs in total have I would say fairly you know, flattered, and actually as we are opening, going out to bid, we're finding that the bids are coming in a little bit better than our, our projection, our estimate that we approved.

Rajesh Vennam: Yeah, Drew, the inflation is actually holding up. I would say our construction costs in total have, I would say, fairly flattered. Actually, as we are opening, going out to bid, we're finding that the bids are coming in a little bit better than our projection, our estimate that we approved. That's a good sign. Costs are holding up. I'm not going to say they're going down meaningfully, but they're not going up. From a return perspective, we feel really good. Cash on cash is a metric that can vary depending on how you choose to invest, whether you take TI or not, and you do make your own capital, that kind of stuff, and use your own capital. However, when we look at it, even with all that, and we look on average, our cash on cash is really strong.

Raj Vennam: Yeah, Drew, the inflation is actually holding up. I would say our construction costs in total have, I would say, fairly flattered. Actually, as we are opening, going out to bid, we're finding that the bids are coming in a little bit better than our projection, our estimate that we approved. That's a good sign. Costs are holding up. I'm not going to say they're going down meaningfully, but they're not going up. From a return perspective, we feel really good. Cash on cash is a metric that can vary depending on how you choose to invest, whether you take TI or not, and you do make your own capital, that kind of stuff, and use your own capital. However, when we look at it, even with all that, and we look on average, our cash on cash is really strong.

Speaker #11: Good morning, guys. Thanks for putting us in. Raj, earlier you broke out the components of the comp guidance for '27. You have implied flat and modestly positive traffic.

Rick Cardenas: Not all of our brands are going to do a 9 comp every quarter. We've got a framework and a portfolio of brands that'll let us meet that framework and hopefully exceed it every once in a while. We'll continue to learn. LongHorn, as you mentioned, has multiple sizes of most of their steaks. Olive Garden has a little bit on that. Protein is a little bit more important. Olive Garden just introduced, or it's been a year, a pretty protein-forward dish, and we might see some more protein communication at Olive Garden. LongHorn is just doing a great job right now, and we're going to keep them going.

Speaker #11: We've seen a sustained period of negative traffic for the industry, but obviously sustained outperformance for your brands. Could you just kind of walk us through what your expectations are for the industry in fiscal '27?

Speaker #1: So that's a good sign. So costs are holding up. I'm not going to say they're going down meaningfully, but they're not going up. From a return perspective, we feel really good.

Speaker #11: And maybe how we should think about your ability to continue to either pull guests from other brands or perhaps pull them from other occasions and just kind of walk us through that.

Speaker #1: You know, cash-on-cash is a metric that, you know, can vary depending on how you choose to invest—whether you take TI or not, and if you do make your own capital, that kind of stuff.

Speaker #1: Yeah. The way we think about it is really we focus on what we can control. We're not expecting any material change to industry performance.

Speaker #1: and use your own capital. However, when we look at it, even with all that, as we look on average, our cash-on-cash is really strong.

Speaker #1: So our baseline assumption is industry is going to be where it's been. And then we are like trying to say, what can we do to take share?

Speaker #1: And I think if you look at last year, we had positive traffic for the year. In an environment when industry was negative. And we've done that for years.

Speaker #1: It's actually coming in ahead of our expectations. And then more importantly, when you look at the IRR and the net present value of these projects, these are significantly positive.

Rajesh Vennam: It's actually coming in ahead of our expectations. More importantly, when you look at the IRR and the net present value of these projects, these are significantly positive and IRR exceeding our cost of capital by multiple hundreds of basis points. We feel really good about the growth portfolio, the performance of the new restaurants.

Raj Vennam: It's actually coming in ahead of our expectations. More importantly, when you look at the IRR and the net present value of these projects, these are significantly positive and IRR exceeding our cost of capital by multiple hundreds of basis points. We feel really good about the growth portfolio, the performance of the new restaurants.

Operator: Thank you. Next question is coming from Chris Carril from KeyBanc Capital Markets. Your line is now live.

Speaker #1: And like you said, there are different initiatives our brands have. To drive traffic. And that's really how we look at it. It varies from brand to brand.

Speaker #1: And the IRR is exceeding our cost of capital by multiple hundreds of basis points. So we feel really good about the growth portfolio, the growth, and the performance of the new restaurants.

Chris Carril: Hi, good morning. Just on the commodity basket guidance of 3%, can you expand a little bit more on that and touch on some of the specific drivers?

Speaker #1: But I don't want to get too much into the details on what exactly we do. But ultimately, the biggest and most important thing is execution and superior execution, consistent execution.

Chris Carril: Specifically beef. I think you mentioned, Raj, 4% inflation in the Q1. Any more on the cadence of commodity inflation expectations, that'd be great. Thank you.

Speaker #2: Thank you. Our next question today is coming from Jim Solero from Stephens. Your line is now live.

Operator: Thank you. Our next question today is coming from Jim Suslow from Stephens. Your line is now live.

Speaker #1: Which I know is a fabric of how we think about it at Garden across all our brands.

Speaker #7: Morning, guys. Thanks for putting us in. Raj, earlier you broke out the components of the, the comp guidance for '27. You have implied flat and modestly positive traffic.

Jim Suslow: Morning, guys. Thanks for fitting us in. Raj, earlier you broke out the components of the comp guidance for 2027, have implied flat to modestly positive traffic. We've seen a sustained period of negative traffic for the industry, but obviously sustained outperformance for your brands. Can you just walk us through what your expectations are for the industry in fiscal 2027, and maybe how we should think about your ability to continue to either pull guests from other brands or perhaps pull them from other occasions, and just walk us through that.

Jim Salera: Morning, guys. Thanks for fitting us in. Raj, earlier you broke out the components of the comp guidance for 2027, have implied flat to modestly positive traffic. We've seen a sustained period of negative traffic for the industry, but obviously sustained outperformance for your brands. Can you just walk us through what your expectations are for the industry in fiscal 2027, and maybe how we should think about your ability to continue to either pull guests from other brands or perhaps pull them from other occasions, and just walk us through that.

Speaker #11: Right. And then a quick follow-up. Earlier to previous question, you had given the price for Olive Garden and Longhorn in the quarter. Can you just round that out and give us the traffic as well?

Raj Vennam: Yeah, Chris, I'd just say from a commodities perspective, as you look at the fiscal 2027, one of the things that you're gonna see, we expect to see in the Q1 primarily is beef is gonna be somewhere in that mid to high single digit, because we're wrapping on pretty low inflation a year ago. We started to experience significantly higher inflation for beef starting in the Q2 last year. For the full year, we ended up in the close to 12-ish percent for beef on the fiscal 2026. As we look at 2027, we expect beef to be in the low single digits for the full year. In fact, we would expect somewhat deflation in the Q2.

Speaker #7: We've seen a sustained period of negative traffic for the industry, but obviously sustained outperformance for your brands. Could you just kind of walk us through what your expectations are for the industry in fiscal '27?

Speaker #1: Quarter. If you look at the quarter, the pricing I mean, the check growth was 3.3. Traffic growth was 1.3. Pricing was 3.8. So basically about 50 basis points of mix on the quarter.

Speaker #7: And maybe how we should think about your ability to continue to either pull guests from other brands, or perhaps pull them from other occasions, and just kind of walk us through that.

Speaker #1: Yeah. The way we think about it is really we focus on what we can control. We're not expecting any material change to industry performance.

Rajesh Vennam: Yeah. The way we think about it is really we focus on what we can control. We're not expecting any material change to industry performance. Our baseline assumption is industry is going to be where it's been, then we are trying to say, what can we do to take share? I think if you look at last year, we had positive traffic for the year, in an environment when industry was negative. We've done that for years. Like you said, there are different initiatives our brands have, to drive traffic. That's really how we look at it. It varies from brand to brand. I don't want to get too much into the details on what exactly we do.

Raj Vennam: Yeah. The way we think about it is really we focus on what we can control. We're not expecting any material change to industry performance. Our baseline assumption is industry is going to be where it's been, then we are trying to say, what can we do to take share? I think if you look at last year, we had positive traffic for the year, in an environment when industry was negative. We've done that for years. Like you said, there are different initiatives our brands have, to drive traffic. That's really how we look at it. It varies from brand to brand. I don't want to get too much into the details on what exactly we do.

Speaker #1: And from Olive Garden, sales perspective, their traffic was up 20 basis points. Their check I mentioned pricing was 2.8. And then they had catering that was helping by about 50 basis points.

Speaker #1: So, our baseline assumption is the industry is going to be where it's been, and then we are trying to say, what can we do to take share?

Speaker #1: And I think if you look at last year, we had positive traffic for the year—in an environment when the industry was negative. And we've done that for years.

Speaker #1: So really, if you look at catering and the traffic, that would probably be think of it as 70 basis points of traffic at Olive Garden.

Raj Vennam: For the H1, I think we signaled low single digit inflation, but that includes mid to high in the Q1 and basically slight deflation in the Q2. As far as other items, one of the things I know a lot of you are looking at is the chicken. We do a contract, and actually what happens for us is, over time, we are actually doing well. Our contracts help protect us from the volatility in the market. We've been able to have much more stable pricing. If you look at the last three years, our costs on chicken have been fairly flat, whereas there's been a roughly 5% annual inflation in the broader market. Those are some of the big drivers, I'd say.

Speaker #1: And like you said, there are different initiatives our brands have to drive traffic, and that's really how we look at it. It varies from brand to brand.

Speaker #1: And the check growth of 1.5. Lighter portions, as I mentioned, were a headwind of 80 basis points. And then there was some negative mix of 30 basis points.

Speaker #1: But, you know, I don't want to get too much into the details on what exactly we do. But ultimately, the biggest and most important thing is execution—and superior execution, consistent execution.

Speaker #1: From a Longhorn perspective, traffic was up 4.2. And their check was up 5.3. Basically in line with their pricing.

Rajesh Vennam: Ultimately, the biggest and most important thing is execution, and superior execution, consistent execution, which I know is the fabric of how we think about it at Darden across all our brands.

Raj Vennam: Ultimately, the biggest and most important thing is execution, and superior execution, consistent execution, which I know is the fabric of how we think about it at Darden across all our brands.

Speaker #2: Thank you. Our next question today is coming from Peter Solar from BTNG. Your line is now live.

Speaker #1: Which I know is the fabric of how we think about it at Darden, across all our brands.

Speaker #12: Great. Thanks for squeezing us in. I did want to come back to the conversation on Longhorn. The comps were the strongest we've seen in, I think, more than three years.

Speaker #7: Great. And then a quick follow-up. Earlier, to the previous question, you had given the price for Olive Garden and LongHorn in the quarter.

Jim Suslow: Great. Then a quick follow-up. Earlier to a previous question you had given the price for Olive Garden and LongHorn in the quarter. Can you just round that out and give us the traffic as well?

Jim Salera: Great. Then a quick follow-up. Earlier to a previous question you had given the price for Olive Garden and LongHorn in the quarter. Can you just round that out and give us the traffic as well?

Speaker #7: Can you just round that out and give us the traffic as well?

Raj Vennam: I think seafood we expect seafood to be high single digits in the H1, but normalize as we get to the H2.

Speaker #12: Do you think there's any trade down there from fine dining or maybe any trade up? Any more details you can provide on that would be helpful.

Speaker #1: If you look at the quarter, the check growth was 3.3%, traffic growth was 1.3%, and pricing was 3.8%. So basically about 50 basis points of mix on the quarter.

Rajesh Vennam: If you look at the quarter, the check growth was 3.3, traffic growth was 1.3, pricing was 3.8, basically about 50 basis points of mix on the quarter. From Olive Garden sales perspective, their traffic was up 20 basis points. I mentioned pricing was 2.8. They had catering that was helping by about 50 basis points. Really, if you look at catering and the traffic, that would probably be, think of it as 70 basis points of traffic at Olive Garden and a check growth of 1.5. Lighter portions, as I mentioned, were a headwind of 30 basis points, and then there was some negative mix of 30 basis points. From a LongHorn perspective, traffic was up 4.2, and their check was up 5.3, basically in line with their pricing.

Raj Vennam: If you look at the quarter, the check growth was 3.3, traffic growth was 1.3, pricing was 3.8, basically about 50 basis points of mix on the quarter. From Olive Garden sales perspective, their traffic was up 20 basis points. I mentioned pricing was 2.8. They had catering that was helping by about 50 basis points. Really, if you look at catering and the traffic, that would probably be, think of it as 70 basis points of traffic at Olive Garden and a check growth of 1.5. Lighter portions, as I mentioned, were a headwind of 30 basis points, and then there was some negative mix of 30 basis points. From a LongHorn perspective, traffic was up 4.2, and their check was up 5.3, basically in line with their pricing.

Speaker #12: And then I have a follow-up. Thanks.

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

Speaker #1: Hey, Peter. Yeah, there's probably some trade down from fine dining. There's also some trade in from retail. Is what we think is happening. But when you think about frequency and fine dining versus frequency at Longhorn, you'd need quite a bit of trade to make it a real big difference.

Speaker #1: And from Olive Garden, from a sales perspective, their traffic was up 20 basis points. Their check— their PR, I mentioned pricing was 2.8%. And then they had catering that was helping by about 50 basis points.

Rick Cardenas: In regards to delivery, right now we're still focused on the brands that have first party delivery, Olive Garden, Cheddar's, and Yard House. Chuy's already has third party. In regards to third party delivery, as we've mentioned many times, there's a few things that we don't like about third party delivery, that model, but some have been solved. Others we'd have to see addressed before we get into that. I'll give you some examples. Price transparency for our consumers, so they know exactly what their entree costs in our restaurant versus getting it delivered, control of the data, and tips for our employees. Those are just three things. We've got others.

Speaker #1: But and the size of Longhorn versus the rest of fine dining. But yeah, there's some trade. But I think it's more retail trade.

Speaker #1: So really, if you look at catering and the traffic, that would probably be—think of it as 70 basis points of traffic at Olive Garden.

Speaker #1: And the check growth of 1.5%. Lighter portions, as I mentioned, were a headwind of 80 basis points. And then there was some negative mix of 30 basis points.

Speaker #12: Got it. And then just following up on that, you're still are you still seeing the demand destruction of beef in retail? Is that an ongoing thing?

Speaker #1: From a LongHorn perspective, traffic was up 4.2%, and their check was up 5.3%, basically in line with their pricing.

Speaker #12: And has that gotten better or worse? Any details on that would be helpful as well. Thanks.

Speaker #1: Yeah. I think it's I wouldn't say it has gotten meaningfully better, Peter. I think last month we saw was 8.5% decline in the volume for steaks.

Speaker #2: Thank you. Our next question today is coming from Peter Solero from BTNG. Your line is now live.

Operator: Thank you. Our next question today is coming from Peter Saleh from BTIG. Your line is now live.

Peter Saleh: Great. Thanks for squeezing us in. I did want to come back to the conversation on LongHorn. The comps were the strongest we've seen in, I think, more than three years. Do you think there's any trade down there from fine dining or maybe any trade up or any more details you can provide on that would be helpful. I have a follow-up. Thanks.

Speaker #8: Great, thanks for squeezing us in. I did want to come back to the conversation on Longhorn. You know, the comps were the strongest we've seen in, I think, more than three years.

Speaker #1: So it's at retail. Which is I think we were seeing as much as 11 at one point. So it's moderated a little bit. But still pretty high.

Rick Cardenas: you know, with the acquisition of Chuy's, we have greater insight into the third-party model and how that can impact restaurant sales both positively and negatively. Right now, we continue to focus on that first party in the restaurants that we have and the brands we have it with Uber Direct. But if third-party is ever going to be part of our business model, it must be sustainable for us in the long term. Our guidance does not contemplate any third-party delivery.

Speaker #1: 8.5%. And it's retail makes up roughly half of the total beef sales, I think. So it's a pretty meaningful still a meaningful step down.

Speaker #8: Do you think there's any trade down there from fine dining, or maybe any trade up? Any more details you can provide on that would be helpful.

Speaker #2: Thank you. Our next question today is coming from Jacob Bacon Phillips from Melius Research. Your line is now live.

Speaker #8: and then I have a follow-up. Thanks.

Speaker #1: Hey, Peter. Yeah, there's probably some trade down from fine dining. There's also some trade in from retail, is what we think is happening. But, you know, when you think about frequency in fine dining versus frequency at LongHorn, you'd need quite a bit of trade to make it a real big difference.

Rick Cardenas: Hey, Peter. Yeah, there's probably some trade down from fine dining. There's also some trade in from retail, is what we think is happening. When you think about frequency in fine dining versus frequency at LongHorn, you'd need quite a bit of trade to make it a real big difference, and the size of LongHorn versus the rest of fine dining. Yeah, there's some trade. I think it's more retail trade.

Speaker #11: Hi. Good morning. Thanks for the question. I just wanted to ask a narrower question on beef risk management. You gave some helpful call on the cadence.

Speaker #11: But with the cattle supplies are already tight. How do you think about disruptions from screw worm and international cattle flows? And is that more of a supply chain management issue?

Andrew Charles: Thank you. That's helpful. My follow-up was just around marketing spend. Given what we saw in Q4, you know, should we expect another year in 2027 of increased activity, but less of an increase in cost as you find efficiencies?

Speaker #1: But—and the size of Longhorn versus the rest, fine dining—but yeah, there should, there's some trade. But I think it's more retail trade.

Speaker #11: Or could it change pricing and margin framework?

Speaker #1: Yeah, Jacob. I think from on the screw worm front, I would say we're seeing some of the same information you're all seeing. Our perspective is that the short-term risk to beef supplies is minimal.

Raj Vennam: Yeah, I think from a marketing perspective, we expect to make some investment, even with some causes. You know, most of the causes we received this year, next year, I think there's probably another, you know, $5 to 6 million of causes. We expect marketing expense to go up roughly 10 basis points. It will be, you know, from a dollars perspective, think of it as about a $25 million investment year-over-year, and that's contemplated in the guidance.

Speaker #8: Got it. And then just following up on that, are you—you're still s—are you still seeing the demand destruction of beef and retail?

Peter Saleh: Got it. Just following up on that, are you still seeing the demand destruction of beef in retail? Is that an ongoing thing or has that gotten better or worse? Any details on that would be helpful as well. Thanks.

Speaker #1: So really no meaningful impact to supplier pricing short-term. And then the consumer demand seems to be holding up, meaning they're not significant USDA has done a great job of just talking about how the product is safe to consume.

Speaker #8: Is that an ongoing thing? And has that gotten better or worse? Any details on that would be helpful as well. Thanks.

Speaker #1: Yeah. I think it's, it's i I wouldn't say it has gotten meaningfully better, Peter. I think last month we saw was 8.5% decline in the volume, for sake.

Rajesh Vennam: Yeah, I wouldn't say it has gotten meaningfully better, Peter. I think last month we saw was 8.5% decline in the volume for steak at retail. I think we were seeing as much as 11 at one point, so it's moderated a little bit, still pretty high, 8.5%. Retail makes up roughly half of the total beef sales, I think. It's still a meaningful step down.

Raj Vennam: Yeah, I wouldn't say it has gotten meaningfully better, Peter. I think last month we saw was 8.5% decline in the volume for steak at retail. I think we were seeing as much as 11 at one point, so it's moderated a little bit, still pretty high, 8.5%. Retail makes up roughly half of the total beef sales, I think. It's still a meaningful step down.

Speaker #1: So long-term, risks are really could stem from restrictions to animal movement across the state lines. So that could potentially disrupt supply chains for a short period of time.

Speaker #1: So it's, at retail, which is, you know, I think we were seeing as much as 11 at one point, so it's come—it's moderated a little bit.

Operator: Thank you. Our next question today is coming from Danilo Gargiulo from Bernstein. Your line is now live.

Speaker #1: But it's still pretty high—8.5%. And, you know, retail makes up roughly half of the total beef sales, I think. So it's still a pretty meaningful step down.

Danilo Gargiulo: Thank you. First of all, at a very high level, I was wondering if you can give us some puts and takes of your guidance and perhaps where you have the highest conviction and, you know, where instead you are monitoring a little bit more closely and what will take you to the higher end of the guidance, what will take you to the low end of the guidance for 2027.

Speaker #1: But where we sit here, our supply chain teams fairly good about the product side and the price. And that's why I think for this year we're expecting basically a low single digit inflation for beef.

Speaker #2: Thank you. Our next question today is coming from Jacob Bacon Phillips from Melius Research. Your line is now live.

Operator: Thank you. Our next question today is coming from Jacob Aiken-Phillips from Melius Research. Your line is now live.

Jacob Aiken-Phillips: Hi. Good morning. Thanks for the question. I just wanted to ask a narrower question on beef risk management. You gave some helpful color on the cadence. With the cattle supplies are already tight, how do you think about disruptions from screwworm and international cattle flows? Is that more of a supply chain management issue, or could it change pricing and margin framework?

Speaker #9: Hi, good morning. Thanks for the question. I just wanted to ask a narrower question on beef risk management. You gave some helpful, helpful color on the cattle supplies already being tight.

Raj Vennam: Yeah, Danilo. Let's start with, you know, our guidance of 2.5% to 3.5% for the year, which implies flat to positive traffic, with check in the mid to high 2% range. That as a starting point, you think about, you know, we're looking out 12 months. There are a lot of factors that can impact what can happen with the traffic. But, you know, we expect our pricing to be closer to inflation. If, you know, I mentioned that we expect our total inflation to be approximately 3%. Our pricing should be fairly close to that, and our check would be in that mid to high 2s. That is the background.

Speaker #11: Got it. And then just you mentioned some softness and guests among under 35. Can you give just give more color on that? Is it affordability issue?

Speaker #9: How do you think about disruptions from screw worm and international cattle flows? And is that more of a supply chain management issue, or could it change the pricing and margin framework?

Speaker #11: Is it just more about how they're choosing occasions across different channels?

Speaker #1: Jacob, it's hard to tell why. They're down. But it is I would say that unemployment is the highest on those 20 to 25s that it's been in a long time.

Speaker #1: Yeah, Jacob. I think, you know, on the screw worm front, I would say we're seeing some of the same information you're all seeing.

Rajesh Vennam: Yeah, Jacob, I think on the screwworm front, I would say we're seeing some of the same information you're all seeing. Our perspective is that the short-term risk to beef supplies is minimal. Really no meaningful impact to supplier pricing short term. The consumer demand seems to be holding up. USDA has done a great job of just talking about how the product is safe to consume. Long term, risks really could stem from restrictions to animal movement across the state lines. That could potentially disrupt supply chains for a short period of time. Where we sit here, our supply chain team's fairly good about the product side and the price. That's why, I think for this year, we're expecting basically a low single-digit inflation for beef.

Raj Vennam: Yeah, Jacob, I think on the screwworm front, I would say we're seeing some of the same information you're all seeing. Our perspective is that the short-term risk to beef supplies is minimal. Really no meaningful impact to supplier pricing short term. The consumer demand seems to be holding up. USDA has done a great job of just talking about how the product is safe to consume. Long term, risks really could stem from restrictions to animal movement across the state lines. That could potentially disrupt supply chains for a short period of time. Where we sit here, our supply chain team's fairly good about the product side and the price. That's why, I think for this year, we're expecting basically a low single-digit inflation for beef.

Speaker #1: But there's no specific reason that we're hearing that the below 35 is down. And it's not a huge it's not as big a part of our business as the people that are above 35.

Speaker #1: our perspective is that the short-term risk to beef supplies is minimal. so really no meaningful impact to supplier pricing, short-term. and then the consumer demand seems to be holding up, meaning they're not significant they USDA has done a great job of just start talking about how the product is safe to consume.

Speaker #2: Thank you. Our next question today is coming from Andrew Strelzic from BMO Capital Markets. Your line is now live.

Raj Vennam: As we think about the puts and takes, there's obviously the broader macro that plays into that range. If the macro ends up being much better, we'll end up in the higher end. There are initiatives that our brands have. That is the reality is the portfolio of brands is a huge advantage when you think about planning and forecasting ahead and how we can pull different levers across our portfolio to get to our commitments. So, you know, broadly speaking, those are the things.

Speaker #1: So, you know, long term, risks really could stem from restrictions to animal movement across state lines. So that could potentially disrupt supply chains for a short period of time.

Speaker #11: Hey, good morning. Thanks for taking the questions. I know it doesn't get a lot of focus, but I wanted to ask a question on the other business segment, which had its best comp performance in a couple of years, both some momentum through the year.

Speaker #1: But where we sit here, you know, our supply chain teams are fairly good about the product side and the price.

Speaker #11: So I was hoping you could unpack what's been driving that better growth trajectory and how should we think about the durability of that into '27.

Speaker #1: And, you know, that’s why I think for this year, we're expecting basically low single-digit inflation for beef.

Speaker #1: Yeah, Andrew, I would say the other business, which is Yardhouse Cheddars, season 52, and Chewies. All of the brands were positive this quarter. And really driven a lot by Yardhouse.

Raj Vennam: One thing I wanna point out that I think might have been, you know, may not be as clear is we have a pretty big step-up in growth. If you think about the fact that we're guiding to 75 to 80 gross openings. Last year we opened 71. You also have, in addition to that 75 to 80 gross openings, we also have 11 Bahama Breeze conversions. When you add those two up, it's really from a development perspective and from a pre-opening perspective, we're actually going to have roughly 20 more openings year-over-year. That will lead to some incremental pre-opening costs. When you take all that into consideration, that's roughly a $15 million impact on our profit and a $0.10 EPS drag on the year. This is really growth costs, right?

Jacob Aiken-Phillips: Got it. Just you mentioned some softness in guests under 35. Can you just give me some more color on that? Is it an affordability issue, or is it more about how they're choosing occasions across different channels?

Speaker #9: Got it. And then, you just mentioned some softness in guests under 35. Can you give more color on that? Is it an affordability issue?

Speaker #1: Yardhouse and Cheddars had a pretty darn good quarter. And we think that can that should be able to continue. At the levels of Yardhouse comp, I don't know.

Speaker #9: Or just more about how they're choosing occasions across different channels?

Speaker #1: Jacob, it's hard to tell why they're down. But I would say that unemployment is the highest among those 20 to 25s.

Rick Cardenas: Jacob, it's hard to tell why they're down, but I would say that unemployment is the highest on those 20 to 25s that it's been in a long time.

Rick Cardenas: Jacob, it's hard to tell why they're down, but I would say that unemployment is the highest on those 20 to 25s that it's been in a long time. There's no specific reason that we're hearing that the below 35 is down. It's not as big a part of our business as the people that are above 35.

Speaker #1: Maybe. But we think they're doing a pretty good job. They've actually over the last three years, as I mentioned, I prepared remarks, done a lot on their menu.

Speaker #1: And it's been in for a long time. But there's no specific reason that we're hearing that the below 35 is down. And it's not a huge—it's not as big a part of our business as the people that are above 35.

Speaker #1: Especially on the things that really matter. At a kind of a bar and gathering place, they've really improved their burgers. They've really improved their tacos.

Rick Cardenas: There's no specific reason that we're hearing that the below 35 is down. It's not as big a part of our business as the people that are above 35.

Speaker #1: And their pizza platform. And they've got other things that they want to work on. But Cheddars is the same thing. Cheddars made is made, has made, and is making more improvements in their food.

Speaker #2: Thank you. Our next question today is coming from Andrew Strelzik from BMO Capital Markets. Your line is now live.

Operator: Thank you. Our next question today is coming from Andrew Strelzik from BMO Capital Markets. Your line is now live.

Speaker #1: And continue to improve their service. And we're going to focus on executing on both of those brands. Chewies is in the middle of its integration and kind of kind of on the back end of its integration.

Speaker #10: Hey, good morning. Thanks for taking the questions. I know it doesn't get a lot of focus, but I wanted to ask a question on the other business segment, which, had its best comp performance in a couple years, both some momentum through the year or so.

Andrew Strelzik: Hey, good morning. Thanks for taking the questions. I know it doesn't get a lot of focus, but I wanted to ask a question on the other business segment, which had its best comp performance in a couple of years, built some momentum through the year. I was hoping you could unpack what's been driving that better growth trajectory and how should we think about the durability of that into 2027?

Raj Vennam: Which are because they just kept changing the number of openings. It includes the pre-opening costs and some year one inefficiencies. When you actually look at that and still see that even with that headwind, our guidance implies EBIT margin flat to positive. If you add that back, I would actually put EBIT margin 10 plus basis points expanding. Those are really the big components of how we're thinking about for the full year.

Speaker #1: And now they're going to focus on using those tools that they know and continue to work on recipes, to make sure there's consistency across all of the restaurants on execution of the recipes.

Speaker #10: I was hoping you co-could unpack what's, been driving that better growth trajectory and, and how should we think about the durability of that into 27.

Speaker #1: So we feel really good about those brands. And the trajectory that we have for them in their future growth. As I mentioned in my call, in the early part of the call, that you should see a little bit more growth on those three brands in the future than you've seen from the past.

Speaker #1: Yeah, Andrew, I would say the other business, which, you know, is Yard House, Cheddar's, Seasons 52, and Chewy's—you know, all of the brands were positive this quarter.

Rick Cardenas: Yeah, Andrew, I would say the other business, which is Yard House, Cheddar's, Seasons 52, and Chuy's. All of the brands were positive this quarter and really driven a lot by Yard House. Yard House and Cheddar's had a pretty darn good quarter, and we think that should be able to continue. At the levels of Yard House comp, I don't know, maybe, but we think they're doing a pretty good job. They've actually, over the last three years, as I mentioned in my prepared remarks, done a lot on their menu, especially on the things that really matter at a bar and a gathering place. They've really improved their burgers, they've really improved their tacos, and their pizza platform. They've got other things that they want to work on. Cheddar's the same thing.

Danilo Gargiulo: Great, thank you. Actually, you went on my follow-up question, which was on development, but more from an international standpoint. I see that it's quite interesting that you're highlighting also in your presentation the relevance of international within your strategic planning. I'm wondering if you can maybe help us understand when will we see the highest, in the next two to three years, when will we see the highest impact coming from the international expansion? Maybe if you can give us some sort of boundaries from an EBIT standpoint of the contribution that we could be expecting from an expansion in international markets. Thank you.

Speaker #1: And really driven a lot by Yard House. Yard House and Cheddar's had a pretty darn good quarter, and we think that should be able to continue.

Speaker #11: Okay. That was helpful. And then on the Olive Garden delivery side now that we're a year plus in, can you give us a sense for how you're thinking about mixed potential there, incrementality, and kind of the growth rate as we've lapped the national rollout?

Speaker #1: At the levels of Yard House comp, I don't know. Maybe. But we think they're doing a pretty good job. They've actually, over the last three years, as I mentioned in my prepared remarks, done a lot on their menu.

Speaker #11: Thanks.

Speaker #1: Especially on the things that really matter. At a kind of a bar and gathering place, they've really improved their burgers. They've really improved their tacos.

Speaker #1: Andrew, so from Uber, first-party delivery, when we look at where we were in Q4, we were basically around 4.7% of total sales, which is consistent with what we saw in Q3.

Speaker #1: And their pizza platform. And they've got other things that they want to work on. But Cheddar's is the same thing. Cheddar's has made and is making more improvements in their food.

Rick Cardenas: Ed Emilio, just remember that our international expansion is franchising. While, it's not the same as opening an existing restaurant for us, we do get a good percentage of the sales from that. The EBIT should grow as we continue to add franchise restaurants. We're talking single digit pennies a year, a low end of that, a year because you're talking 20 restaurants, 25 restaurants, maybe in a good year for openings. It's a significant business for us, and Brad Smith and his team are doing a great job finding partners. I would say, as I said in my prepared remarks, this will be the most international openings we've ever had at Darden. We would expect to keep doing that every year for the next few years, then we'll continue to find new partners.

Speaker #1: So we don't expect this to be a meaningful driver incrementally year over year as we get into the future. But it's holding pretty fairly steady.

Rick Cardenas: Cheddar's has made and is making more improvements in their food and continue to improve their service. We're going to focus on executing on both of those brands. Chuy's is in the middle of its integration or on the back end of its integration, now they're going to focus on using those tools that they know, and continue to work on recipes to make sure there's consistency across all of the restaurants on execution of the recipes. We feel really good about those brands, and the trajectory that we have for them in their future growth. As I mentioned in the early part of the call, that you should see a little bit more growth on those three brands in the future than you've seen from the past.

Speaker #1: And continue to improve their service. And we're going to focus on executing on both of those brands. Cheddar's is in the middle of its integration and kind of on the back end of its integration.

Speaker #1: The incrementality is still in line. We said roughly 50% incremental. That's what we think we're seeing. But Olive Garden off-premise in total, this quarter was 27%.

Speaker #1: And now they're going to focus on using those tools that they know, and continue to work on recipes to make sure there's consistency across all of the restaurants on execution of the recipes.

Speaker #1: And so that's a pretty good place to be.

Speaker #2: Thank you. Our next question today is coming from Johnny Wonko from JPMorgan. Your line is now live.

Speaker #12: Hi. Thank you very much. The question is on both direct and indirect disruption that may have happened due to the recent gulf crisis. Was there anything in terms of supplier or other types of distribution surcharges?

Speaker #1: So we feel really good about those brands. and, and the trajectory that we have for them in their in their future growth. as I mentioned in my call i-in the early part of the call, that you should see a little bit more growth on those three brands in the future than you've seen from the past.

Speaker #12: Anything at all that may have actually influenced COGS direct or indirect in the fourth quarter and first quarter? And would you expect that any type of disruption that happened from that would have been short-term that wouldn't occur beyond the very short term?

Speaker #10: Okay, that was helpful. And then on the Olive Garden delivery side, now that we're, you know, a year plus in, can you give us a sense for how you're thinking about mix potential there, incrementality, and kind of the growth rate as we've lapped the national rollout?

Andrew Strelzik: Okay. That was helpful. On the Olive Garden delivery side, now that we're a year plus in, can you give us a sense for how you're thinking about mix potential there, incrementality, and the growth rate as we've lapped the national rollout? Thanks.

Rick Cardenas: When we signed these last three deals, we signed them in June of last year. Basically a year ago. We signed 40 restaurants in part of India, 40 restaurants in Spain, and 30 restaurants in Canada. We had never signed a development deal for a country and opened it within 12 months. All three of them pretty much are going to open within 12 months. We have more openings in those countries already coming. We feel really good about where we are, but it's not going to be a monster driver of EBIT growth. It will be a driver of EPS, but pretty small, but it's still positive.

Speaker #12: Thank you.

Speaker #10: Thanks.

Speaker #1: Yeah, John, great question. So there was some impact, especially there is a fuel surcharge, as you can imagine. But there's a little bit of a lag in how that works its way through the system.

Rajesh Vennam: Andrew, from Uber first-party delivery, when we look at where we were in Q4, we were basically around 4.7% of total sales, which is consistent with what we saw in Q3. We don't expect this to be a meaningful driver incrementally year over year as we get into the future, it's holding pretty fairly steady. The incrementality is still in line. We said roughly 50% incremental. That's what we think we're seeing. Olive Garden off-premise in total this quarter was 27%, that's a pretty good place to be.

Raj Vennam: Andrew, from Uber first-party delivery, when we look at where we were in Q4, we were basically around 4.7% of total sales, which is consistent with what we saw in Q3. We don't expect this to be a meaningful driver incrementally year over year as we get into the future, it's holding pretty fairly steady. The incrementality is still in line. We said roughly 50% incremental. That's what we think we're seeing. Olive Garden off-premise in total this quarter was 27%, that's a pretty good place to be.

Speaker #1: Andrew, so from an Uber first-party delivery, when we look at where we were in Q4, we were basically around 4.7% of total sales, which is consistent with what we saw in Q3.

Speaker #1: So we would expect part of the Q1 inflation is some unfavorable impact due to that elevated fuel prices working their way through the system.

Speaker #1: So, we don't expect this to be a meaningful driver incrementally year over year as we get into the future, but it's holding pretty fairly steady.

Speaker #1: And we expect that impact to ease through the fiscal year as prices come down. But it was an impact, and it was when you look at it, especially through the lens of COGS inflation, it could be it was not it could be tens of basis points approaching 50, 60 basis points.

Speaker #1: The incrementality is, you know, still in line. We've said roughly 50% incremental—that's what we think we're seeing. But Olive Garden off-premise, in total, this quarter was 27%.

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

Speaker #1: And so, that's a pretty good place to be.

David Palmer: Thanks. Congratulations on your year. I wanted to ask you about, on the same-store sales guidance for fiscal 2027, 2.5% to 3.5%. How are you generally thinking about that for Olive Garden? Is it safe to say you're thinking slightly below, still positive? If so, how are you thinking about restaurant level margin for that brand this year, especially with what you're doing with the small plates? It seems like you're leaning in there. Do you think you can keep those margins stable this year? I have a quick follow-up.

Speaker #2: Thank you. Our next question today is coming from Johnny Wonko from JPMorgan. Your line is now live.

Operator: Thank you. Our next question today is coming from John Ivankoe from JP Morgan. Your line is now live.

Speaker #1: So at the peak, but it seems like things are starting to calm down. So that should help.

John Ivankoe: Hi. Thank you very much. The question is on both direct and indirect disruption that may have happened due to the recent Gulf crisis. Was there anything in terms of supplier or other types of distribution surcharges, anything at all that may have actually influenced COGS, direct or indirect in Q4 or in Q1? Would you expect that any type of disruption that happened from that would have been short-term, that wouldn't occur beyond the very short term? Thank you.

Speaker #11: Hi, thank you very much. Yes, the question is on both direct and indirect disruption that may have happened due to the recent Gulf crisis.

Speaker #12: Okay. That's very helpful. And 50 to 60 basis points is certainly not nothing. And remind us where we are on the utility side. Obviously, a lot of utilities across the US are contracted or regulated.

Speaker #11: Was there anything, in terms of, you know, supplier or other types of distribution surcharges, you know, anything at all that may have actually influenced Cogs at, you know, direct or indirect in the fourth quarter, you know, or f in first quarter?

Speaker #12: So there might be some lag there. So just remind me where Jordan stands on the utility front. And they're relatively near-term outlook. Thank you.

Speaker #11: And, you know, would you expect that any type of disruption that happened from that would have been short-term—that wouldn't occur beyond the very short term?

Speaker #1: Yeah. John, actually, we saw some impact of a natural gas I guess peak during February of this year. But since then, it's been fairly steady.

Speaker #11: Thank you.

Speaker #1: Yeah, John, great question. So, there was some impact, especially—there is a fuel surcharge, as you can imagine. But there's a little bit of a lag in how that works its way through the system.

Rajesh Vennam: Yeah. John, great question. There was some impact, especially there is a fuel surcharge, as you can imagine, there's a little bit of a lag in how that works its way through the system. We would expect part of the Q1 inflation is some unfavorable impact due to that elevated fuel prices working their way through the system. We expect that impact to ease through the fiscal year as prices come down. It was an impact, and when you look at it, especially through the lens of COGS inflation, it could be tens of basis points approaching 50, 60 basis points at the peak. It seems like things are starting to calm down, that should help.

Raj Vennam: Yeah. John, great question. There was some impact, especially there is a fuel surcharge, as you can imagine, there's a little bit of a lag in how that works its way through the system. We would expect part of the Q1 inflation is some unfavorable impact due to that elevated fuel prices working their way through the system. We expect that impact to ease through the fiscal year as prices come down. It was an impact, and when you look at it, especially through the lens of COGS inflation, it could be tens of basis points approaching 50, 60 basis points at the peak. It seems like things are starting to calm down, that should help.

Speaker #1: Our utilities inflation has been more in that mid-single-digit range for the year. But as we go to next year, based on some of the contracts we have and some of the hedging we have in place, we expect it to be in that low to mid-single digits.

Speaker #1: So, we would expect part of the Q1 inflation is some unfavorable impact due to those elevated fuel prices working their way through the system.

Speaker #1: and we expect that impact to ease through the fiscal year as prices come down. but it was it was an impact, and it was i you know, when you look at it, especially through the lens of, you know, Cogs inflation, you know, it could be i-it was it was not sm it could be, you know, tens of basis points approaching, you know, 50, 60 basis points, so at the peak.

Speaker #2: Thank you. Our next question today is coming from Jim Sanderson from North Coast Research. Your line is now live.

Speaker #11: Hey, thanks for the question and time. Just one question on Olive Garden. I wanted to go back to the mix issue for the lighter portions.

Speaker #11: I think that's 80 basis points in the quarter. How do you see that evolving? Is that going to grow as more and more consumers take advantage of that menu option?

Speaker #11: Or is it relatively stable as you lap the launch next year?

Speaker #1: But, you know, it seems like things are starting to calm down, so that should help.

Raj Vennam: We don't expect the margins to go backwards. They've done a great job of managing costs in the rest of the P&L to be able to fund investments, and that's really what's great about Olive Garden. This is an engine that has been fueling growth for Darden through the cash generation that it does. It plays a big role in helping Darden portfolio be as successful as it's been.

Speaker #11: Okay, that's very helpful. And 50 to 60 basis points is certainly not nothing. And remind us where we are on the utility side.

John Ivankoe: Okay. That's very helpful, 50 to 60 basis points is certainly not nothing. Remind us where we are on the utility side. Obviously, a lot of utilities across the US are contracted or regulated, there might be some lag there. Just remind me where Darden stands on the utility front in the relatively near-term outlook. Thank you.

Speaker #1: Yeah, Jim, I'd say we would expect that to come down a little bit. 80 basis points is probably the peak. If as more consumers come in, it will have some impact, but it's not going to be as it's not going to be we don't expect it to be a lot more than maybe 10, 15 basis points.

Speaker #11: Obviously, a lot of utilities across the U.S. are, you know, contracted or regulated, so there might be, you know, some lag there.

Speaker #11: So, just remind me where Darden stands on the utility front, you know, in the relatively near-term outlook. Thank you.

Speaker #1: And that will still take a big increase in preference. The bigger part of it is year over year, we started with basically 40% of the system in Q1 last year.

David Palmer: Yeah. Just to follow up on Olive Garden, there's been a lot of things happening with that brand. You guys have had, maybe with LongHorn, there's initiatives, but we don't see them as much. With Olive Garden, there's been highly visible initiatives, those small plates, you've leaned in with delivery. What are you leaning into into fiscal 2027? I'm sure you don't want to be doing much worse than the exit rate comp in the mid-2s going into this year. What's the team going to be really focusing on? What will be the story of 2027 for that brand? Thank you.

Speaker #1: Yeah. John, actually, we had—we saw some impact with natural gas, you know, I guess, peak during February of this, you know, year.

Rajesh Vennam: Yeah. John, actually, we saw some impact when natural gas, I guess, peaked during February of this year. Since then, it's been fairly steady. Our utilities inflation has been more in that mid-single digit range for the year. As we go to next year, based on some of the contracts we have and some of the hedging we have in place, we expect it to be in that low to mid-single digits.

Raj Vennam: Yeah. John, actually, we saw some impact when natural gas, I guess, peaked during February of this year. Since then, it's been fairly steady. Our utilities inflation has been more in that mid-single digit range for the year. As we go to next year, based on some of the contracts we have and some of the hedging we have in place, we expect it to be in that low to mid-single digits.

Speaker #1: And so there was about 30 basis point impact, I think, in Q1. So as we wrap on that, you get you would expect this quarter first quarter, for example, to be more of a 50 to 60 basis point headwind.

Speaker #1: But since then, it's been fairly steady. Our utilities inflation has been more in that mid-single-digit range for the year. But as we go to next year, based on some of the contracts we have and some of the hedging we have in place, we expect it to be in that low to mid-single digits.

Speaker #1: And work its way down as we go through the year as we wrap on the phases of launches that we had last year.

Speaker #2: Thank you. Our next question today is coming from Brian M. Vaccaro from Raymond James. Your line is now live.

Speaker #2: Thank you. Our next question today is coming from Jim Sanderson from North Coast Research. Your line is now live.

Operator: Thank you. Our next question today is coming from Jim Sanderson from Northcoast Research. Your line is now live.

Speaker #13: Hi. Thanks. Just two quick ones. First at Olive Garden, could you just elaborate a little bit more on how the lighter portion menu is performing?

Speaker #12: Hey, thanks for the question and the time. Just one question on Olive Garden. I wanted to go back to the mix issue. For the lighter portions, I think that's 80 basis points in the quarter.

Jim Sanderson: Hey, thanks for the question and time. Just one question on Olive Garden. I wanted to go back to the mix issue for the lighter portions. I think that's 80 basis points in the quarter. How do you see that evolving? Is that going to grow as more and more consumers take advantage of that menu option? Is it relatively stable as you lap the launch next year?

Rick Cardenas: Yeah, David. Raj mentioned the story of the brand a little bit is their comps are going to be somewhere in the 2.5% to 3.5% range, but probably closer to the bottom, and we're okay with that. We think that that's a good place for Olive Garden to be, as long as they continue to make investments for the long term so they can be running those comps for the next 20 years instead of doing something for a year and a half. Marketing, Olive Garden's a brand that's well-positioned to leverage news to drive traffic, and they're continuing to work on some news. You see that. LongHorn is a little less about using news to drive traffic, but Olive Garden is using news to drive traffic. One of the ways we do that is we've got several initiatives to continue appealing to core guests.

Speaker #13: Rick, it sounds like that preference continues to build sequentially. But how's the customer using the platform? Any new learnings there? And then the follow-up, just a quick one on the guidance.

Speaker #12: How do you see that evolving? Is that going to grow as more and more consumers take advantage of that menu option, or is it relatively stable as you lap the launch next year?

Speaker #13: Raj, what level of SG&A did you embed for the year in the fiscal '27 guidance? Thanks very much.

Speaker #1: Yeah, Jim. I'd say we would expect that to come down a little bit. 80 basis points is probably the peak. You know, if, as more consumers come in, it will have some impact.

Rajesh Vennam: Yeah, Jim Sanderson, I'd say we would expect that to come down a little bit. 80 basis points is probably the peak. As more consumers come in, it will have some impact, but we don't expect it to be a lot more than maybe 10, 15 basis points, and that will still take a big increase in preference. The bigger part of it is year-over-year, we started with basically 40% of the system in Q1 last year. There was about 30 basis point impact, I think, in Q1. As we wrap on that, you would expect this Q1, for example, to be more of a 50 to 60 basis point headwind and work its way down as we go through the year, as we wrap on the phases of launches that we had last year.

Raj Vennam: Yeah, Jim Sanderson, I'd say we would expect that to come down a little bit. 80 basis points is probably the peak. As more consumers come in, it will have some impact, but we don't expect it to be a lot more than maybe 10, 15 basis points, and that will still take a big increase in preference. The bigger part of it is year-over-year, we started with basically 40% of the system in Q1 last year. There was about 30 basis point impact, I think, in Q1. As we wrap on that, you would expect this Q1, for example, to be more of a 50 to 60 basis point headwind and work its way down as we go through the year, as we wrap on the phases of launches that we had last year.

Speaker #2: Yeah, Brian. The lighter portions menu we're talking somewhere in the mid-single low to mid-single digits total preference. But a lot of that is on the weekends at lunch.

Speaker #1: But it's not going to be as big; it's not going to be, you know—we don't expect it to be a lot more than, you know, maybe 10 or 15 basis points.

Speaker #2: Which is where we had eliminated a lunch menu years ago. There's still some of that preference going on at dinner. But more of it is lunch on the weekends.

Speaker #1: And that will still take a big, in big, increase in preference. The bigger part of it is year over year. We started with basically 40% of the system in Q1 last year.

Speaker #2: And it helps fill our restaurants again. And we'll start seeing other things. As that grows, you should start seeing it spread across. And as we kind of potentially re-merchandise it and how we talk about it, it might be it might continue to grow.

Speaker #1: And so, there was about a 30 basis point impact, I think, in Q1. So as we lap on that, you would expect this quarter, first quarter, for example, to be more of a 50 to 60 basis point headwind.

Rick Cardenas: Olive Garden's core guests were the fastest-growing part of Olive Garden in the last quarter, and that's important to us. We're going to continue to follow our marketing filters, and you'll see some of that stuff over the next year. Remember, it's got to be simple to execute, can't be at a deep discount, and it's got to elevate brand equity. At the end of the day, Olive Garden's about profitable sales growth, and Raj has mentioned that we're going to be somewhere in the flat to positive segment profit for Olive Garden, even with the growth. Without getting into too many competitive things, you'll see some things at Olive Garden that you may have seen years ago, or some people may have never seen.

Speaker #1: And work its way down as we go through the year, as we wrap on the phases of launches that we had last year.

Speaker #2: That's why we think maybe 10s of basis points in the future of mix. But not 80 like we talked about.

Speaker #2: Thank you. Our next question today is coming from Brian M. Vaccaro from Raymond James. Your line is now live.

Operator: Thank you. Our next question today is coming from Brian Vaccaro from Raymond James. Your line is now live.

Speaker #1: Yeah. And Brian, on the SG&A, I'll separate S and G&A because we separate marketing. We put that as part of the restaurant-level EBITDA. For marketing, we expect it to go up about 10 basis points.

Speaker #13: Hi, thanks. Just two quick ones. First, at Olive Garden, could you just elaborate a little bit more on how the Lighter Fare menu is performing?

Brian Vaccaro: Hi, thanks. Just two quick ones. First at Olive Garden, could you just elaborate a little bit more on how the lighter portion menu is performing? Rick Cardenas, it sounds like that preference continues to build sequentially, how's the customer using the platform? Any new learnings there? The follow-up, just a quick one on the guidance. Rajesh Vennam, what level of SG&A did you embed for the year in the fiscal 2027 guidance? Thanks very much.

Speaker #13: R-rate, it sounds like that preference continues to build sequentially. But how is the customer using the platform? Any new learnings there? And then, the follow-up, just a quick one on the guidance.

Speaker #1: And I think I mentioned roughly 25 million a year over a year. And then G&A, we expect it to be closer to just probably a little bit, not the 500, but around 500 million.

Speaker #13: Raj, what level of SG&A did you embed for the year in the fiscal '27 guidance? Thanks very much.

Rick Cardenas: I think it's important to know that we're not going to just sit back and let Olive Garden do nothing and have a very low comp. We're going to make sure they're doing the right things for Olive Garden in the long term and to help the other brands in the long term as well. You should see some things this year that you may not have seen before or may haven't seen in a while.

Speaker #1: So and that can move a little bit based on what happens with mark-to-market.

Speaker #2: Yeah, Brian. The lighter portions menu, we're talking somewhere in the low- to mid-single digits total preference. But a lot of that is on the weekends at lunch.

Rick Cardenas: Brian, the lighter portions menu, we're talking somewhere in the low to mid single digits total preference, but a lot of that is on the weekends at lunch, which is where we had eliminated lunch menus years ago. There's still some of that preference going on at dinner, but more of it is lunch on the weekends. It helps fill our restaurants again. We'll start seeing other things. As that grows, you should start seeing it spread across. As we potentially re-merchandise it and how we talk about it might continue to grow. That's why we think maybe tens of basis points in the future of mix, but not 80 like we talked about.

Speaker #2: Thank you. Our next question is coming from Jeffrey Bernstein from Barclays. Your line is now live.

Speaker #14: Great. Thanks very much. Rick and Raj, rather than ask a 10-part question and follow up, I do just want to share a personal note with my plan to retire in the back half of this calendar year.

Speaker #2: Which is where we had eliminated lunch menus years ago. There's still some of that preference going on at dinner, but more of it is lunch on the weekends.

Operator: Thank you. Next question today is coming from Sara Senatore from Bank of America. Your line is now live.

Speaker #2: And it helps fill our restaurants again. And we'll start seeing other things, you know, as that grows, you should start seeing it spread across.

Speaker #14: I just wanted to thank you and your predecessors for your partnership, learnings, and insights over the past many years. I've always appreciated your longer-term perspective on the business, which is a rarity.

Sara Senatore: Thank you. I have a quick question about guidance and then a question about the quarter. For the guidance, I just was wondering about the CapEx outlook. It looks like a bigger jump than the number of new units. Is that related to the conversions, or is there something else going on there? Just trying to understand if it has to do with maybe the shift in where your unit growth is coming from or more to do with the Bahama Breeze conversions. Thanks.

Speaker #2: And as we kind of re potentially re-merchandise it and how we talk about it, it might it might be it might continue to grow.

Speaker #14: And I applaud your 30-plus-year chart demonstrating the 10-year average total shareholder return always above at or above 10%. I think that's something your peers likely strive for.

Speaker #2: That's why we think, you know, maybe 10 to tens of basis points in the future of mix, but not 80 like we talked about.

Speaker #14: So I just wanted to congratulate you on a successful fiscal '26. Best of luck achieving similar in fiscal '27. And most importantly, sustaining for years to come.

Speaker #1: Yeah. And Brian, on the SG&A, I'll separate S, S and G&A because we separate marketing. We don't, you know, we put that as part of the restaurant-level EBITDA.

Rajesh Vennam: Yeah. Brian, on the SG&A, I'll separate S and G&A because we separate marketing. We put that as part of the restaurant level EBITDA. For marketing, we expect it to go up about 10 basis points, I think I mentioned roughly $25 million year-over-year. Then G&A, we expect it to be closer to just probably a little bit north of 500, but around $500 million. That can move a little bit based on what happens with mark to market.

Raj Vennam: Yeah. Brian, on the SG&A, I'll separate S and G&A because we separate marketing. We put that as part of the restaurant level EBITDA. For marketing, we expect it to go up about 10 basis points, I think I mentioned roughly $25 million year-over-year. Then G&A, we expect it to be closer to just probably a little bit north of 500, but around $500 million. That can move a little bit based on what happens with mark to market.

Speaker #14: So I just wanted to thank you again. It has been an honor to work with you over all these years. Thank you.

Raj Vennam: Yeah, Sara. Let me start by breaking down the CapEx a little bit. Talk about the new units. That is where you're seeing the biggest increase. If you look at the guidance of $875, roughly $25 million is related to the conversions. Then we're talking about $850. Close to $350 is maintenance/IT investment. It's basically maintaining our buildings, technology investments, all of that. Roughly $500 is related to new unit growth. We talked about opening 75 to 80 this year. We also talked about trying to get into that 3% to 4% and building the pipeline for next year. There is a pretty strong pipeline for next year. Some of those costs come into this year. That's really part of the reason why we're ending up where we are ending up.

Speaker #1: For marketing, we expect it to go up about 10 basis points, and I think I mentioned roughly $25 million year over year. And then G&A, we expect it to be closer to just, you know, probably a little bit north of $500 million, but around $500 million.

Speaker #2: Hey, Jeff. I want to say the same thing to you. Thanks for your questions and your comments, all these years. And thanks for believing in what we do and thinking about the long term.

Speaker #1: So, and that can move a little bit based on what happens with mark-to-market.

Speaker #2: We're going to miss your questions. We're going to miss what you've done with us and helped us over the years. And I would say my predecessors would say the exact same thing.

Speaker #2: Thank you. Our next question is coming from Jeffrey Bernstein from Barclays. Your line is now live.

Operator: Thank you. Our next question is coming from Jeffrey Bernstein from Barclays. Your line is now live.

Speaker #2: If they were on this line, best of luck to you in your retirement. I was hoping you would ask a question or at least be on this call.

Speaker #14: Great, thanks very much. Rick and Raj, rather than ask a 10-part question or a follow-up, I just want to share a personal note. With my plan to retire in the back half of this calendar year, I wanted to thank you and your predecessors for your partnership, learnings, and insights over the past many years.

Jeffrey Bernstein: Great. Thanks very much. Rick and Raj, rather than ask a 10-part question and follow up, I did just want to share a personal note with my plan to retire in the back half of this calendar year. I just wanted to thank you and your predecessors for your partnership, learnings, and insights over the past many years. I've always appreciated your longer term perspective on the business, which is a rarity, and I applaud your 30-plus year chart demonstrating the 10-year average total shareholder return always at or above 10%. I think that's something your peers likely strive for. I just wanted to congratulate you on a successful fiscal 2026. Best of luck achieving similar in fiscal 2027, most importantly, sustaining for years to come. I just wanted to thank you again. It has been an honor to work with you over all these years.

Speaker #2: And I look forward to hearing from you some other ways. You've got our email addresses. Every once in a while, if you get the knack to listen to a call and you want to and you want to give us a call afterwards, that'd be awesome.

Speaker #2: But I don't expect you to do that. I expect you to have fun in your next endeavor. And I'll let Raj say what he wants to say.

Raj Vennam: Trust us, we have a pretty strong filter for how we spend capital here at Darden. We hold our brands and our development team to a pretty high standard. Our returns on new restaurants have been stellar. We feel like this is a good use of capital.

Speaker #14: I've always appreciated your longer-term perspective on the business, which is a rarity. And I applaud your 30-plus-year chart demonstrating the 10-year average total shareholder return always at or above 10%.

Speaker #1: Yeah. No, thank you, Jeff. And I echo everything Rick said. And we've always enjoyed the partnership. And we really want to thank you for the time we had the opportunity to spend with you.

Speaker #14: I think that's something your peers likely strive for, so I just wanted to congratulate you on a successful fiscal '26. Best of luck achieving similar results in fiscal '27.

Sara Senatore: Thank you. I wanted to go back to the comment about seeing some growth in spending from lower-income consumers. I think that cohort has been declining in terms of traffic in prior quarters. I know you mentioned refunds, but is there anything as you think about what brought them in? Was it smaller portions? Did that play a role? Because obviously, it's also smaller price points. I guess as you think about maybe value messaging perhaps more broadly, if anything changed in the quarter. We had heard that perhaps the Italian category maybe was a little bit more promotional or more focused on value. I'm just trying to reconcile all of what I think I know about the industry, but maybe isn't the case.

Speaker #1: And all the best. And with your next chapter in life. And we'll miss hearing your voice on this call.

Speaker #14: And most importantly, sustaining for years to come. So, I just wanted to thank you again. It has been an honor to work with you over all these years.

Speaker #2: Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further closing comments.

Jeffrey Bernstein: It has been an honor to work with you over all these years. Thank you.

Speaker #14: Thank you.

Jeffrey Bernstein: Thank you.

Rick Cardenas: Hey, Jeff. I want to say the same thing to you. Thanks for your questions and your comments all these years, and thanks for believing in what we do and thinking about the long term. We're going to miss your questions. We're going to miss what you've done with us and helped us over the years. I would say my predecessors would say the exact same thing if they were on this line. Best of luck to you in your retirement. I was hoping you would ask a question or at least be on this call. I look forward to hearing from you some other ways. You've got our email addresses. Every once in a while, if you get the knack to listen to a call and you want to give us a call afterwards, that'd be awesome, but I don't expect you to do that.

Speaker #3: Thanks, Kevin. I want to remind you that we plan to release first quarter results on Thursday, September 24th, before the market opens with a conference call to follow.

Speaker #2: Hey, Jeff. I, I, I want to say the same thing to you. Thanks for your questions and your comments all these years. And thanks for believing in what we do and thinking about the long term.

Speaker #3: Thanks for participating on today's call. Have a great day.

Speaker #2: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker #2: We're gonna miss your questions. We're gonna miss what you've done with us and helped us over the years. And I would say my predecessors would say the exact same thing.

Speaker #2: If they were on this line, best of luck to you in your retirement. I was hoping you would ask a question, or at least be on this call.

Speaker #2: and I, I look forward to hearing from you some other ways. you've got our email addresses. every once in a while, if you if you get, get the knack to listen to a call and you wanna and you wanna give us a call afterwards, that'd be awesome.

Rick Cardenas: I think you've said all the things, right? There could be a lot of different things. I do believe that the tax refunds were a little bit of that. I'm not saying that that's the only reason. I think there are other reasons. The Italian category being more promotional, I'm not sure I necessarily saw that. I think Olive Garden did what they did the year before, but maybe others did. But again, we have a big portfolio. We said that all of casual dining did pretty well across all the cohorts. It's just that the bottom quintile was positive year-over-year where the past they weren't. That's why we wanted to highlight that. We'll see if there's more reasons, but it's still early to determine exactly what the reasons were, but we feel pretty good about it.

Rick Cardenas: Every once in a while, if you get the knack to listen to a call and you want to give us a call afterwards, that'd be awesome, but I don't expect you to do that. I expect you to have fun in your next endeavor. I'll let Raj say what he wants to say.

Speaker #2: But I don't expect you to do that. I expect you to have fun in your next endeavor. And I'll let Raj say what he wants to say.

Rick Cardenas: I expect you to have fun in your next endeavor. I'll let Raj say what he wants to say.

Speaker #1: Yeah, no, thank you, Jeff. And I echo everything Rick said. You know, we've always enjoyed the partnership, and we really want to thank you for the time we had the opportunity to spend with you.

Rajesh Vennam: Yeah, no. Thank you, Jeff. I echo everything Rick said, and we've always enjoyed the partnership, and we really want to thank you for the time we had the opportunity to spend with you, and all the best with your next chapter in life. We'll miss hearing your voice on this call.

Raj Vennam: Yeah, no. Thank you, Jeff. I echo everything Rick said, and we've always enjoyed the partnership, and we really want to thank you for the time we had the opportunity to spend with you, and all the best with your next chapter in life. We'll miss hearing your voice on this call.

Speaker #1: And, and all the best. And, you know, with your next chapter in life. And, we'll miss you we'll miss hearing your voice on this call.

Speaker #2: Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further closing comments.

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

Speaker #3: Thanks, Kevin. I want to remind you that we plan to release first quarter results on Thursday, September 24, before the market opens, with the conference call to follow.

Courtney Aquilar: Thanks, Kevin. I want to remind you that we plan to release Q1 results on Thursday, 24 September before the market opens with a conference call to follow. Thanks for participating on today's call. Have a great day.

Courtney Aquilla: Thanks, Kevin. I want to remind you that we plan to release Q1 results on Thursday, 24 September before the market opens with a conference call to follow. Thanks for participating on today's call. Have a great day.

Operator: Thank you. Our next question today is coming from Brian Harbour from Morgan Stanley. Your line is now live.

Speaker #3: Thanks for participating in today's call. Have a great day.

Speaker #2: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Brian Harbour: Yeah. Thanks. Good morning, guys. I guess, 3% commodity inflation seems pretty good in this environment where some things are really moving around a lot. I guess, is this a prime example of where your scale really benefits things? I guess, the distribution model you have, does that reduce some of the cost versus what you might otherwise see or what some peers might see in this sort of environment?

Raj Vennam: Yeah, absolutely. We've talked about the benefit of scale. I think Rick actually in his prepared remarks specifically talked about the benefit of having our own distribution network and owning our own inventory and actually working directly with our suppliers. The scale benefit is meaningful, especially helps us protects us from a lot of volatility. Because we can guarantee certain volumes, that helps the suppliers feel good about committing to certain prices. I don't want to take away from our supply chain team, does a great job. They have done excellent job outperforming the market by mid to high single-digit percentage points in multiple years. A part of it is how good our team is at negotiating and getting great deals for Darden. The scale is really a factor. Absolutely.

Brian Harbour: Raj, you're talking about more pre-opening and a little bit of margin inefficiency from new units. I guess it doesn't sound like that's necessarily one time, and in future years, if you still saw a little bit of acceleration in unit growth, I assume that's not necessarily something that goes away. Were you suggesting that was more just related to the conversions this year, therefore, it's not something you'd have in future years?

Raj Vennam: Yeah, Jon, great point. If you look at what I was suggesting is we're stepping up basically because of conversions, it ends up being a 20 unit step-up roughly. Whereas when you look at year-over-year from now to next year, even if you assume mid to high % of that target range we have for units, it will not be as big of a step up. This will be in the P&L, a year-over-year, you won't have the same headwind.

Operator: Thank you. Our next question today is coming from Jon Tower from Citi. Your line is now live.

Jon Tower: Great. Thanks for taking the question. Maybe just starting on Olive Garden. I know we talked a lot about it. Right now you're featuring smaller plates, and now they're part of the menu core. It looks like protein is becoming a bigger piece of the menu at Olive Garden. I think at the moment you're focusing on a hot honey chicken bite, at least from an appetizer standpoint. Can you speak to how you're thinking about balancing what the consumer wants against these strong margins that the brand has had historically? It seems like some of these new items or LTOs, which might be more protein centric, end up costing a little bit more. How we should think about margins longer term for that segment?

Rick Cardenas: Hey, John. I just want to make sure it's clear that we have the lighter portions menu. We're not featuring anywhere. It's not like we're marketing it or doing anything. It's the guests are finding it as they go. In terms of the protein, yes, we have a little bit more protein on some of these items on the menu. They're still at a good margin. As we mentioned, next year, with these investments that we made and the lighter portions, and even in some of the protein, we expect our margins to be flat to positive. We'll continue to find other ways to help fund these things. Olive Garden is going to be, we believe, a viable brand for a very long time. In order to do that, we have to continue to make investments.

Rick Cardenas: We have to continue to evolve with what the consumer is looking for. They're looking for a little bit more protein right now. Who knows how long that'll be. They're looking for a little bit of protein right now, and we can find ways to give them that at Olive Garden and at all of our other brands. Again, that is the value of the portfolio that we have. We're not reliant on any one brand, and we're not reliant on any one cuisine. You think about LongHorn, you think about Yard House, Cheddar's, Chuy's, very protein centric in those brands, and all of our other brands. Let's not go too far in saying Olive Garden needs to be LongHorn with protein. They are going to have some protein on their menu, and they always do. With promotions, they have some proteins.

Rick Cardenas: The chicken appetizer you mentioned is doing really well for them. We'll see how we can keep that going.

Jon Tower: Great. Thank you. You did just hit on the idea that the advantages you have as a portfolio company, and I think throughout the presentation on the call today, you spoke to, frankly, the strength of scale. I'm curious if you could kind of refresh your thoughts around the M&A environment and specifically how you see your portfolio growing over time outside of the existing brands that you have today.

Rick Cardenas: Yeah, John, I want to first start by saying that our long-term framework does not need acquisitions to help us hit that. M&A doesn't have to be part of that framework. M&A could give top spin to that framework. We love the brands we have right now. We're focusing on the organic growth of these brands, and building scale that way. If something comes up, our board will discuss it. Right now, we work with what we have in front of us, which is the brands we have today and converting those remaining Bahama Breezes. That's not a little bit of work. That's quite some work for our teams. It's going to be very valuable to us, but we're going to focus on the brands we have until there's another brand.

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

Dennis Geiger: Great. Thanks, guys. Two on Olive Garden, if I may. The first one, just on value perceptions of the brand, any change in the scores there? I don't know if smaller plates has helped on the value side of things or some of the other initiatives you've had in place, just any updates on where value sits, if you've observed any changes there of late.

Rick Cardenas: Yeah, value is still pretty strong at Olive Garden. It's always been a strong brand for value, and it still is a strong brand for value. The lighter portions have very strong value. Again, it's not like half of our guests are ordering that lighter portion. I'm not going to tell you the preference. It's not anywhere near that. Those guests that are ordering the lighter portions menu are coming back more frequently than they were before, and that frequency is continuing to build. We believe that in the long term, we'll get even more value with whatever we put on the menu. That is one of the biggest filters we have at Olive Garden with whatever we try to add. What is the value rating when we test it? Does that improve value or detract from value?

Rick Cardenas: If it detracts from value, we won't put it on the menu. We feel really good about where Olive Garden's value is.

Dennis Geiger: Great. Thanks, Rick. Just to slip in one on Olive Garden and the operational efforts, just kind of the latest there, operational efforts, overall speed of service. I know you've got some longer term focused initiatives on this, just any updates there. I'm not sure you can find better service anywhere, relative to Olive Garden, at least relative to restaurant side visits. I'm just curious if you think you're getting credit from the guests on the operations side of things, and maybe just what that opportunity looks like on the ops side of things for the brand in 2027. Thank you.

Rick Cardenas: Yeah, Dennis. I would agree with you. I think Olive Garden gives some of the best service in casual dining. Thanks for that. Olive Garden has made a pretty meaningful change in the last quarter in their speed. They're focusing on it. They're doing a great job. John Wilkerson and his team of operators with Shane Elrod are doing an amazing job getting the message out to their team members on the importance of speed and what's happening. They are seeing a very quick change in their speed, and they're seeing great feedback from their guests. Their service scores and their pace of meal scores have gone up significantly, they still have a lot more to do, by the way. We believe Olive Garden can continue to move the needle on the speed along with our other brands.

Rick Cardenas: Olive Garden is leading the way for Darden, and we're going to continue to learn from them and help to see what other brands can do from that.

Operator: Thank you. Our next question is coming from William Norris from Baird. Your line is now live.

Drew North: Great. Thanks for taking the question. A lot of mine have been asked, but maybe one on pricing. Can you walk through some of the pricing figures by brand, at least Olive Garden and LongHorn in the Q4, and then how you're thinking about the cadence of pricing through 2027, either on a blended level or a little bit of perspective by brand as we think about the relationship between pricing and inflation? I have a follow-up.

Raj Vennam: Sure, Drew. For Q4, pricing was basically, the blended pricing for Darden was 3.8%. Olive Garden was 2.8%. LongHorn was just over 5.3% or 5.4%. As we look at next year, I mentioned we expect pricing to be about 3%, which we expect that to be more in line with inflation. From a quarterly cadence, we expect it to be slightly higher in the H1, higher than 3% in the H1, and lower than 3% in the H2. I mentioned earlier already from an inflation, we expect Q1 to be the highest, and we expect Olive Garden to be lower pricing than Darden's pricing. Yeah.

Raj Vennam: Yeah, Drew. The inflation is actually holding up. I would say our construction costs in total have, I would say, fairly flat. Actually, as we are opening, going out to bid, we're finding that the bids are coming in a little bit better than our projection, our estimate that we approved. That's a good sign. Costs are holding up. I'm not going to say they're going down meaningfully, but they're not going up. From a return perspective, we feel really good. Cash on cash is a metric that can vary depending on how you choose to invest, whether you take TI or not, and you do make your own capital, that kind of stuff, and use your own capital. However, when we look at it, even with all that, and we look on average, our cash on cash is really strong.

Operator: Thank you. Our next question today is coming from Jim Salera from Stephens. Your line is now live.

Jim Salera: Morning, guys. Thanks for fitting us in. Raj, earlier you broke out the components of the comp guidance for 2027 have implied flat to modestly positive traffic. We've seen a sustained period of negative traffic for the industry, but obviously sustained outperformance for your brands. Can you just kind of walk us through what your expectations are for the industry in fiscal 2027, and maybe how we should think about your ability to continue to either pull guests from other brands or perhaps pull them from other occasions, and just kind of walk us through that?

Raj Vennam: Yeah, the way we think about it is really we focus on what we can control. We're not expecting any material change to industry performance. Our baseline assumption is industry is going to be where it's been. We are trying to say, "What can we do to take share?" I think if you look at last year, we had positive traffic for the year, in an environment when industry was negative. We've done that for years. Like you said, there are different initiatives our brands have. To drive traffic. That's really how we look at it. It varies from brand to brand. I don't want to get too much into the details on what exactly we do.

Jim Salera: Great. A quick follow-up. Earlier to a previous question, you had given the price for Olive Garden and LongHorn in the quarter. Can you just round that out and give us the traffic as well?

Raj Vennam: Quarter. If you look at the quarter, the pricing, the check growth was 3.3, traffic growth was 1.3, pricing was 3.8, so basically about 50 basis points of mix on the quarter. From Olive Garden sales perspective, their traffic was up 20 basis points. I mentioned pricing was 2.8. They had catering that was helping by about 50 basis points. Really, if you look at catering and the traffic, that would probably be, think of it as 70 basis points of traffic at Olive Garden and a check growth of 1.5. Lighter portions, as I mentioned, were a headwind of 80 basis points, there was some negative mix of 30 basis points. From a LongHorn perspective, traffic was up 4.2, and their check was up 5.3, basically in line with their pricing.

Operator: Thank you. Our next question today is coming from Peter Saleh from BTIG. Your line is now live.

Peter Saleh: Great. Thanks for squeezing us in. I did want to come back to the conversation on LongHorn. The comps were the strongest we've seen in, I think, more than 3 years. Do you think there's any trade-down there from fine dining or maybe any trade-up, or any more details you can provide on that would be helpful. I have a follow-up. Thanks.

Rick Cardenas: Hey, Peter. Yeah, there's probably some trade-down from fine dining. There's also some trade-in from retail, is what we think is happening. When you think about frequency in fine dining versus frequency at LongHorn, you'd need quite a bit of trade to make it a real big difference, and the size of LongHorn versus the rest of fine dining. Yeah, there's some trade. I think it's more retail trade.

Peter Saleh: Got it. Just following up on that, are you still seeing the demand destruction of beef in retail? Is that an ongoing thing, and has that gotten better or worse? Any details on that would be helpful as well. Thanks.

Raj Vennam: Yeah, I wouldn't say it has gotten meaningfully better, Peter. I think last month we saw was 8.5% decline in the volume for steak at retail, which is, I think we were seeing as much as 11 at one point, it's moderated a little bit, but still pretty high, 8.5%. Retail makes up roughly half of the total beef sales, I think. It's still a meaningful step down.

Operator: Thank you. Our next question today is coming from Jacob Aiken-Phillips from Melius Research. Your line is now live.

Jacob Aiken-Phillips: Hi. Good morning. Thanks for the question. I just wanted to ask a narrower question on beef risk management. You gave some helpful color on the cadence. With the cattle suppliers are already tight, how do you think about disruptions from screwworm and international cattle flows? Is that more of a supply chain management issue, or could it change pricing and margin framework?

Raj Vennam: Yeah, Jacob, I think on the screwworm front, I would say we're seeing some of the same information you're all seeing. Our perspective is that the short-term risk to beef supplies is minimal, really no meaningful impact to supplier pricing short term. The consumer demand seems to be holding up, meaning they're not significant. USDA has done a great job of just talking about how the product is safe to consume. Long term, risks really could stem from restrictions to animal movement across the state lines. That could potentially disrupt supply chains for a short period of time. Where we sit here, our supply chain team's fairly good about the product side and the price. That's why, I think for this year, we're expecting basically a low single-digit inflation for beef.

Jacob Aiken-Phillips: Got it. Just, you mentioned some softness in guests under 35. Can you just give some more color on that? Is it an affordability issue, or is it more about how they're choosing occasions across different channels?

Rick Cardenas: Jacob, it's hard to tell why they're down, I would say that unemployment is the highest on those 20 to 25s that it's been in a long time. There's no specific reason that we're hearing that the below 35 is down. It's not as big a part of our business as the people that are above 35.

Operator: Thank you. Our next question today is coming from Andrew Strelzik from BMO Capital Markets. Your line is now live.

Andrew Strelzik: Hey, good morning. Thanks for taking the questions. I know it doesn't get a lot of focus, but I wanted to ask a question on the other business segment, which had its best comp performance in a couple of years, built some momentum through the year. I was hoping you could unpack what's been driving that better growth trajectory, and how should we think about the durability of that into 2027?

Rick Cardenas: Yeah, Andrew, I would say the other business, which is Yard House, Cheddar's, Seasons 52, and Chuy's. All of the brands were positive this quarter, really driven a lot by Yard House. Yard House and Cheddar's had a pretty darn good quarter, we think that should be able to continue. At the levels of Yard House comp, I don't know, maybe, we think they're doing a pretty good job. They've actually, over the last three years, as I mentioned on my prepared remarks, done a lot on their menu, especially on the things that really matter at a kind of a bar and a gathering place. They've really improved their burgers, they've really improved their tacos, and their pizza platform, and they've got other things that they want to work on. Cheddar's is the same thing.

Rick Cardenas: Cheddar's has made and is making more improvements in their food and continue to improve their service, we're going to focus on executing on both of those brands. Chuy's is in the middle of its integration or kind of on the back end of its integration, now they're going to focus on using those tools that they know, and continue to work on recipes to make sure there's consistency across all of the restaurants on execution of the recipes. We feel really good about those brands, and the trajectory that we have for them in their future growth. As I mentioned in my call, in the early part of the call, that you should see a little bit more growth on those three brands in the future than you've seen from the past.

Andrew Strelzik: Okay, that was helpful. On the Olive Garden delivery side, now that we're a year plus in, can you give us a sense for how you're thinking about mix potential there, incrementality, and kind of the growth rate as we've lapped the national rollout? Thanks.

Raj Vennam: Andrew, from Uber first-party delivery, when we look at where we were in Q4, we were basically around 4.7% of total sales, which is consistent with what we saw in Q3. We don't expect this to be a meaningful driver incrementally year-over-year as we get into the future, it's holding pretty fairly steady. The incrementality is still in line. We said roughly 50% incremental. That's what we think we're seeing. Olive Garden off-premise in total this quarter was 27%, that's a pretty good place to be.

Operator: Thank you. Our next question today is coming from John Ivankoe from J.P. Morgan. Your line is now live.

John Ivankoe: Hi. Thank you very much. The question is on both direct and indirect disruption that may have happened due to the recent Gulf crisis. Was there anything in terms of supplier or other types of distribution surcharges, anything at all that may have actually influenced COGS at direct or indirect in Q4 or in Q1? Would you expect that any type of disruption that happened from that would have been short-term, that wouldn't occur beyond the very short term? Thank you.

Raj Vennam: Yeah, John, great question. There was some impact, especially there is a fuel surcharge, as you can imagine, but there's a little bit of a lag in how that works its way through the system. We would expect part of the Q1 inflation is some unfavorable impact due to that elevated fuel prices working their way through the system. We expect that impact to ease through the fiscal year as prices come down. It was an impact, and when you look at it, especially through the lens of COGS inflation, it could be tens of basis points approaching 50, 60 basis points at the peak. It seems like things are starting to calm down, so that should help.

John Ivankoe: Okay, that's very helpful, 50 to 60 basis points is certainly not nothing. Remind us where we are on the utility side. Obviously, a lot of utilities across the US are contracted or regulated, so there might be some lag there. Just remind me where Darden stands on the utility front in the relatively near-term outlook. Thank you.

Operator: Thank you. Our next question today is coming from Jim Sanderson from Northcoast Research. Your line is now live.

Jim Sanderson: Hey, thanks for the question and time. Just one question on Olive Garden. I wanted to go back to the mix issue for the lighter portions. I think that's 80 basis points in the quarter. How do you see that evolving? Is that going to grow as more and more consumers take advantage of that menu option, or is it relatively stable as you lap the launch next year?

Raj Vennam: Yeah, Jim, I'd say we would expect that to come down a little bit. 80 basis points is probably the peak. As more consumers come in, it will have some impact, but we don't expect it to be a lot more than maybe 10, 15 basis points, and that will still take a big increase in preference. The bigger part of it is year-over-year, we started with basically 40% of the system in Q1 last year. There was about 30 basis point impact, I think, in Q1. As we wrap on that, you would expect this Q1, for example, to be more of a 50 to 60 basis point headwind and work its way down as we go through the year as we wrap on the phases of launches that we had last year.

Operator: Thank you. Our next question today is coming from Brian Vaccaro from Raymond James. Your line is now live.

Brian Vaccaro: Hi, thanks. Just two quick ones. First at Olive Garden, could you just elaborate a little bit more on how the lighter portion menu is performing? Rick, it sounds like that preference continues to build sequentially, but how's the customer using the platform? Any new learnings there? The follow-up, just a quick one on the guidance. Raj, what level of SG&A did you embed for the year in the fiscal 2027 guidance? Thanks very much.

Rick Cardenas: Yeah, Brian. The lighter portions menu, we're talking somewhere in the low to mid-single digits total preference, but a lot of that is on the weekends at lunch, which is where we had eliminated lunch menus years ago. There's still some of that preference going on at dinner, but more of it is lunch on the weekends. It helps fill our restaurants again. We'll start seeing other things. As that grows, you should start seeing it spread across, and as we potentially re-merchandise it and how we talk about it might continue to grow. That's why we think maybe 10 to 10s of basis points in the future of mix, but not 80 like we talked about.

Raj Vennam: Yeah. Brian, on the SG&A, I'll separate S and G&A because we separate marketing. We put that as part of the restaurant level EBITDA. For marketing, we expect it to go up about 10 basis points, and I think I mentioned roughly $25 million year-over-year. G&A, we expect it to be closer to just probably a little bit north of 500, but around $500 million. That can move a little bit based on what happens with mark to market.

Operator: Thank you. Our next question is coming from Jeffrey Bernstein from Barclays. Your line is now live.

Jeffrey Bernstein: Great. Thanks very much. Rick and Raj, rather than ask a 10-part question and follow-up, I did just want to share a personal note. With my plan to retire in the back half of this calendar year, I just wanted to thank you and your predecessors for your partnership, learnings, and insights over the past many years. I've always appreciated your longer-term perspective on the business, which is a rarity. I applaud your 30-plus year chart demonstrating the 10-year average total shareholder return always at or above 10%. I think that's something your peers likely strive for. I just wanted to congratulate you on a successful fiscal 2026. Best of luck achieving similar in fiscal 2027, and most importantly, sustaining for years to come. I just wanted to thank you again. It has been an honor to work with you over all these years. Thank you.

Rick Cardenas: Hey, Jeff. I want to say the same thing to you. Thanks for your questions and your comments all these years, thanks for believing in what we do and thinking about the long term. We're gonna miss your questions. We're gonna miss what you've done with us and helped us over the years, I would say my predecessors would say the exact same thing if they were on this line. Best of luck to you in your retirement. I was hoping you would ask a question or at least be on this call. I look forward to hearing from you some other ways. You've got our email addresses. Every once in a while, if you get the knack to listen to a call and you want to give us a call afterwards, that'd be awesome, I don't expect you to do that.

Rick Cardenas: I expect you to have fun in your next endeavor. I'll let Raj say what he wants to say.

Raj Vennam: Yeah, no. Thank you, Jeff. I echo everything Rick said, and we've always enjoyed the partnership and we really want to thank you for the time we had the opportunity to spend with you, and all the best with your next chapter in life. We'll miss hearing your voice on this call.

Operator: Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further closing comments.

Courtney Aquila: Thanks, Kevin. I want to remind you that we plan to release Q1 results on Thursday, 24 September, before the market opens with a conference call to follow. Thanks for participating on today's call. Have a great day.

Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Q4 2026 Darden Restaurants Inc Earnings Call

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