Diners wearing protective masks wait outside an Olive Garden restaurant in Thornton, Colorado, on Friday, March 19, 2021.
Chet Strange | Bloomberg | Getty Images
Darden Restaurants on Thursday reported quarterly earnings that topped analysts’ expectations as customers visited Olive Garden and its other chains more than expected.
The company is forecasting that its fiscal fourth-quarter results will show it’s well on the way to recovering from the impact of the coronavirus pandemic.
Shares of the company surged 4.5% in premarket trading.
Here’s what the company reported for the quarter ended Feb. 28 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 98 cents vs. 69 cents expected
- Revenue: $1.73 billion vs. $1.63 billion expected
The company reported fiscal third-quarter net income of $128.7 million, or 98 cents per share, down from $232.3 million, or $1.89 per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings of 69 cents per share.
Net sales fell 26.1% to $1.73 billion, topping expectations of $1.63 billion. Darden’s total same-store sales fell 26.7% during the quarter, down from the fiscal second quarter’s same-store sales declines of 20.6%. During the three months ended Feb. 28, many states imposed stricter mandates for restaurants as new Covid-19 cases surged, hurting sales for the overall industry.
Olive Garden, which accounts for roughly half of Darden’s revenue, reported same-store sales declines of 25.8%. LongHorn Steakhouse is bouncing back more quickly, with a same-store sales decline of just 12.6%.
Darden’s fine-dining business, which includes The Capital Grille, remains the hardest hit by the pandemic. Its same-store sales plunged 45.2%, declining more steeply than the prior quarter.
For Darden’s fiscal fourth quarter, the company is predicting total sales of $2.1 billion and earnings per share from continuing operations of $1.60 to $1.70. The pace of vaccinations is accelerating, which will encourage more consumers to eat at restaurants as states relax restrictions. Darden’s same-store sales turned positive in the week ended March 21 as it starts to lap when restaurant lockdowns were first implemented.
For fiscal 2022, Darden expects roughly 35 restaurant openings and $350 million to $400 million in capital expenditures. Executives said that it was too early to predict earnings or sales for the next fiscal year.
Darden also said it plans to spend about $17 million to give hourly restaurant workers a one-time bonus and to hike wages. Starting Monday, every hourly worker at its restaurants will earn at least $10 an hour, including tip income. In January, hourly wages will go up to $11, and the following January they’ll rise to $12 an hour.
The company’s move to raise worker pay follows an early push from President Joe Biden to raise the federal minimum wage to $15 an hour, including tipped workers. Democrats dropped the proposal from the Covid relief bill, but they will likely try again while Biden is in office.