Olive Garden’s parent company Darden Restaurants saw its stock surge 8.5% on Thursday after it said sales have lately recovered following a weak summer and announced a new delivery partnership with Uber.
Darden reported weaker-than-expected earnings on Thursday, but it reaffirmed its full-year outlook and said sales have been improving since the quarter ended Aug. 25.
“While we fell short of our expectations for the first quarter, I firmly believe in the strength of our business,” CEO Rick Cardenas said in a statement. “I am confident in the actions all our brand teams are taking to address their guests’ needs, which do not compromise the long-term health of our business for short-term benefits.”
The company also announced that it had signed an exclusive two-year contract with Uber Technologies, reversing its prior aversion to third-party delivery services.
Customers will be able to order Olive Garden fan-favorites — like their pasta and breadsticks — through the Olive Garden app. Uber’s network of drivers will be used to deliver the food.
“Guests have been asking us for home delivery options and they continue to show they are willing to pay for the convenience,” Cardenas said in a statement.
Dish prices will reflect in-store prices and customers will pay a delivery fee that will average $7 per order, according to The Wall Street Journal.
The company’s shares were down 1.9% this year prior to Thursday’s boost as the restaurant industry has struggled to draw back inflation-battered customers who continue to eat in and scrimp on dining.
Olive Garden same-store sales dropped 2.9%.
Like many fast-service restaurants, Olive Garden is turning to deals to win over customers. The company will be bringing its Never Ending Pasta Bowl back to menus later this month.
“The significant step down in traffic during July, led to our first quarter earnings being lower than expected,” CFO Raj Vennam said in a statement.
“Following the softness in July, our sales trend has continued to improve. Considering this recovery as well as the planned initiatives to support the remainder of the fiscal year, we are reiterating our guidance for fiscal 2025,” Vennam said.
Darden’s fine dining sector – which includes Eddie V’s and The Capital Grille, and will include newly acquired Ruth’s Chris Steak House next quarter – was hit hardest. Its same-store sales declined by 6%.
The company reported net income of $207.2 million, or $1.74 a share – up from $194.5 million, or $1.59 a share, the year before.
Excluding its costs related to the purchase of Tex-Mex chain Chuy’s, Darden reported adjusted earnings per share of $1.75 – below LSEG analysts’ expectations of $1.83 a share.
Darden reported revenue of $2.76 billion, missing estimates of $2.80 billion.
While total sales rose 1%, same-store sales declined 1.1% in the same period.
LongHorn Steakhouse was Darden’s only business to report a same-store sales growth.
Its same-store sales rose 3.7%. The casual dining steak restaurant was a top performer for Darden throughout the pandemic.
Darden bought Chuy’s Holdings – an Austin, Texas-based Tex-Mex chain with about 100 stores across the southern US – in July for approximately $605 million. Its acquisition is set to close next fiscal quarter.
Chuy’s is Darden’s second acquisition in two years, after it bought Ruth’s Chris Steak House in June 2023 for about $715 million.
Darden reiterated its full-year fiscal 2025 guidance. The company is forecasting earnings per share between $9.40 to $9.60 and net sales between $11.8 billion to $11.9 billion.
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
