Dive Brief:
- Darden Restaurants’ flagship brand Olive Garden posted 3.2% same-store sales growth in Q3 fiscal 2026, which ended Feb. 22, according to an earnings release.
- The comps growth marked the chain’s sixth-consecutive quarter of improvement in the key metric. However, Chief Financial Officer Raj Vennam said the brand saw traffic decline by 0.4%
- Darden executives attributed the sales growth to a combination of factors, including modest growth in catering orders, the expansion of its Uber Eats delivery channel, and its lighter portion lineup, which is meant to appeal to both value-conscious and health-conscious consumers.
Dive Insight:
Darden’s earnings are the first set of earnings to encompass the impact of major winter storms in January and February. Vennam told analysts that weather negatively impacted same-restaurant sales by 100 basis points, and that at times, in January, the chain had to temporarily shut up to 40% of its locations.
That negative impact was exacerbated by ill-luck, CEO Rick Cardenas said. Prior to the quarter, Darden anticipated a reversion toward warmer and less snowy weather in Q3, resulting in a traffic tailwind; Olive Garden cut some price-pointed promotions from its cadence in Q3 because of that prediction. Instead, there were major weather headwinds.
Olive Garden is planning to run its buy-one-take-one promotion in fiscal Q4 for a week longer than in the year-ago period, a move Cardenas said was planned well in advance.
“This is not a reaction to promotional intensity anywhere else,” Cardenas said.
The chain does not count catering orders in its traffic figures, Vennam said, though growth in that channel was significant. Adjusting for those factors, Vennam said, Olive Garden would’ve seen significant positive traffic growth.
The lighter portion menu, which offers smaller sizes of traditional entrees for under $15, also stunted sales growth, resulting in downward pressure on check sizes as consumers opted for smaller fare.
Uber Eats delivery orders at Olive Garden continued to grow, reaching 4.7% of orders, Cardenas said, up from about 4% last quarter.
Longhorn Steakhouse outperformed Olive Garden in terms of sales growth, while fine dining brands at Darden lagged somewhat. The company is in the process of shutting down its Bahama Breeze brand, with 14 locations being converted to other brands. Vennam said most of the workers and managers displaced by the closures of another 14 Bahama Breeze locations were being shifted to other Darden restaurants.
