Analyst Note| Jaime M. Katz |
Narrow-moat Darden Restaurants extended its full-service restaurant share gains during its fiscal 2024 first quarter ended August, outperforming the industry’s same-store sales average by over 400 basis points (Black Box Intelligence). Driven by strong same-store sales growth of 6.1% at Olive Garden and 8.1% at LongHorn Steakhouse, total sales topped $2.7 billion, matching our estimate. Against a more challenging economic backdrop, Darden’s development of more value-oriented fare continues to resonate with consumers, buoyed by its dedication to strategically pricing at a value gap to its peers (according to Darden). As for cost management, restaurant-level EBITDA margin increased 170 basis points to 19%, thanks to food and beverage pricing leverage and productivity gains, just south of our 20% forecast.