TLDR
- Darden Restaurants stock fell 1.4% to $211.42 after its fiscal first-quarter earnings report.
- Net earnings dropped about 9% to $234.3 million, down from $257.9 million a year earlier.
- Operating costs and expenses rose 7% to $2.88 billion on higher food and labor costs.
- Olive Garden’s same-restaurant sales grew just 1.1%, down from 2.4% growth the prior quarter.
- LongHorn Steakhouse was the bright spot, with comparable sales up 6% for the quarter.
Darden Restaurants stock slipped 1.4% to $211.42 on Thursday after the company posted a drop in net earnings for its fiscal first quarter. The owner of Olive Garden and LongHorn Steakhouse blamed rising food and labor costs for the pullback.
Net earnings fell about 9% to $234.3 million, down from $257.9 million a year ago. Adjusted earnings came in at $2.05 a share on sales of $3.2 billion, both matching analyst estimates.
Operating costs and expenses climbed 7% to $2.88 billion. Darden pointed to higher costs for food, beverages, and labor as the main drivers.
CEO Rick Cardenas described the quarter as a “solid start” to fiscal 2027. He highlighted positive same-restaurant sales growth across every one of Darden’s brands.
Olive Garden Growth Cools Off
Olive Garden remains Darden’s largest chain, but its momentum is fading. Same-restaurant sales grew just 1.1% this quarter, a slowdown from 2.4% growth in the fiscal fourth quarter ended May 31.
That deceleration stands out given how much weight Olive Garden carries in Darden’s overall results. Investors watching the chain’s performance may see this as an early signal worth tracking in coming quarters.
LongHorn Steakhouse told a different story. The steakhouse chain posted comparable sales growth of 6% for the quarter, easily outpacing Olive Garden.
Across the whole company, comparable sales rose 3.1%. That came in just below analyst projections of 3.3% growth.
Guidance Left Unchanged
Darden reaffirmed its fiscal 2027 outlook. The company still expects earnings per share from continuing operations of $11.10 to $11.35.
Management did not raise that guidance despite the quarter’s overall growth. That decision to hold steady, rather than lift the forecast, appears to be weighing on investor sentiment today.
Some analysts note that the stock’s drop reflects disappointment over the lack of an upgraded outlook rather than the underlying numbers themselves. Revenue and comparable sales both came in reasonably healthy for the period.
Darden’s free cash flow remains a consistent strength for the business. That cash generation supports continued investment in restaurants, dividend payments, and stock buybacks.
The company does carry a fairly high debt load. That leverage leaves less room to absorb pressure if ingredient costs like beef keep climbing or if consumer spending patterns shift further.
Darden stock is up 18.84% year to date. Average trading volume sits at roughly 1.29 million shares, and the company’s market cap stands at $24.25 billion.
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