Darden Restaurants Stock (DRI): Serves Up Growth but Rising Costs Bite Margins

By Patricia Miller

Sep 22, 2025

3 min read

Olive Garden and LongHorn drive Darden’s 10% revenue jump, but rising food and labor costs test profits even as expansion plans stay on track.

#Darden Restaurants Latest

Darden Restaurants reported a strong revenue growth of about 10% in the first quarter of fiscal 2026, driven by positive same-store sales at Olive Garden and LongHorn, as well as contributions from the recent Chuy’s acquisition and net new restaurant openings.

The company is actively expanding, with plans to open 65 new restaurants. Adjusted earnings per share came in at $1.97 versus analyst expectations of about $2.00, a modest miss. The company reaffirmed its full-year guidance of $10.50–$10.70 per share. It is facing cost pressures, particularly in beef, shrimp, and labor, with total inflation for fiscal 2026 expected at 3.0–3.5%, though segment profit still grew.

Despite these challenges, Darden has kept menu pricing increases below overall inflation and is using promotions and menu innovations to maintain value for customers.

#What Investors Need to Know About Darden Restaurants

  • Revenue increased by nearly 10% year-over-year in Q1 2026. This growth was driven by 4.7% same-restaurant sales increases, the acquisition of Chuy’s Tex Mex (103 restaurants), and net new openings.

  • Same-store sales at Olive Garden and LongHorn were key growth drivers.

  • Plans to open 65 new restaurants indicate growth strategies.

  • Adjusted EPS of $1.97 fell short of expectations but guidance remains firm. Reported GAAP EPS, including certain one-time items, was higher at $2.19.

  • Rising costs in beef, shrimp, and labor are creating margin pressures, though segment profit still increased year-over-year.

#Darden Restaurants At A Glance

Darden Restaurants operates several well-known brands including Olive Garden and LongHorn Steakhouse. It also owns The Capital Grille, Yard House, Eddie V’s, Bahama Breeze, Seasons 52, and Cheddar’s Scratch Kitchen, and recently added Chuy’s Tex Mex.

It is one of the largest full-service restaurant companies in the U.S., focusing on casual dining. The company has a diverse menu and aims to provide a welcoming atmosphere for families and casual diners.

#Competitive Landscape

Darden competes with other casual dining chains such as Texas Roadhouse, Bloomin' Brands, and Brinker International. These companies also face similar challenges with rising food and labor costs while striving to attract diners with competitive offerings.

#Near-Term Catalysts and Risks

Investors should watch for the impacts of rising inflation on consumer spending and dining habits. Darden's expansion plans could drive growth, but they also come with risks associated with high operational costs and changing consumer preferences in the restaurant sector. Maintaining quality and customer experience amidst these challenges will be crucial for ongoing success.

The company expects full-year same-restaurant sales growth of 2.5–3.5%, capital expenditures of $700–750 million, and continues to return capital to shareholders through dividends and stock buybacks.

#Trading DRI Stock

For retail investors considering Darden Restaurants stock, the recent dip could represent a strategically sound entry point. With its solid revenue growth and expansion plans, the stock may appeal to long-term investors looking for exposure in the consumer discretionary sector.

Keeping an eye on cost management efforts and customer response will be key as you frame your investment strategy. In Q1 alone, Darden repurchased $183 million of its stock and declared a quarterly dividend of $1.50 per share, highlighting management’s confidence in long-term performance.

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Important Notice And Disclaimer

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.