Darden Restaurants (DRI) 23 Mar 232023 Q3 Earnings call transcript

Good day and welcome to the Darden Fiscal Year 2023 Third Quarter Earnings Call. [Operator Instructions] Please note today's conference is being recorded.

If you have any objections, please disconnect at this time.

I will now turn the call over to Mr. Kevin Kalicak. you. Thank

begin. may You

morning, thank Good on for today's call. everyone, Todd. you and participating Thanks,

are Darden's Rick and today me Joining Cardenas, CFO. Raj President Vennam, CEO; and

As risks Reform Act will XXXX. These this defined made subject the that of a to could are statements the in Litigation forward-looking uncertainties as call Securities Private statements reminder, comments and include during cause and in was to and the Exchange projections. are morning described expectations distributed with materially which Those release, our the its from differ press Securities actual Commission. results Company's filings in this risks and

these a during presentation are the and website presentation. the broadcasting simultaneously are included posted of darden.com. is at call, include in certain We in Relations our measurements section presentation of this non-GAAP discussion which measurements, Today's Investor reconciliations and

plan Looking followed market the fiscal release XXnd, quarter call. XXXX opens June Thursday, earnings to ahead, we on before by conference a fourth

to is XXXX. the discussing During when third any call, performance quarter reference third quarter today's to pre-COVID of comparison a fiscal

all Garden, Additionally, dining specifically results Darden, refer call Cheddar’s excluding benchmark, Intelligence’s, today's Olive Black during Box Steakhouse, Kitchen. to casual and Scratch to LongHorn references industry

financial During our X.X% decreased industry share and update will Raj increased on This financial same-restaurant third details industry our outlook. counts XXXX and will on to guest results some an moving quarter, morning, Rick remarks the forward, and sales X%. brief our same-restaurant quarter and focus fiscal our provide fiscal more

the turn call Rick. I'll Now, to over

Thanks, morning, Kevin. Good everyone.

on we on both exceeded the industry sales We outperforming and same-restaurant the and significantly traffic did strong We benchmarks had top than a quarter more bottom sales. on for line. traffic,

to industry. check resulting growth inflation, We also underprice continued in the relative lower to overall

four to reinforces and advantages our ability competitive philosophy. provide power investment our and to comes strong this of Our life our executing operating our through make back-to-basics guests value strategy, which the to

guest focus restaurant brilliant way on proud the basics. particularly am the by intense being execute This them of food, atmosphere to service with high and a to create level teams enables our experiences. providing memorable continue great I at consistently

holiday weekly sales records, and season, Steakhouse week. During them set Olive LongHorn the Garden only break Valentine's during to new all-time

fact, record total quarter. achieved the In our of sales all brands for

possible right course, ready right would the to be serve of roles this in the having our people without Of guests. none

Our continue well manager to staffing at our be highs. remains restaurants and staffed historic

hard place Our to great each leaders restaurants a work to our work. is ensure of

Olive as During Award, Best and our the LongHorn the brands industry recognized by received the Eddie of several were which as with Practices Garden, Seasons The leaders workforce Black Box of Grille Capital well were data, Award, diversity. V's racial sales as performance. employee employee retention evaluates quarter, brand's Intelligence. is XX and and and honored on Choice and turnover traffic which including gender the based Employer

of team customer survey from This helping very our all Customer engagement and understand level down our our of Data high, drive know what recent satisfaction overall industries. Satisfaction members satisfaction guest that We the American externally. both at from internally is work. is metrics, is and high expected Index results shows across engagement is them

our internal remain exceptionally brands, guest our of satisfaction all across However, ratings strong.

Breeze House Cheddar's fact, achieved and Scratch Kitchen, during Bahama Yard quarter. highs In the all-time

Technomic’s second number casual each ranked tool. Darden major was dining Additionally, for industry among category brands quarter, the consecutive one measurement brand in within the tracking

total we XX% LongHorn strong, sales remained Even Cheddar's. for at quarter, and to-go at with accounting growth sales XX% the Olive the at during Garden, traffic achieved of XX%

of the it added pick to expense having to continue to third-party to pass and to a We up leverage our guests. pay on delivery technology without easier make order

Our teams high are the executing off-premise at level. a experience

significantly Valentine's accuracy improved and and for for day. Olive total they Garden's orders Day, on example, order accounted that both to-go of For ratings for their XX% sales on-time

Darden's XX% total of digital For accounted quarter, XX% more than of sales. transactions off-premise and for the all sales

Finally, new across during restaurants quarter we states. X opened X the

Our opening hiring new and locations. and of new training do excellent team successfully opening members teams restaurant these continue an job to

open are the our our leadership We we so net restaurants to to tremendous quarter, because and track am ability and I well-prepared on new do support pipeline in fourth XX of during teams have confident place. in the

fortunate are the the team continue best members am I We in have proud they to focus and display. industry, of the to and commitment

delight of team and and other. our each everything our do of members behalf nourish for our team thank On want I senior all to Directors, leadership the of Board and you to guests

Now, it over turn I to will Raj.

Rick. Good everyone. you, morning, Thank

sales and weather last quarter for high over restaurants. on weeks the quarter combined expectations had million high winter total of Omicron higher billion, expectations, $XXX of net reduce we XX.X% last outbreak $X.X same-restaurant those several growth of the severe wrapping XX Exceeded along by in year, XX.X% was last to addition were with new driven record which sales by third January’s of that We posting than the third as sales year. growth sales

basis sales an basis earnings industry million and our from year. last above was EBITDA $XXX roughly performed continuing million in X%. XXX XX industry XX.X% even was exceeded quarter increase This share Total as this basis XXX in inflation of repurchases. per points pricing dividends consisting shareholders were the million Total of counts Diluted the points, quarter, of outpaced below points. and to guest same operations of million, cash $XXX share net and performance returned we total by by more X.X%, the restaurant our they approximately same-restaurant benchmark for $XXX $X.XX, $XXX

grains of higher X%, going margin of our and to prior and the versus beverage each Chicken, levels which last commodities continue at looking Food pricing was categories Now expenses experiencing as highest improved and year. quarter of points, inflation, outpaced basis anticipated we compared to but significantly we XXX inflation rose dairy expected. by be quarter X.X%. the than performance approximately into driven

beef higher-than-anticipated and the drove commodities second level inflation of from increased the quarter. inflation However, majority this quarter our

than labor restaurants we leverage from as restaurant despite X%. points elevated offset labor XX wage to favorable expenses our as Total was last better on as inflation that hourly than expense. Restaurant X%. year utilities inflation sales we of repairs efficient Restaurant XXX sales inflation benefited and year maintenance were as was higher more leveraged labor run basis to and last basis well higher points continue

lower compensation points of XX than leverage. margin expenses year, expenses Marketing were the basis driven higher was last timing by year. last were XX sales than points Operating year, XX incentive points expenses. G&A by driven last other of basis than better our income accrual XX.X% and basis

continuing effective and we quarter of $XXX XX.X%, ended earnings quarter for Our rate the with tax from operations million. was the

XX grew reduced by more inflation at XXX while more by operating margin Increased Now underpricing offset versus basis savings basis other performance our points, beverage COVID, looking pre and since cost by and pre-COVID. productivity, marketing than initiatives. were points than improved costs we income food

our at segment Looking performance.

year, of Sales sales of above and grew last LongHorn with XXX% XX.X% our leverage significantly was year, last their basis than profit XX.X%. Olive level. sales industry and sales Olive XX.X%. XX.X% were by All segments XX.X% labor at of growth outperformed last above same-restaurant sales. better year, XXX growth Garden at points both of sales efficiencies. Average of grew on Garden same-restaurant respective traffic driven driven Segment margin benchmarks pre-COVID by weekly sales

same-restaurant inflation. year and by pre-COVID our year, of of pre-COVID of grew below inflation. Segment driven LongHorn driven at last Sales sales profit elevated in level. Dining XX.X% were and XX.X% XX basis XX.X% Fine year, commodities basis of margin level. by by was over the driven XXX% Segment XXX% sales were segment last margin sales commodities was elevated of weekly weekly last growth below XXX Average average profit the XX.X% points points

other Segment XX% grew Our XX.X% better XX leverage profit above sales margin of the segment weekly was last driven sales basis same average XX.X% points level. last year restaurant of with and and of labor than year, pre-COVID growth efficiencies. by XXX% were sales sales the

fiscal XXXX. our Turning to for financial outlook

X% year-to-date approximately expectations diluted quarter. approximately rate of resulting $XXX all and we to have net between X.X%. of XX%, our sales per million billion, X.X% to new for guidance commodities results for fourth diluted our We to and $XXX sales X% to average X.X% expect restaurant and year, same-restaurant total billion the million, of X.X% approximately shares growth total X%, outstanding of to $XX.X spending and of in Furthermore, to the share and between XX inflation capital reflect between tax now inflation openings, million $XX.XX We earnings effective the annual $X. XX% XXX pricing expect annual $X.XX increased

earnings X%, higher commodities outlook billion fourth It share last to inflation primarily higher-than-anticipated solidly sales between now in between the call. versus we same-restaurant inflation and net $X.XX is We communicated. This and range commodities diluted than X% per earnings with shared between quarter in that costs. billion, closer on fourth inflation due we for $X.XX. implies quarter you the commodities last the expect also flat $X.XX estimate Increase to $X.XX beef sales is and the implies low-single-digit

For we million opening million $XXX technology fiscal between and to restaurants and restaurant new to anticipate to maintenance, XX refresh restaurants $XXX million capital related to XX million another $XXX and related and spending $XXX XXXX, new ongoing spending.

total anticipating don't the inflation a the normally we commodities outlook single-digit provide basket fiscal while inflation year, by beef high for we for on fiscal in produce. led And low-single-digit XXXX next are and commodity early this

from inflation. all low deflation expect range to other to single-digit slight We categories

deliver how very we are With by our saying that, their continue managing to this proud I'd that strong results in of like to close environment. dynamic be businesses teams to

open it we'll questions. up Now, for

[Operator from Instructions] comes RBC Carril Capital with Our Markets. first Chris question

ask to wanted first about trends. just line top or I talk So, the

trends seeing basis? are of we're the saw Day. quarter? sense year, quarter around and to Omicron the So, of could know, a what I in given last normalized in comparison Rick, I lap, the just get guess, about you maybe what a through as progression the kind Valentine's trying Maybe out current sales you're to spoke of just the shaking talk following you the the specifically the of perhaps on strength choppiness where you

be So, great. detail would that any point beyond

Hey this Raj. Chris, Good is morning.

So, month-to-month everything at incorporated been noise the pre-COVID, pre-COVID, we back fourth look underlying and when into in promotions, look our we is the know quarter-to-date holidays of the stable. and But has it's stable that actually at you weather pretty versus And and they've trends traffic versus step continued and our from when basically, quarter. excluding actually guidance. fairly

FYXX. appreciate I the inflation for then, preliminary outlook And commodity

any commodity or that you're Any how outlook FYXX? thanks -- here guidance relative you're to morning. about on you So, thoughts providing that thinking providing on provide just going could for forward just for inflation pricing this that

we at also, over think we’ve XXX Chris, points. Yes. last underpriced by basis over way I talked the over And basis think And XXX inflation three we is about, think points. underpriced we by look years, CPI the we’ve about I pricing inflation. full-service as total

next year. a on positions So, share us the significant we the as created -- plans more head competitors, the thoughts We'll pricing our it XXXX next and gap into fiscal well call. we our in June between

Our from with next Brian comes question Harbour Stanley. Morgan

a in side. up does see Yes. good still into question that kind now to I Do very labor envision think, And it's you're you. pay year, forward? you continually. from perspective inflation continue that and of you your as taking just look expect people next to a we're I of an you kind factor important know you in environment How better retain what Thank on into the than Maybe still a staffing. where wage going place on obviously, do peers. right -- wages

is Brian, this Rick. Hey

talk our Let's about staffing.

call, on staffed. our mentioned we're well very we As

our in We than had more ever per have history. managers restaurant we’ve

we So, we good are. about where feel really

We’re to say that in be talk our even inflation I not will year. next COVID, was will wage about the wage before going necessarily what mid-signal-digit. growth

So, employment to great have the work we we and with our however way But comes proposition. continue can whatever we that. a handle economy will

we're pre-COVID Our We're we've we as closer significantly discerning to we been hiring think got It's getting being room improve turnover our people before is and great COVID. reducing. still had to our levels. as And turnover.

feel and June. inflation about talk where we good those our in So, are. really our of about And things we'll pricing targets we all and

that? know thing, is And Is of there inflationary that's higher sort there end that. or maybe that you of -- took But up is what's spending. the an spending point? of I just driving running more on any of bucket Thank of you. capital at kind low this

about bit, and when pre-COVID, quite gone talked the of we've to right? things, it you a have compare think one look up growth. at ramping costs I big being When construction especially we're up Well, you inflation

XX XX approximately we then year, have So, I year new of we're -- this do said think we kind about next and as that well. units we XX in talked to

costs. it's function So, increase really the in a of construction

a quite FF&E the been I especially front, new growing think on restaurants has cost bit. the for construction

And costs pre-COVID. those so a XX-plus-percent it's that's -- -- you're to increase seeing in related

drivers. our economics continue improvements have units, target as given models do our having said on made So strong that, to we are, where and pretty those that's our can. the But why grow new and And want try big business still as to we've we are returns to the want really that. we we growth to to much unit

going a opportunity we to how little But but disciplined do share. feel being we like take to we're we're be we selective, we have still, -- Now, in have bit more that.

Our next question Baird. with comes David Tarantino from

My question, if implied are up quarter. what be running X% in of us fourth I the the and And just comp might you number. from you trying guidance what just guess, traffic a that could to to of Raj, tell perspective in pricing level frame X%

basically, have to we're we be X%. under think I David, Yes. going --

is running X% running probably we're QX. to X.X% to it, call in expect what be or So

And traffic. And you comment macro slightly just it is given lately. a I'd implies macro the something was thoughts is? issue, if or think hear it. love could I current that or seen all the then, on environment then wondering Rick negative guess your we've maybe on Rick, maybe, in the else to And I you Got guidance view? you volatility your is And it why

Just several next of how about the quarters? outlook thinking the are you for kind

the you take the next But macro look David, let's the did think it about for QX. pre-COVID, if where think QX. even Never-Ending for that is what you talk we're our for are we Bowl in out change trends if pre-COVID, macro you our guide When you Yes. the at about quarter, similar, Omicron about thinking the versus about very and change consumer. Pasta

durable the that. state So from of benefiting the calls, the -- consumer from to but state the as there's goods in said spending shift and previous economy, businesses you a restaurant services, about been we've this of think in are

consumer calendar for interesting year was spending is, high. What's most but customer significantly was sentiment XXXX, of pretty bad,

were they they were bad, spending. So still even though were thinking that things

And and spend. long continue should we increasing, rate low as think consumers so, the as is unemployment are wages to

dining Casual traffic. quarter year positive sequentially the improved, the same-restaurant gap during sales especially and fiscal to industry improved each in our

So, our like pulling to will service what we they do most we're visits from trading helping also not the doing suggests I have. us. health full service and really on are brand feel back not that that the consumers appear down be is say based restaurant proprietary we limited tracker data data from from to

Now afford. between spending they there to the is because most out to is of them. is want luxury away a is difficult value, people home seek an one affordable are food consumers what trade-offs. prices, tension still going which about what and for can give Consumers continue expenses restaurant up making And low a to from not

we will industry deliver focused category. challenges. remain For to what believe for us? and whatever so, what happens that promise the appeal brands, that brand And does that's and no value matter despite in that happens mean our what can operators we the doing, economic continue And consumers, their on to to on

Makes Thank sense. you.

you. Thank

Jeffrey Our comes from Barclays. next Bernstein question with

very much. you Thank Two Great. questions.

growth just both like pretty guidance, one, you first X% terms earnings about last quarter and XX%. fourth fourth quarters. talked maybe the The looks of on maybe in I be growth implied should the quarter the know quarter of third even to quarter, that's

grew XX%. The third quarter

you're to for growth tempering the maybe like algo looks So, just fourth quarter the relative it the earnings third.

uptick I the trend the view earnings of inflation. had or quarter? And relative Just you follow-up. one wondering how perspective it's that from Kind an in whether the fourth third think then, sequential conservatism about to you the perhaps as modest in

inflation. actually was we said. -- saying We you low said call, we QX as to in that's flat. we're It's thought solidly -- last the that did commodities closer the Jeff. to digits. going flat, now Hey be the And what It's then single in

outside really you when of kind -- growth that less. But layer that's dynamic little that's of in, is So, that's different. the primary bit where the a

think Understood. it, wondering manage growth, all, impact you the the And that business macro new rates rise. on at your still how if how which to still just decisions? or interest maybe does that behavior, question terms then you of borrowings consumer you impacts think you any on play, seems into up all, Like, how about in the it how as following stable does unit cash or return with manage be or I'm if of whether come business? you. Thank at just

business. impact rates huge We our have this aren’t Jeff, really Rick. is significant interest actually a in cash. a The balance Yes. in making

little time. So, over given higher interest actually more has interest a us rates bit

mentioned. seen You have think inflation, Raj our we openings restaurant as that about new

of we're we bid you this if we little get so, know bid during some getting bit of being prudent we're a year, wait see saying, And what, sites. to just some at a and might time deals in second sometimes only looking these one of can for these

want be So done But to anything haven't interest us. for really we the prudent. rates

And card if the when today. record they're We'll in spending see but were balances, consumer, they're due, think highs these spending. credit which happens come what still you about at still December,

our So, so in far, space. nothing

changed it one pertains returns our our again strong our cash we of shareholders. feel we we our it what a that's as it long-term we return about in capital about coming today. June. announced framework. talk to We'll As have to But cash, outlook return up dividend way We like and hasn't very really think

the dividend how imply our a return would shares. shareholders, and talk framework in somewhere that we've million quarter. buy bought little gave you we've cash share back to bit and $XXX-and-some-odd got a framework the long-term we in our on our June. in we target about if rough we'll for our in of our targets back more to as percent year, But and our and much you fourth This how So, go we back return more cash earnings count

clarify, it. fiscal in through the March. just seen third think I Rick, stability And quarter you've you sales before that relative Got even into to mentioned and

the lead outside or you that and restaurant sales the mean, like over headlines looking, noise weeks. to volatility from macro? it all do things few to Does the in broader with to not see so line, really that much or banking despite most recent and Just I week week, day day the create noise the that past greater for the

March, break. when you of happen in Jeff, about just I think spring will volatility Well, think you think, in shifts because if March

account. trends fairly are to you take into that But So consistent. have

might think spring is. when you So, about a state the where change break

will volatility feel that show haven't really our changed So, But at like general, we restaurants. in much. trends

Our next question comes from Stephens. Long Josh with

prior In the the context are of relative back mean, messaging I year into versus we of on as what macroeconomic kind versus how into we that? you into comfortable any a more basis that marketing levels kind of the to fiscal be then or your environment? marketing you 'XX? business, reason we of the have challenging Are visibility potentially and with about years. go and thinking could still of the go in terms seen opportunity lower adjust at half Is spend as volatile there what strategy

is of different this is be advantage Josh, to It isn't into to XX get significantly they marketing going Hey as too Garden's be of year-over-year. But to the as our much either mix but have. scale we on would say that think promotional advertising going way, I be our about year. before, always plans, basis We're to or might not said part points we've XX next going Rick. up because detail down spend Olive

advantage with leverage we'll so, scale Olive continue to And Garden. that

evaluate has before, And a it to the discount. to to going marketing equity. not we activity, brand at deep execute, filters has it's that mentioned to and elevate be -- be simple we'll use to elevating It any

without to as to dramatically been on where expect plan we strategy. when we'd earn to so, a compared in many that we've But things have it. and And our said increase we'll react it times past, would we change, return marketing And if if sticking spend, we accordingly. the

So, hurt it it impact ROI, our margins. be it should shouldn't shouldn't and a -- positive our

follow-up one maybe then, me. And for helpful. That's Understood.

helping the terms than restaurant more from had managers fact that about that in about either we how talking about you just Can of opportunities benefits your positively gap the and that to versus bit a should service having that the pipeline talk should think component of industry wider kind drive as about impacting how restaurant we you over mentioned think -- the go or and experience guest a In and you time? unlocks forward history. manager you've the maybe

the gives make with team, especially time the spend Josh. them in role spend there fully manager and more and role just with time being them develop forecasting business And important partner. to their guests. manager, and is restaurants The staffed managing time Yes, the have, their we them, stronger general our spending their team that train most

going highest If restaurant with But you're our history fully well. other under and you and pipeline helps run the the about think doesn't it about for in new that quarter, net thing this restaurants managers as XX managers in openings staff of being staffed staffing coming right? have. the that open ready the that with we managers, have us have units, are is our If we forward, about we

of to we spend open have time our they So, with team, and more guests, being the benefits a lot there's with fully managers can restaurants. more time staffed spend managers of can their

Our next Bernstein. with Danilo question comes from Gargiulo

morning. Good

inflation you in Darden price mentioned the that ability the traffic. faster is sales below market the of Rick, terms So giving to grow than to ability and

inflation decelerates food at at and expecting the pace perhaps if inflation the So, away to lower home continue inflation? to same from home compared are increases momentum food you a

low. lot has been our sticking are based over inflation our Well, and down, a already a on of plan slow we things down comes where whether this we has for for while, high next to been long helped quite really on now. strategy on it. the pricing is inflation term It's right inflation has or year in or If been built us strategy

And to be so, able accordingly. we'll react

than long it below XX-month scale might That that a so a bit our period, said, bit lower inflation. us little price down drive a or get be when higher, run, better a advantage long inflation bit, guests. guests inflation. as they savings to they believe get we pricing that plan for we value little value, little below consistent we in the opportunity places for if the find that in great and experiences, to economy can and But what to value earlier, the intend gives the any especially run, we appreciate cost And they a provide. our In said on great slows go we that's

Thank you. selective. And the maybe, your if recent bit on more Raj, units what you're caused a net the of marginal to returns units? and also deceleration new comment comment can be strong in new little expectations And on you in going that

is can share strategy the evolving time? estate So, how over you real

Yes.

So openings. And a the talked new new we challenges for construction of is XX the this are a is things. just expectation and part we still The opening units, delays about, year think it I quite of had. approximately mean, we've I couple our few.

a So, quite we're bit. opening

expected comment actually as we especially returns, on on recent top when our into. the more actually openings As units outperformed we the than the at far -- new the going look line have

So, They're would have most actually exceeding the we for that what at are going into the our -- project. at approved estimated opening they brands. the capital we opening are of when volumes

terms in our -- of lot overall, of So our in the capital. cost a had of versus we returns headroom always

cost. construction we the the margin exceeding are with so, a hurdle And by increased wide even

Thank you.

from with comes Geiger Dennis UBS. question next Our

about Raj, you've of on thinking I any ask term there's you're to I holding how know pandemic? the margin and if update to more one recently to that wanted gains since on seen spoken kind number. thoughts you've longer maybe if term recently? have a to of an more of total return annual new algorithm growth curious observations sort any or seen trajectory, you've margin what just than long-term you margin rather But longer given on sort

last in this the Yes. the price talked -- purposeful Dennis, we where price, been about to I deliberate think few years and we versus gains actually of right, had choosing we've have because pre-COVID. year we've over

these the year, might dividend at get different. over TSR. do a to any time. from EPS be the intent the end there, we given how to we from this XX% starting levels. to to it in yield. grow But be growth try But plus of that expect can different. margins Our to XX% are go be would And That's given Ultimately, we fiscal we year, build year back where

That's will you've can speak to appreciate brand more, great. the look just new on you I of breakdown whether seen one similar what years? you. sort by prior just XX in that. the to And openings, Thank

Yes.

I you're the the Olive have little they there Garden more because opportunity they of think in see we shared to is that bit we've growth pandemic. out going portfolio, -- a think returns of openings and best the have just more for coming

might up mid-teens in XXish for making you So, LongHorn see then else and and then the everybody rest. them for

next Jeff Our question from Haskett. comes Farmer with Gordon

Great.

G&A level are as Just moving you that on roughly following restaurant forward? restaurant pre-COVID below points both up and looks the of think revenue on running lower a is sustainable XXX levels. margins, some structure of marketing of the basis percent but corporate your touch stuff you expense did you Do just like discussed. at cost But and

talk -- our trying guest. always about Yes. we benefiting, we that are impacting When for costs scale focus We on opportunity the are take to directly us. always the that's not

restaurant really are think able and being that's So, we where scale. expenses two benefits in most leverage our costs of G&A the to terms take our places out, us scale the

continue to to gap. those -- to expect maintain do we a pre-COVID, be so, positive gap And wider

just customer then, profile. on -- of the on one lower income sort demand follow-up And more the

their itself? of customer or changes that slowing some curious How to how lower I'm but Is demand when just check there, behavior? pointed sort that obviously reduced management? that income does visit You've manifests that up show

talked if with they'll now Generally, their But manifests it check later. manage visits few but lower time the In a still over past, in we the consumer, we seen news quarters, good a it last bit, managing haven't change their itself, manage in mix and down consumer. generally pre-COVID. lower The shifting we starts last end then being talked above income from Yes. to first, the material that had our the is about check. consumers will mix little

And a lot so far, of management. really we check whole seen haven't

based you, what we but sentiment consumer And 'XX, tells earlier, shifted in as that bad still pretty benefited. I consumers said So, to restaurants, spent. was on people

a it we may it. when population. brands, impact they then shocks mix impact lower-end and consumers, So, of impact benefit lower-end high-end withstand they're see have it portfolio will it our that But the consumer to and that our have And likely that that's of do, bigger yet. it will haven't not just we one the brands. start we a more can we the at lower end probably and of We brands, seen check portfolio will probably segment less

question Cowen. Andrew from TD next Our Charles with comes

quick question. guidance, we Raj, still about One XXXX EPS roughly as is for the $XXX number million bookkeeping G&A? right think

That's Yes. right.

you you macro then realize stubbornly in consumer your proven there has going XQ And the the But in we high. backdrop in slowing call. guys I provide of take you a TSR XXXX talk backdrop? if guidance and just just get on to this different the to Can to environment, Thanks. with are uncertain to Okay. about see XXXX plus ability deliver could were that XX% combined confidence the inflation just avenues

in TSR below return. company, any that XX% will been say that. said that we've year, this than in returning history confidence less be above that since back that’s had it never I Andrew, had remember many of -- think we've go you Rick. any to our will public shareholder total earnings say, we year, a a one about Yes. our a times yield. if dividend period annualized growth XX-year XX% or is a could have XX-year one that in and I we've And XX%

XX%. the be XX% So, pretty going about like year. we're next going that would we to But long confident not we I to there. get get feel We're to we're to talk confident to feel run over able should

Our Jon comes next from Citi. question Tower with

away limited from been it's from handful Awesome. the Hopefully, from hearing down trading Great. not into recent me, weeks. Thanks -- consumer own service your survey a limited are to full-service -- we've operators of counter Frankly, service. what in you excuse struck really for okay. the taking was can was I hear commentary that your suggesting I about customers question. me by

curious speaking or then broadly that to your customers two, hear from away they talk brands, now it down about -- to And specifically from the home? versus thinking Are about number you say, you, just I'm past, is are Number when speaking brand using broadly what eating for they're you as their category? So is in about sticking own these trading differently or your that years full-service elsewhere? can your more is why than, telling one. out you with about or going budgeting about

is Yes. said Jon, earlier most aren't. customers Rick. we What is this

in shifting limited customers to Now, mean most not we're results. there but that aren't. any really service, seeing our aren't from And that full-service doesn't

So, others than doing might We've be, pricing value. of but what we most providing our a lot less have great competition. is actually taken been a

that we're reason So, that seeing might when not. be a be others might that

our improving experience. we're guest And

that basis So, we've at we've the same time pre-COVID, improving experience. XXX or versus by was lower inflation taken XXX that Raj points than pricing said, our been

mentioned I as and at satisfaction Cheddar's is Our House, had records Yard growing. already. We've customer

a tougher. when So, I to bit them environments And continue crave provide what a And experience. doing we'll that. gives get we've think will value. little consistent a crave them that been things that's that, great that and They people do

Okay.

suggesting your specific you're did to more brand full the you is category? that whole survey brands service So, work necessarily than this

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are, or consumers aren't. we downturns had in we big like that, -- but prior And a a lot lot down. things had more trade most Some

seen We haven't that.

up. satisfaction is I our specifically talk when about Now, our brands, to

before. than was Our value is better it

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does stick triggers. We've don't on much about execute, marketing Hey making our to to I What specific testing John, deep necessarily easier be to to But And make spend. it prudent branded, we've things not when time continue of business what to strategy it's the is brand done this last very during to and say to right to few years in Rick. done going it change. our and our be going discount. lot a elevating more we're now, over simple really our to talk communication we can We're operate be equity, we a going expect lot we're change drive. marketing may dramatically, of simplify to a

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John next Ivankoe from Our with JPMorgan. question comes

that, on talked certainly so, assume of know not guiding, dining to out, follow-up consumers do, and service a that they're think. months but guidance most trading a traffic. is Just next negative especially I employed, you're to full and want don't giving I from a assuming I we've up over people lot or service limited three the when something about same-store

on kind bigger I Commodities oftentimes a for restaurants, a prepared just Is back relative retaking restaurant to and view that value number some think you're really Grocery for there pricing grocery question what single maybe So maybe bringing if other or promotion advertising, restaurants is your the of is, be still want year-over-year keeping grocery brand of of XX%, to was guys that x When of way you something that brands, Tower's it. excess about meals maybe internally pricing how perhaps and now. in and back to commodities. from still low as included pricing. like in want this very relative in and I calculate for to question to It industry. drop to own coming terms you kind service so of guess digits. than to brand your Grocery consumed some follows is forward-looking is language you Jon remains total actually multiple, restaurants? a the bottom customers start you bringing expected opportunity say, has are been of emerge just depending sure the guess, pricing to grocery X-plus it maybe actually a even well your make of using think X% percent question, XX-plus start limited to whatever the them. And

Yes John, Rick. It's thanks.

the what commodity they let margin I past, One of we're hear us X% in equal, declines of want margin, to the else not in going in make If said about down, think in nothing. food go the costs significant a sure everybody things risk all traffic, offset to happens will is X% because decline what a inflation decline with economy. we've doing

So and same if traffic get weather can still and comes bit we down, the a commodity decline costs inflation EBITDA. to down of come a little

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change, going we'll let forward. strategy our that's things know. So, If you

clear certainly think important Well express. not you. and permanently hear Thank think temporarily that's learned, I -- and to lesson that's very and to I learned,

Our O'Cull next from Stifel. Chris come with will question

Rick, quarter to less tied traffic the than you've the outperformance pricing competition. this

difference or some of you you do think believe So, change caused with are has marketing value. I'm now just in a effort, noticing quarter? trigger If what relative there why that consumers this that wondering was sort or advertising

would think just it's say that don't I I quarter. Chris, this Hey

I think inflation, been inflation. underpricing doing. long we've putting started underpricing COVID, on the been Even time more been been we before we've We've a it's what plate. and

we've while so, actually And underpricing. invested

Garden, you [indiscernible] are for was But look up. example, COVID. And you take contribution at margin, it's today can't contribution do their But before at the lower look if just you so, math. than Olive margin margin, it if variable margins in Garden, Olive

this. think come it because that to not doesn't have more that's we getting figure the we're shouting figure they're a talk this about the that seeing are and to we're out. take restaurants, them consumers value run they when about into what to over that doing, done out when And you why long takes our to rooftops we've time a doesn't long the take out. It week So -- that that

higher and a while got brand things about made our that spot now, have freshly make in about never-ending that Garden at XX-second still Right advertising their show some where on we sauces price Never-Ending back special. did day, on TV the The our was that we've that and closest $X Olive our being have cases sold value Bowl our first Pasta and we a course. people about we to great to brought talking talking back restaurants, still every talking

that brands so aren't item that actually There course never-ending you for many you order. that And us. is -- and every on first give that never-ending

don't restaurants, and have and we see or And less. we've it than we priced We rooftops out from that about. they others our go time. talk that so, prices into shout lower come as it's something not again, over necessarily builds the They that do

data And I especially you a guys segments Garden? That's I certain set. know consumer visits, have rich Olive increased great. of mean, their consumer that indicate at your data have does frequency

actually news for these to for and are great us starting the to that's that our is we're data and What had versus by say little in us than come used bit But to go time, visit driven too. business. a a actually is lot their increase an tell first I brands, COVID that's would to of younger getting our the were somewhat us, go pre-COVID, all -- across before would restaurant, first that of we folks our into

a So it of kind come handshake in. to was

bit what And great so that's us. are getting similar frequency We're we've fairly what we're before. And core that's been in our slightly they segments younger, guests. to news a focusing really on. And more consumer but also for little were our

really can to don't to our like have They're That consumers change we're have means not we we we been younger. just that keep what before. doing the is good slightly because talking that So, consumers are different. our news

from comes Senatore question Sara Bank next Our America. of with

Katherine This I you. ask to is again just marketing, for on Thank on Griffin wanted Hi. sorry. Sara.

bit you're little a about up and seeing on at them if other spending? speak could promotional restaurants, marketing you if what you're seeing Just ramping

Rick. Hey Katherine, is this

other X it that probably as that we back can just competitors before, you they TV it And tell these competitor there's talked big You just on and see as got about that some went did do. of it. But they you've I much a versus That of are a there top out little advertising through usually deals. still in Olive branded is Garden spend television on and we're bit said, before. that space, of our X the than doing kind advertising more or were in they

comes question next Strelzik BMO. Andrew from Our with

not as Cheddar's just maybe sound I much at you Breeze like they're or about Yard and scores Olive Garden you maybe at wanted and highs but but I does talked mentioned satisfaction to customer and all-time LongHorn. about the not some records, of House Bahama believe, as ask the It as and up, well, others.

how So that two, strategy guiding I'm perception much maybe your why maybe your between forward? as is up of aren't going those I is guess the difference the curious Thanks. just what and

Rick. Andrew, this is

Let and are by at that are saying other very LongHorn Garden owning me and Olive our high, satisfaction brands, our significantly fine start brands high.

significant House. House to to more that. have versus and Cheddar's little significant what And and and their customers at a so move improvements others value, bit Cheddar's made we've to brand, significant Yard up takes them seen and and improvements see service it improvement significantly Yard to

I And quarter. and this or near Yard made at our the that But actually you a record brands aren't at just others so, we've mentioned, wouldn't having had It's record great tell those highs. that records. Cheddar's their performance House -- at I

it. Got

period about little seems or the if your you've exercise a menu pricing Okay. the on settled different a And you've one an sense. there's environment coming ongoing of very And stand -- positive a I'm one curious That what maybe exercise settling maybe the the the makes seeing brands, comps. little you're other any gone that driving value are have out where proposition. just bit. curious menus that's brands of within now within maybe obviously, if be bit. looked overall just maybe address And I'm to opportunities things how the where now? or through now pieces or at and to We're

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like matter others. won't that We'll doing happens earned feel or we with economy do, the and done. no to the change do continue what right in we've what to keep what what So we've happens we

with Evercore David from ISI. Palmer question Our comes next

like comparisons go of 'XX. something the investors is calendar looking I they're thinking at trend flat, the are about industry thinking they're multiyear a the that in industry half and think going And on to basis. second

that stay much single clear in on regard at casual if it than are is of unless on to levers gap to heads if this and the got that mean, call very happen, But people's points X-plus pull course? pessimistic? think better And along been And really marketing mix to so, about you're your value point. were to too bad. the advertising you've really not you you're and because, based But stay obviously, that's seeing that don't to you you're too to I digits, where positive and four-year low doing that is wanting coming of your you're change kind wonder, this stable. with the what not trends would the do industry dining. I sort with regard need

outperformed brands I some brands, of and at -- second the trusted out for history 'XX if David, in during don't they talk look see that calendar guests go the because want happens, half about of our they is of I fiscal Garden look that that's if Olive you Yes. brands, Garden where is back think and But most -- time what I and there. for go necessarily in slowdowns, Olive one value back trusted you look significantly us. 'XX because think to you to fiscal of and other

So, expect we would that outperform. could we

but will, I that's what -- would can't stay. I say I history think think our we we

unless our like couple to the something anything just going or And we and mix dramatically so, years, differently. But of doing there. it few anticipate changes, we're we may marketing at here a we've in don't last tenths move look done

big all, thing scores other and to those originally a was potentially. I being and just one are this the category you is country a number might going into is killer of Cheddar's that returns. menu move varied menu help bought center about be Cheddar's become of have been to all grill a and mean a much thing, The in I better first these seeing congrats wondering TAM is bar on scores big the value, scores. But has value thought big varied

bit XX where and as is you a up returns can't year. a growing on now right maybe metrics that maybe units brand quite that about today? thoughts go it Thanks. any you're So XX, Why see

they make had the when their David. their we that them. ICR world of fast, have we're growth -- how teams as prudent I and we're And it of a on strategic too our they we said grow. opportunities on at still our be believe very a open sure lot the very, for they grew Yes, have I with lot ahead of Cheddar's, bought ahead We to grow to littered leadership brands that is that restaurant opportunities brands. them. say we of would thought we going

days growth doesn't happen percent of And XX-plus that at so, much. for Darden, the a very brand

we they single do. have to And And continue how as digits to going in, get we restaurants Cheddar's, prudent. great we're already ways new I ready people, we restaurants. done And people open we open. find to them. we can will of John pipeline Wilkerson We're to more developing so his little we be see have that to do while have grow into in and long have markets people infill a with for a tell they markets, team going it, can the the their job And to have open the people you as as to that these to faster and the

question Our Lauren Silberman Credit next comes from Suisse. with

outperformance of basis-point outperformance? do about this think On how the traffic the as XXX sustainable, view outperformance, you do gap, you level or

X%, basis every And of Hey might that, total pleased pretty XXX lower anybody there do expect is quarter, very of about expect We're XXX that in Lauren, what the the this than quarters growth our depends is have outperformance expect at that's if points to get It we no? be XXX And quarter. this that hard. growing a long think the over every points long with too but outperform. is traffic the we quarter And is But I bit we term. basis on say term, really basis points and outperformance we industry. X% competition. over this do to for we be wouldn't -- the strong. would traffic little think thinking Rick. all performance we outperformance, industry if If to

you on just getting guess calls environment? change are that current another I are in the Any that interested or then know about you seeing past and talked the M&A, I in brand. valuation? what And you've in guys in the

scale. is getting. into calls one of getting said is can want we discovery price on ways scale the have to improves. I And or build All I say And buy to don't brands. valuations advantage before, to biggest we're volatility competitive other the get detail we're that we've as our is reduces,

And to continue so, made we've interest to have that's think And change. about. got some rates what

do. come our we to be we'll when feel talk opportunities So, when still to the right ready and they play, like Board we'll

question Oppenheimer. Bittner Brian next come with will from Our

EBIT quarter, was And that to but seems this first at quarter. in at Just segments. your showed saw obviously Olive by this only segment expanded we the it Garden we margin be when was measurable margin we driven look as the time look margins it EBIT expansion. Garden many Olive the quarters that primarily quarter, the expansion

average. on down actually were segments other The

the Olive of is should can of So, the in of Garden quarters? talk the you trend continue couple rest performance bifurcation for how the next drivers of versus about segments? the the over And kind margin margin that

think it's pricing versus I the Brian, Hey the given any brand a quarter, function to inflation. brand, of

mentioned, in quarter, Dining the if brands, level our Fine right? the you I and for So look So, weren't LongHorn at beef was third of for some extent, prepared biggest our -- surprise, frankly, they inflation. as and that instance, to

the We past, hadn't place. of of is pricing it. the been price in So to what's for think and overreact truly And try near-term kind going not part to in we we're the pricing more the secure way about think the about inflation fluctuations. I like said to

our quarter segments. noise brand. a was that this Garden up that Olive that XX% impacted sales there front of -- and or is XX% bit really over of said, more it is the that that little on makes other so, mean, our And With I largest of profit.

to with the some we some heavy in to us for have to where Garden the got lot a from did it they growth, second But to up. Olive from everybody else make or -- you see of costs grow, thing quarter. were was Garden the other of did lifting Olive So moderate takes

you recall, it around were was second way So margins deteriorating. if other the where quarter, the

year. piece And Olive impacted last by disproportionately is We Omicron about year. talked was the Garden last third that

some they're the -- them their outperform the benefiting wrap you're were them last so gas, of and it, that. it demographic we them mix inefficiencies of because for most. from year, their hurt on of There as especially now because and geography Now, seeing of labor most

this incredibly else margin average. strong that leverage potentially about of was the going to this above a amplify labor on point in you labor anything just And be can strong quarter quarter, outside labor relative within so leverage any can sales realize this the forward? execution follow-up, how for were model sales past, I there consolidated the quarters can help quarter, But and of margin the we strong executed to quarter your the think this then recent that moving was that

Brian, that's year last labor and And the is sick we are of inefficiencies a but as sales Yes. we you turnover biggest in called -- lot some obviously, last of out pay part, think we so think had I get Omicron. mentioned, seeing because year, I better.

And quarter-to-quarter see over so XXX quarter. points second we do in also from of sales third right? helps piece, said by delta. basis I as that's earlier, actually helping. quarter that's you is And last almost But really function progressed and with We improved the think improvement, mean, a I the I getting sales, had and And of retention with $XXX is that helps leverage. that a then productivity. more million lot the to better,

Our next Securities. question comes from Gregory Guggenheim Francfort with

next -- the 'XX, your years. not on how just to about is few margins, maybe question necessarily in but think my Rick,

XX about next the helpful. versus does think be to at to of that points, Thanks. updated I you margin big basis think of on that points it, wondering look is and step and long-term the I'm that more basis had XX because on a store-level your this years? several way maybe G&A XX framework Just would just cost was a to lot if right side pressure. within of come food XX And the that you when year, in down the Any thoughts

we'd we've framework expansion. year. XX margin COVID. I to that And of expansion we Hey back is about year that give basis that of all, probably margin this of last points Greg, got it question. We first What the for significant XX had talked thanks of say, during some would long-term

think basis I significant expansion XXX So, XXX over we're we to XXX, closer during of to had now and COVID points, pre-COVID.

as so, and we our think think our hold long-term And forward, about over going we still to we long-term get will time. as framework framework

costs. restaurant we should some sales savings that some level a the And about grows that still that come G&A will of and get half should at other But come restaurant. below same-restaurant be But grow, of the as traffic will leveraging of from think to probably we going maybe forward. third some as

comes next James. Raymond from question Our Brian Vaccaro with

XX to across your Are lot that benefiting kind operations? And just currently metrics a you speak could kind was There's can to question operations. labor of also, just driving willing industry? proficiency share And staff of on there that that's is new share of to hourly been obviously to performance industry what would the running? My X hires where and degree how to gap you think be you your be and then manager turnover past that widening any your in the the and months. of the

we've by me reduction in has a helping let Brian, Yes. been us. start saying had turnover, which

our as learn levels. the newer what mentioned members they staffing is pretty team to manager members. especially starting high do, team And earlier, I Our at more are about

so, can spend team of more out teaching And more they getting productivity their time their and team.

getting levels. than into get pre-COVID that back And would Without those too much say to pre-COVID different gap is to our I it turnover, we was. to What towards also isn't our than detail closer turnover levels. it intend COVID would levels is on

So, better. the we're industry as gets better, getting

quarters the over feel And so, And couple in improvement is what of continue really turnover. like we've we'll last big a to seen we improve.

Manager, I of managing more last their August, job is one It a things about work. So, brand actually fruit. to on talked even said work. to as it. each are partner We've spent call, make to place better lot And our a to in great whatever their how our understand already conferences our time, what they bearing how was -- people a do to General an place I those work every and now -- better place like feel think how

better. getting is turnover our So,

making just before on putting busy turnover improved it because on where ago first months focus Our a was team significantly from training we're get of is sure speed six XX-day Friday. out the that up they to and members that feel those thrown

fourth let heard my take look a thinking few And us or your pricing changed All sort you or taken much quick have planned thinking But quarter much of moderate just third take guess I has have arc the and follow-up, pricing, you pressure right. in on how you you over how the expectation more next know of the might quarter? just on to Raj, And how Thank fiscal little That's you. to your did fiscal let that quarter. the quarters? for with on on fourth I helpful. your commodities, Great. quickly the could your in comments

we be I fourth was been, X.X%, to I'm quarter I third pricing but to where will second look on tell X.X%, not was expect at X%. Brian, comment Yes, you quarter that going think under quarter we just you completed QX, if has that the past

on So behind us. annual the peak us an basis pricing for is

dramatically I think unless pricing changes, coming we it's see down. -- going something

then with end actually that's about basis And actually on XXX from I -- pricing. not XXX I started though, to -- of when to year I most I in basis -- -- to below in talked the but downward you points trend at look upward into think inflation And can started translating when the everybody here think roughly this and market, trend. expect points. year, overall, what's people we're pricing we know us but for about. on a the we've we -- happening some We range. results on are compare that the And target else, an of

next Our Wells Fargo. question Parke with John from comes

to I guess guess consumer like seeing lot middle a on that focus but there's a is you more? trade brands low guys down coming and end, into signs I your value bit more are been moving of any that income

different you John. not, seen the our same of Yes, of XX.X% whole versus change I sales look across lot our haven't segments value I brands. we between release ranges was restaurant say if had at it in mix between And XX.X%. today, We and really brands would a think

our I total XX.X%. for comp. the segments comp And of think company had was actually our three So XX.X%

our restaurant And consistent very, same strong So very it's brands sales. across. very had all of

you. Thank Great.

the in questions further no have to over remarks. queue. additional will turn we I call Kalicak time or this closing At Kevin back you. for Thank any now

plan before Great. day. for release in follow. would to you That on call market Thanks Thank call our today. to a call that opens, for a Have I quarter participating you we the June Todd. conference today. concludes results with fourth remind good to Thursday, XXnd like the

call. This concludes you today's participation. your Thank for

time. at You disconnect may any