Darden Restaurants Stock Sinks as Sales Hurt by ‘Tougher’ Operating Environment

Shares of Darden Restaurants (DRI) dropped 6% in early trading Thursday after the restaurant chain’s quarterly sales fell and it reduced its full-year revenue outlook, citing difficult conditions. 

The operator of Olive Garden and The Capital Grille reported third-quarter fiscal 2024 revenue increased 6.8% from a year earlier to $2.97 billion, short of forecasts. Adjusted earnings per share (EPS) came in at $2.62, in line with estimates.

Total sales were driven by the addition of 79 company-owned Ruth’s Chris Steak House restaurants and 53 other net new restaurants. Darden purchased the Ruth’s Chris chain last year for $715 million.

Same-store sales declined 1%, and were down at its biggest revenue generator, Olive Garden. Sales for Olive Garden fell 1.8%. Darden’s Fine Dining segment recorded a 2.3% drop and its Other Business segment declined 2.6%. Sales were up 2.3% at LongHorn Steakhouse.

CEO Rick Cardenas said that Darden faced “an operating environment that was tougher than we anticipated.”

The company lowered its outlook for full-year revenue to $11.4 billion from $11.5 billion, and same-store sales growth to a gain of 1.5% to 2% from an increase of 2.5% to 3%.

Shares of Darden Restaurants were down 6% to $164.03 as of 11:40 a.m. ET Thursday. They’ve gained close to 8% over the past year.