Darden Restaurants, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the fiscal 21 second quarter earnings conference call. All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone keypad. If you require operator assistance during the call, please press star zero. I'd now like to turn the call over to your speaker today, Kevin Kalakak. Thank you. Please go ahead, sir.

Thank you, James. Good morning, everyone, and thank you for participating on today's call. Joining me on the call today are Gene Lee, Darden's CEO, and Rick Cardenas, CFO. As a reminder, comments made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning, and in its filings with the Security and Exchange Commission. We are simultaneously broadcasting a presentation during this call, which is posted in the investor relations section of our website at Darden.com. Today's discussion and presentation includes certain non-GAAP measurements and reconciliations of those measurements are included in the presentation. We plan to release fiscal 2021 third quarter earnings on March 25th before the market opens, followed by a conference call. This morning, Jean will share some brief remarks about our quarterly performance and business highlights. Rick will then provide more detail on our financial results and share our outlook for the third quarter. And then Jean will share some closing comments. Now I'll turn the call over to Jean.

Thank you, Kevin, and good morning, everyone. We continue to operate in a very fluid environment, and I was pleased with our ability to once again deliver strong profitability in an unpredictable sales environment. Total sales from continuing operations were $1.7 billion, a decrease of 19.4%. Same restaurant sales decreased 20.6%, and diluted net earnings per share from continuing operations were $0.74%. The last two weeks of the quarter negatively impacted our same restaurant sales by approximately 200 basis points, as we quickly went from 97% of our dining rooms being open in the middle of the quarter to only 80% being open at the end of the quarter. As a reminder, Thanksgiving shifted back into our second quarter this year, and we believe guests modified their behavior in advance of the holiday. During the quarter, we remain focused on four key priorities. the health and safety of our team members and guests, in-restaurant execution in a complex operating environment, deploying technology to improve the guest experience, and transforming our business model. The health and safety of our team members and guests has always been our top priority. We continue to follow the latest guidance from the CDC as well as our own enhanced safety protocols to create a safe environment for everyone. This includes daily team member health monitoring, requiring masks for every team member, enhanced cleaning procedures, and social distancing protocols. I am proud of the commitment our teams make every day to keep our guests and each other safe. Second, our restaurant teams remain focused on our back-to-basics operating philosophy to drive restaurant-level execution that results in great guest experiences, whether our guests are dining with us or ordering curbside to go. Our teams have been operating in this environment for 10 months, and they've become very adept at adjusting to the ever-changing COVID restrictions, but it's still not easy. That's why we remain committed to our simplified operations, including streamlined menus, processes and procedures, which continue to strengthen our execution. And our guest satisfaction metrics confirm that our restaurant teams are doing a great job delivering exceptional guest experience in this challenging environment. Third, we continue to deploy technology to improve the guest experience. Our brands benefit from the technology platform Darden provides, allowing each of them to compete more effectively by harnessing the power of our digital tools, including the 25 million email addresses in our marketing database. During the quarter, Olive Garden and Long Orange Steakhouse launched refreshed websites, and all our brands continue to use their digital storefronts effectively. More than 55% of our off-premise sales during the quarter were fully digital transactions where guests ordered and paid online. And at Olive Garden, 20% of our total sales for the quarter were digital. During the quarter, we also rolled out Curbside I'm Here, which allows our guests to easily notify the restaurant that they've arrived to pick up their curbside to-go order by simply tapping on a link embedded in a text message. As a result, our operators are spending less time on the phone and more time focused on ensuring orders are accurate and on time, which is leading to improved guest satisfaction scores. We also introduced waitlist visibility, allowing guests to see their place on the waiting list using their phone regardless of whether they've checked in online or in person. And we're working on several other initiatives, including streamlining our online checkout process and adding additional mobile payment options to provide even more convenience for our guests. We continue to accelerate our digital journey, and I'm encouraged by the progress we are making. Finally, we continue to view this environment as a rare opportunity to transform our business model for long-term growth. We continue to make investments in our team members, product quality, and portion sizes to ensure we emerge even stronger and better positioned to grow SHARE. Olive Garden same restaurant sales declined 19.9% as capacity restrictions continue to limit their top line sales. Olive Garden began November with 56 dining rooms closed and that number accelerated to 208 by the end of the month. However, they were able to deliver strong average weekly sales during the quarter of more than 73,000 per restaurant, retaining 80% of last year's sales. Olive Garden also continued to realize operational efficiencies and strengthen margin as a result of their simplified menu and the elimination of promotional activity, including discounts. In the current limited capacity environment, their reduced marketing spend was focused on showcasing the convenience of their off-premise experience while featuring compelling core menu items rather than limited time promotions. This led to increased segment profit margin while making additional investments in abundance and value. Additionally, off-premise sales grew 83% in the quarter, representing 39% of total sales. Enabled by the technology investments I mentioned earlier, Olive Garden improved their to-go experience and achieved another all-time high in guest satisfaction for having orders ready to pick up at the time promised. Finally, Olive Garden successfully opened three new restaurants in the quarter. Longhorn Steakhouse had another solid quarter. Same restaurant sales declined 11.1%. Almost 20% of their restaurants grew same restaurant sales in the quarter. They also successfully opened three new restaurants during the quarter. The Longhorn team remains laser focused on their strategy of increasing the quality of their guest experience, simplifying operations to drive execution, and leveraging their unique culture to increase team member engagement. During the quarter, the team did a great job of managing controllable costs while their simplified menu drove improved labor productivity. Finally, Longhorn grew off-premise sales by no more than 175%, representing 22% of total sales. And now I'll turn it over to Rick.