Darden Restaurants, Inc.

Please stand by. We are about to begin. Welcome to the Darden Fiscal Year 2023 First Quarter Earnings Conference Call. Your lines have been placed on listen only until the question and answer session. To ask a question, you may press star 1 on your telephone keypad. This conference is being recorded. If you have an objection, please disconnect at this time. I will now turn the call over to Mr. Kevin Kalakak. Thank you. You may begin.

Thank you, Jake. Good morning, everyone, and thank you for participating on today's call. Joining me today are Rick Cardenas, Darden's President and CEO, and Raj Vinam, 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 Securities 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 include certain non-GAAP measurements and reconciliations of these measurements are included in the presentation. Looking ahead, we plan to release fiscal 2023 second quarter earnings on Friday, December 16th before the market opens, followed by a conference call. During today's call, any reference to pre-COVID when discussing first quarter performance is a comparison to the first quarter of fiscal 2020. This morning, Rick will share some brief remarks on the quarter and our focus moving forward, and Raj will provide details on our financial results. Now, I will turn the call over to Rick.

Thanks, Kevin. Good morning, everyone. As you saw from our press release, we had a solid quarter in what continues to be a challenging inflationary and uncertain macroeconomic environment. This was also the first quarter where we began to see the industry return to normal seasonal patterns. I am proud of the way our restaurant teams are performing, Our brands remain focused on executing our back-to-basics operating philosophy anchored in food, service, and atmosphere, while at the Darden level, we continue to concentrate on strengthening and leveraging our four competitive advantages of significant scale, extensive data and insights, rigorous strategic planning, and our results-oriented culture. Our people bring our brands to life every day, and our restaurant teams continue to execute at a high level. Even with a lot of new team members, as our staffing has returned to normal levels. Our team's ability to be brilliant with the basics is driving strong guest satisfaction across all brands. Key satisfaction measures at Olive Garden are at or near all-time highs, and Stakes Grilled Correctly scores at Longhorn Steakhouse are the highest in their history. We remain focused on creating great learning environments for new team members to ensure they are fully trained and execute to our standards. Further, our ongoing investments in our team members helps reinforce our strong employment proposition. This focus takes on added significance as we open value-creating new restaurants, which further strengthens our scale advantage. During the quarter, we successfully staffed and opened nine new restaurants, and we remain on track to open 55 to 60 new restaurants this fiscal year. We also continue to invest in our digital platform, and to-go sales benefited from these investments during the quarter. To-go sales accounted for 24% of total sales at Olive Garden, 14% at Longhorn Steakhouse, and 13% at Cheddar Scratch Kitchen. Digital transactions accounted for 32% of all off-premise sales during the quarter and 10% of Darden's total sales. Our technology investments have created an infrastructure that reduces friction for our guests and our operators, and we will continue to invest in technology that benefits both off-premise and in-restaurant dining occasions. We are also leveraging our scale to help mitigate the impact of heightened inflation. During the quarter, we continued to experience significant commodities cost pressure, and our supply chain team did an excellent job of working with the suppliers to minimize or offset cost increases to the extent possible. Inflation remains a headwind for consumers as well, particularly those in households making less than $50,000 a year. Olive Garden and Cheddar's have more direct exposure to these guests. Looking at guest behavior across our entire portfolio, we are seeing softness with these consumers, while conversely, we are seeing strength with guests in higher income households. Even in this environment, our brands remain committed to our strategy to price below their competitors. Since we emerged from the height of the pandemic, You have heard us talk about the search for equilibrium or more normal business trends. During the quarter, we saw a return to historical seasonal patterns, which we did not experience last year. As we have discussed in recent calls, finding that equilibrium will inform our brand's marketing strategies. As we execute our plans, we will be very selective in bringing any promotional activity back. And any promotional activity we introduce should be evaluated with the following filters. First, it needs to elevate brand equity by bringing the brand's competitive advantages to life. Second, it should be simple to execute. We will not jeopardize all the work we have done to simplify operations, which allows our teams to consistently deliver exceptional guest experiences. And finally, it will not be at a deep discount. We are focused on providing great value to our guests, but doing that in a way that drives profitable sales growth. As an example, Olive Garden's unique competitive advantage is never-ending, abundant, craveable Italian food. That is why their television advertising progressed from spots that featured their never-ending first course to those that are now focused on their made-from-scratch sauces. And anything they do going forward should continue to elevate this core brand equity. I am pleased with the progress our teams made executing against their strategic priorities during the quarter. Our strategy is working, enabling us to grow sales, increase market share, and invest in our people and our brands, all while continuing to return capital to our shareholders. Last month, we held our annual leadership conferences. which provide a powerful way for us to engage with every general manager and managing partner across all 1,875 restaurants. These restaurant leaders hold the most influential role in our company, and the opportunity to interact with them and listen to those closest to the action is invaluable. Our leaders return to their restaurants aligned to their brand's operational priorities and motivated to continue winning. In order to win, we must stay focused on executing our back-to-basics operating philosophy and leveraging our four competitive advantages as we continue working in pursuit of our higher purpose to nourish and delight everyone we serve, our guests, our team members, and the communities where we operate. One of the ways we serve our communities is by fighting hunger. Once again this year, Darden is helping Feeding America add refrigerated trucks for 10 member food banks to support mobile pantry programs and food distribution in communities with the highest need. With the addition of these new trucks, 25 different food banks have received a truck since January of last year. Of course, our philanthropic giving would not be possible without the passion our restaurant teams have for nourishing and delighting our guests. On behalf of our leadership team and our board of directors, I want to thank our 180,000 team members for everything you do to serve our guests and communities. Now we'll turn it over to Raj.