Darden Restaurants, Inc.

Greetings and welcome to the Darden Restaurants Inc. Q3 fiscal year 2025 earnings call. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You will be placed in the question queue at any time by pressing star one on your telephone keypad, and we ask you please ask one question and one follow-up, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Courtney Aquila, Senior Director of Finance and Investor Relations. Please go ahead, Courtney.

Thank you, Kevin. Good morning, everyone, and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's President and CEO, and Raj Vinan, 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 subjects to risk and uncertainty that can 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 includes certain non-GAAP measurements and reconciliations of these measurements are included in the presentation. Looking ahead, we plan to release fiscal 2025 fourth quarter earnings on Friday, June 20th, before the market opens, followed by a conference call. During today's call, all reference to industry results refer to Black Box Intelligence casual dining average benchmark, excluding Darden. During a fiscal third quarter, average same restaurant sales for the industry grew 0.9%, and average same restaurant guest counts decreased 1.2%. Additionally, due to a significant divergence between average and median results, we are sharing that the median same restaurant sales for the industry decreased 2.3% and median same restaurant guest counts decreased 4.2%. This represents the largest disparity between average and median observed in recent years. This morning, Rick will share some brief remarks on the quarter, and Raj will provide details on our financial results and an update to our fiscal 2025 financial outlook. Now I will turn the call over to Rick.

Thank you, Courtney, and good morning, everyone. Overall, I am pleased with our performance this quarter and proud of how our teams managed their business and controlled what they could control. Raj will share specifics, but when you exclude weather impacts, which were even greater than last year's challenging weather, same restaurant sales at all four of our segments were positive. Our ability to deliver profitable sales growth in this challenging environment is a testament to the strength of our business model and adherence to our proven strategy, which is anchored in our four competitive advantages and our restaurant team's commitment to being brilliant with the basics. Several of our brands set sales records during the Christmas and New Year's holidays, as well as on Valentine's Day, which reinforces the strength of our portfolio and the guest loyalty our teams work so hard to earn. During the quarter, Olive Garden launched an updated menu featuring fan favorites, Steak Gorgonzola Alfredo and Stuffed Chicken Marsala, the two most requested entrees that Olive Garden fans asked to bring back. In January, Olive Garden's marketing featured the return of these favorites, along with four cheese manicotti for just $12.99, plus a three-meat manicotti for a limited time. During the six weeks Fan Favorites was on air, Olive Garden's base traffic and sales trends improved significantly. They also experienced high levels of social media engagement, while preference for both items was strong and grew throughout the duration of the offer. The Olive Garden team continues to use news to appeal to core guests as well as value seekers in this environment. For the first time since before COVID, they are bringing back their signature buy one, take one limited time offer. With a price starting at $14.99, guests choose from seven entrees for their dine-in experience and then take a second entree home. This has historically been a high-traffic driving promotion for Olive Garden. Their eClub members are enjoying early access to this offer this week, and it will be available to everyone starting on Monday. In the first week of February, Olive Garden completed their rollout of Uber Direct, making delivery available in all restaurants except the six locations that cannot offer a curbside to go. Our partnership with Uber Direct strengthens Olive Garden's ability to value their guest time by bringing their favorite dishes directly to their doorstep using Olive Garden's online ordering platform and leveraging Uber's delivery network. Additionally, delivery provides Olive Garden with a meaningful sales building opportunity over time. Without any marketing support during the quarter, the volume of delivery orders grew week to week while maintaining a higher check average than curbside pickup orders. In the fourth quarter, the Olive Garden team started to drive awareness of delivery with modest digital activity and will fully leverage their earned and owned channels to target their biggest fans. This will ensure a smooth transition for the newly launched restaurants and establish a baseline from which they will measure future marketing efforts. They are targeting the end of this fiscal year for a more expansive awareness-building campaign, including TV advertising with a compelling and memorable offer, partially funded by Uber. We are pleased with the success of the rollout of Uber Direct at Olive Garden. We heard from the operators how seamless it was, and just this week we began to pilot at Cheddar's Scratch Kitchen. The Cheddar's team is currently testing it in 10 locations with a plan to deploy it more broadly across their systems. At Longhorn Steakhouse, strict adherence to their strategy, rooted in quality, simplicity, and culture, continues to drive their momentum. The restaurant teams focused on execution to ensure every item they serve meets their high-quality standards. This includes having industry-leading specifications and ensuring they perfectly season and grill every steak served to their guests. This level of focus continues to pay off, resulting in an all-time high Steaks Real Quickly score in the third quarter. Longhorn's people bring their strategy to life in their restaurants, and the Grillmaster Legends program is an excellent example of the intersection of quality and culture. The program celebrates extraordinary team members who have grilled more than one million steaks over the course of their career, which typically takes more than 20 years to accomplish. Longhorn leadership recognizes these legends with a surprise party in their restaurant that includes their family, friends, and loyal guests. During the third quarter, they inducted five more grill masters into this exclusive club, bringing the total to 30. To further build on their leadership and food quality, Longhorn is bringing back grilled lamb chops and fire grilled corn during the fourth quarter. These two guest favorites, along with last year's viral sensation, Parmesan crusted lamb chops, will be featured for a limited time. Successfully opening new restaurants is a key part of our ability to create value for our shareholders and help our brands reach their potential. Working with our development team, we are testing new, smaller prototypes for some of our brands. These prototypes help lower construction costs and enable the brands to build out their new restaurant pipelines by considering sites that would have been too small in the past, ultimately accelerating new restaurant openings. During the quarter, Yardhouse and Cheddar's both opened these prototypes and they are performing at or above expectations. Each one is roughly 20% smaller and costs approximately 15% less to build than their legacy restaurant prototype. They also preserve the essence of the brand. For example, while it's significantly smaller, the New Yardhouse prototype still features their full menu and offers 90 different beers on tap. Now let me provide a quick update on Chewy's. The planning phase of the integration is complete and the actual work is underway. On Monday, Chewy's will convert to our human resources platform, which includes our people management systems, payroll, and benefits. Our platform streamlines key day-to-day activities, which improves efficiency and allows managers to spend more time focused on running their restaurant. The next major milestone will be supply chain transitions that will take place in phases beginning in June, followed by the point of sale transition starting in late summer. Integration is never easy. And I'm proud of how the entire CHEWIS team has remained focused on executing at a high level while adapting to change. Every day, we work in pursuit of our shared purpose, to nourish and delight everyone we serve. One of the ways we do this for our team members and their families is through our Next Core Scholarship Program. Recently, the Darden Foundation awarded 98 post-secondary education scholarships worth $3,000 each to the children of Darden team members. This is the third year of the program, and over that time, we have awarded nearly 300 scholarships, helping team members and their families across the country. To wrap up, I'm proud of the focus and commitment our teams continue to display. On behalf of our leadership team and the board of directors, I want to thank all of our team members for everything you do to nourish and delight our guests and each other. Now, I will turn it over to Raj.