Darden Restaurants, Inc.

Greetings and welcome to the Darden Fiscal Year 2026 First Quarter Earnings Conference Call. Your line has been placed on this and only until the question and answer session. To ask a question, you may press star 1 on your touch-tone phone. We ask you to please limit yourselves to one question, one follow-up, and return to the queue. This conference is being recorded. If you have any objections, please disconnect at this time. I'll now turn the call over to Ms. Courtney Aquila. Thank you. You may begin.

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 Manam, 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 2026 second quarter earnings on Thursday, December 18th, before the market opens. followed by a conference call. During today's call, all reference to the industry results refer to Black Box Intelligence casual dining benchmark, excluding Darden. During our fiscal first quarter, average same restaurant sales for the industry grew 5%, and average same restaurant guest counts grew 2.6%. Additionally, due to the continued divergence between average and median results, we are sharing that median same restaurant sales for the industry grew 3.3%, and median same restaurant guest counts grew 1.3%. This morning, Rick will share some brief remarks on the quarter, and Raj will provide details on our first quarter and share our updated fiscal 2026 financial outlook. Now I will turn the call over to Rick.

Thank you, Courtney, and good morning, everyone. We had a great quarter with same restaurant sales and earnings growth that exceeded our expectations. For the first quarter, three of our four segments generated positive same restaurant sales and traffic growth. The strength of our results is a testament to the power of our strategy. Across our portfolio, our restaurant teams remain focused on being brilliant with the basics through culinary innovation and execution, attentive service, and an engaging atmosphere, all enabled by our people. And at the Darden level, we continue to strengthen and leverage our four competitive advantages of significant scale, extensive data and insights, rigorous strategic planning, and the quality of our employees to further position our branch for long-term success. Olive Garden's same restaurant sales grew 5.9%, driven by compelling food news and the continued growth of first-party delivery. Early in the quarter, Olive Garden's marketing highlighted their Create Your Own Pasta platform from the core menu. Their television creative featured a new spicy three-meat sauce and bucatini pasta starting at $12.99. This new sauce taps into guests' evolving tastes for bolder, more flavorful offerings. It was well-received and helped drive a significant increase in preference for the Create Your Own Pasta platform. Olive Garden built on the momentum of bold and spicy flavors by debuting Calabrian Steak and Shrimp Bucatini for a limited time during the quarter. The dish exceeded expectations and quickly became a new guest favorite. ranking among the top 10 entrees for preference. First-party delivery, through our partnership with Uber Direct, is helping capture younger, more affluent guests who value convenience and crave Olive Garden. This represents a significant incremental opportunity for the brand, as these guests have a higher check average and typically do not use Olive Garden for an in-restaurant dining occasion. Olive Garden's advertising, featuring 1 million free deliveries, concluded in the first quarter with all the free deliveries being redeemed. Average weekly deliveries doubled throughout the campaign. Following the campaign, delivery order volume has remained approximately 40% above the pre-campaign average. The team will continue to promote delivery across a number of channels. On our last call, we talked about putting a greater emphasis on sales growth and reinvesting to drive long-term growth. One of the ways we're doing this at Olive Garden is by strengthening affordability on the menu to give guests more variety at approachable price points. During the quarter, Olive Garden began testing a lighter portion section of the menu featuring seven of their existing entrees with reduced portions and a reduced price. These items, available at dinner and all day during the weekend, still offer abundant portions and come with Olive Garden's never-ending first course of unlimited breadsticks and unlimited soup or salad. Forty percent of Olive Garden restaurants currently offer this menu, and the initial response from guests has been encouraging, with affordability scores increasing 15 percentage points and high satisfaction with portion size. I have confidence in Olive Garden's initiatives for the year, as well as their five-year roadmap to sustain long-term growth and success. Longhorn Steakhouse grew its same restaurant sales by 5.5%, driven by a continued adherence to their strategy rooted in quality, simplicity, and culture. The team continues to raise the bar on food quality by consistently executing every dish on their menu to their high standards. This is reflected by Longhorn's number one ranking among casual dining brands, major casual dining brands, within Technomic's industry tracking tool for food quality, service, atmosphere, and value. I'm really proud of the operational consistency at Longhorn and the work the team is doing to maintain their momentum. Same restaurant sales for our other business segment grew 3.3% during the quarter. driven by strong performance at Yardhouse, Cheddar Scratch Kitchen, and Seasons 52. During the quarter, Yardhouse strengthened their competitive advantage of distinctive culinary offerings with broad appeal by enhancing their taco platform with higher quality ingredients and more options for guests. As they have seen with similar investments in their burger and pizza platforms, this resulted in higher preference and guest satisfaction. To help strengthen their competitive advantage of a socially energized bar, Yardhouse held its third annual Best on Tap competition during the quarter. What began as a test of knowledge and hospitality skills has grown into a cornerstone of the Yardhouse culture, where every bartender competes. Congratulations to this year's winner, Michelle Yanez, from the Yardhouse at City Center in Houston, Texas. The Cheddar's team leverages efficiency in Darden's purchasing power to provide great food served at a wow price. During the quarter, they introduced a Hawaiian sirloin, a center cut top sirloin finished with pineapple and a sweet Hawaiian glaze, starting at $16.49. This limited time offer also included a honey butter croissant and two sides for that price. In Technomic's most recent survey, Cheddar's ranked first among casual dining brands for both price and affordability. During the quarter, Cheddar's also saw strong off-premise sales growth driven by first-party delivery. Off-premise sales grew 15% during the quarter, and the Cheddar's team will continue to promote delivery through owned and digital channels as well as in restaurants. Same restaurant sales for the fine dining segment were slightly negative for the quarter, but I'm encouraged by the actions each of our fine dining brands are taking to address the softness. For example, in the current environment, more guests are seeking price certainty, and Ruth's Chris Steakhouse introduced a five-week limited-time offer featuring a three-course menu that drove positive comps for the quarter. For $55, guests could select one of three entrees, as well as a super salad, an individual side, and dessert. The offer was well received with strong guest preference and sales lift. Now I want to share a quick update on the sale of eight Olive Garden locations in Canada that I referenced during our last call. On July 14th, we closed on the sale of those locations to Recipe Unlimited, the largest full-service operator in Canada. At closing, we also entered into an area development agreement with Recipe Unlimited to open 30 more Olive Gardens over the next 10 years, five of which have already been approved. Our franchising team is focused on growing our global presence. Today, we have 163 franchise locations, which includes 63 in the continental United States and 100 outside the continental U.S. Last month, we held our annual leadership conference. which provides a powerful way for us to engage with every general manager and managing partner across our brands, celebrate past performance, and align on key operational priorities. This was also an opportunity for these restaurant leaders to learn about their brand's five-year business plan and understand what they need to do to win today and into 2030. The opportunity to interact with this talented group of operators is one of the highlights of the year. I came away energized by the level of engagement and passion on display, which further reinforced the results of our most recent engagement survey, a new all-time high for Darden. Overall, I am pleased with a strong start to our new fiscal year. Our strategy is working, enabling us to grow sales and take market share, while making meaningful investments in our business and returning capital to our shareholders. Beyond that, We have a larger purpose at Darden, to nourish and delight everyone we serve. One of the ways we do this is by fighting hunger. Once again this year, Darden is helping Feeding America add refrigerated trucks for nine member food banks. With the addition of these new trucks, the Darden Foundation, with support from our partner, Penske Truck Leasing, has funded more than 50 vehicles to meet the increasing demand for food assistance in communities where we operate. Our philanthropic giving would not be possible without the efforts of our 200,000 team members and their passion to nourish and delight our guests and communities. Thank you for all you do. Now I'll turn it over to Raj.