Darden Restaurants, Inc.

Greetings and welcome to the Darden Fiscal Year 2026 Fourth Quarter Earnings Call. Your line has been placed on the list in only mode until the question and answer session. To ask a question, you may press star 1 on your touchtone phone. This conference is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to Ms. Courtney Aquila. Thank you. You may begin.

Thank you, Kevin. Good morning, and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's President and CEO, and Raj Vennam, 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 and in its filings with the Securities and Exchange Commission. A supplemental materials presentation containing information shared on today's call is available on the financials tab in the investor section of our website at Darden.com. Today's discussion includes certain non-GAAP measurements and reconciliations of these measurements are included in the presentation. Looking ahead, we plan to release fiscal 2027 first quarter earnings on Thursday, September 24th Before the Market Opens, followed by a conference call. During today's call, all references to industry results refer to the Black Box Intelligence casual dining benchmark, excluding Darden. Black Box Intelligence updated its benchmarks in early May following changes to the underlying brand set. This restatement had an outsized impact on the casual dining benchmarks. The change moved the average benchmarks up by 150 basis points for same restaurant sales and 25 basis points for same restaurant guest counts. Incorporating this restatement, average same restaurant sales for the industry increased 1.4%, and average same restaurant guest counts decreased 1.8% during our fourth quarter. This morning, we will share some brief remarks on the quarter and full year, as well as the details of our financial results, discuss the power of Darden's portfolio, and share our fiscal 2027 financial outlook. Now, I will turn the call over to Rick.

Thank you, Courtney. Good morning, everyone. The fourth quarter was a strong finish to an excellent year, one in which we significantly outperformed the industry. Our restaurant teams continued to execute at a high level, and their commitment to operational excellence helped each of our brands deliver positive same restaurant sales for the quarter. We know guests choose the brands they trust for key occasions. Several of our brands enjoyed record performance on Mother's Day, including the highest ever traffic day at Olive Garden and Longhorn Steakhouse, and our guest satisfaction results continued to be at or near all-time highs. It was an especially strong year for our three largest brands, Olive Garden, Longhorn and Yardhouse. Olive Garden met our heightened expectations for the year, delivering 4% same restaurant sales growth, which is above the high end of Darden's long-term framework. Longhorn delivered same restaurant sales growth of over 7% for the year, reflecting their focus on food quality and execution. They ended the year by conducting their ninth annual Steak Master Series. Congratulations to Jesse Montalva from the Longhorn Steakhouse in Riverview, Florida, who claimed the championship trophy. Yardhouse grew total sales by $95 million compared to last year, driven in part by same restaurant sales growth of 5.6% for the year. The performance of Olive Garden, Longhorn, and Yardhouse this year is extremely impressive. marking the fifth consecutive year that all three brands have delivered positive same restaurant sales. With our focus on growing our brands, we opened 71 new restaurants during the fiscal year, six more than initially planned at the beginning of the year, and our development team has built a strong pipeline of sites to support new restaurant growth. Raj will share more details about our growth plans in his remarks. Additionally, our newest international franchising partners in Spain and India opened their first locations during the year, and our new partner in Canada plans to open their first new restaurant next week. Our franchising and international team has helped our new partners open restaurants more quickly, and they are on pace to open the most international locations in a single year in fiscal 27. Fiscal 26 marks our 31st year as a publicly traded company, and Darden has achieved an average annualized total shareholder return of 10% or greater for any 10 fiscal year period when considering Darden's stock price appreciation plus dividend yield. This morning I want to focus my comments on how we are able to do this and what gives it new confidence for the future. Full-service dining is a variety-seeking category, and we have a collection of brands that give us reach across multiple dining occasions, guest demographics, price points, geographies, and cuisine types while reducing reliance on any one brand Consumer Segment, Region, or Cuisine. Our brands play distinct and valuable roles. Olive Garden and Longhorn are the two most dominant brands in our portfolio with strong guest relevance and additional room for growth. Yardhouse, Cheddar Scratch Kitchen, and Chewy's are incredibly popular brands with significant runway for growth. And Ruth's Chris Steakhouse, the Capital Grill, Eddie V's, and Season 52 are differentiated brands with strong positions in their respective categories and should have balanced growth over time. Our portfolio creates the scale that enables our brands to benefit from our strategic platform. We have a shared operations philosophy anchored in food, service, and atmosphere, enabled by the best people in the industry. And our four competitive advantages allow our brands to compete more effectively and provide even greater value for their guests. One of these competitive advantages, the power of our scale, is demonstrated in our supply chain and technology stack which enable our brands to deliver stronger performance than they could do on their own. For example, we source directly from producers and have our own dedicated food distribution network. This creates cost advantages for our brands and ensures an uninterrupted supply to our restaurants. Our proprietary POS system serves as a nerve center of our integrated restaurant technology ecosystem. Applications including payroll, guest forecasting, Labor Management, and much more provide key data, improve operations, and make our restaurant managers' jobs easier so they can spend more time focused on their guests and their team members. Our scale also helps from a marketing perspective. Across all our brands, we use digital marketing in a targeted, cost-effective way to build brand equity and support incremental sales. Our smaller brands benefit from the learnings generated from our larger brands. and because of our platform, they can tailor sophisticated media plans to their specific business needs. Another one of our advantages, our extensive data and insights ensures we continually meet our guests' expectations and allows us to identify opportunities to improve the guest experience and drive incremental sales through continuous menu innovation across our brands. Olive Garden's new lighter portions menu is a good example. as is their new protein-forward Calabrian steak and shrimp bucatini that has quickly become a guest favorite. Data and insights have also grounded all the great work Yardhouse has done on menu optimization. The new burger, pizza, and taco platforms they have rolled out over the past three years are easier to execute and receive higher guest satisfaction scores. Rigorous strategic planning is another one of our advantages. Planning at the Darden Enterprise level determines each brand's strategic role to ensure we have the right portfolio of brands, we align strategies and coordinate operations to maximize our portfolio's value, and we capture available synergies across our brands. At the brand level, the strategic planning process helps us identify each brand's distinct advantages and cultivate differentiated positioning, develop a deep understanding of each brand's guests and competitive landscape, and ensure our brands adhere to their strategy so they compete effectively and grow share. We put significant emphasis on this work, and the teams of our acquired brands consistently share that they have even greater clarity about the essence of their brand because of the time and level of rigor involved. The five-year business plans our brands completed last year are also an important part of this process, and our teams continue to execute against those plans to drive shareholder value. Of course, our brands and our platform only matter because of our final advantage, the people who bring them to life every day. Our founder, Bill Darden, said, the greatest edge we have on our competitors is the quality of our employees reflected each day in the job they do. And that is still true today. We have outstanding teams across our 2,200 restaurants, backed by our incredible Restaurant Support Center teams. We have built a compelling employment proposition that is evidenced by our industry-leading retention And to preserve this advantage, we leverage our unique ability to provide robust development opportunities given the breadth of our portfolio. Across operations and the Restaurant Support Center, we can provide opportunities in brand-specific roles, shared support functions, and restaurants across the country. This gives us the ability to move proven talent across brands and support new restaurant growth and gives us multiple options to develop high potential talent. One of the most powerful things about Darden is our ability to change our team members' lives. We give people the opportunity to grow and progress, regardless of their first role with us. Many of our senior leaders, including me, began as hourly team members. That's why I'm extremely proud that we promoted 1,375 hourly team members in a management role since fiscal 26. Darden has a tremendous track record of success, and it reflects the strength of our brands, the discipline of our strategy, and the quality of our teams. With the right brand, strategy, and teams in place, I am confident we are well positioned to continue growing the business and creating long-term shareholder value. In closing, I want to thank our over 200,000 team members for everything they do. I'm proud of the engagement across our teams and the impressive retention levels that help drive our success. I look forward to connecting with many of you during our General Manager and Managing Partner conferences over the next six months. Now I'll turn it over to Raj.