Darden Restaurants Q1 2027 earnings: sales grow but Olive Garden scare weighs on results
Darden's sales grew 5.1% but profit and revenue landed just shy of forecasts, dragged down by an Olive Garden food-safety scare; the company kept its full-year guidance unchanged.
| Q1 2027 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $2.05 | $2.08 | -1.2% |
| Revenue | $3.20B | $3.24B | -1.2% |
Key takeaways
- Total sales rose 5.1% from a year earlier to $3.20 billion, but that came in just under Wall Street’s forecast, and adjusted earnings per share of $2.05 landed slightly below the roughly $2.08 analysts expected.
- Results were uneven across Darden’s restaurant chains: LongHorn Steakhouse was the standout with same-restaurant sales up more than 6%, while Olive Garden grew a modest 1% after a lettuce-related food-safety scare (cyclospora concerns) kept some diners away during the quarter.
- Yard House sales jumped about 10%, which management attributed largely to a lift from World Cup viewership at its bars and restaurants during the quarter.
- Darden reaffirmed its full-year fiscal 2027 outlook: total sales of $13.60-$13.75 billion, same-restaurant sales growth of 2.5%-3.5%, adjusted EPS of $11.10-$11.35, and 75-80 net new restaurant openings, including converted Chuy’s locations.
- CEO Rick Cardenas said sales trends have improved since the quarter ended, into September, and that costs for key ingredients such as beef are expected to ease later in the fiscal year; he also pointed to plans for new value-focused promotions to bring in more traffic during slower times of day.
- The recently completed Chuy’s acquisition is expected to add diversification to Darden’s brand lineup and contribute modestly to per-share earnings this year, as the newly acquired restaurants are folded into the company’s operations.
- Trailing-twelve-month profitability held up despite the softer quarter: operating margin near 12% and net profit margin around 9% suggest the company is still converting a similar share of sales into profit as before, even as it absorbs costs tied to recent acquisitions and promotional activity.
- Return on equity is unusually high, at roughly 56%, which mainly reflects Darden’s heavy use of share buybacks and debt financing (including for deals like Chuy’s) rather than a sudden jump in underlying profitability.
Q1 2027 in context
| Metric | Aug 2026 | Aug 2025 | Change |
|---|---|---|---|
| Revenue | $3.2B | $3.0B | +5.1% |
| Net income | $233M | $258M | -9.5% |
| Diluted EPS | $2.04 | $2.19 | -6.8% |
| Gross margin | 18.8% | 18.9% | -0.0 pts |
| Operating margin | 10.0% | 11.1% | -1.2 pts |
| Net margin | 7.3% | 8.5% | -1.2 pts |
Figures for the quarter ended Aug 2026 and the quarter ended Aug 2025, as reported to the SEC.
How the stock took it
Darden Restaurants Inc closed at $213.69 on Sep 23, 2026, the last session before the report, and at $199.75 on Sep 25, 2026, the first session after it — -6.5% across the report.
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 21.7% | Trailing 12 months |
| Operating margin | 12.0% | Trailing 12 months |
| Net profit margin | 9.1% | Trailing 12 months |
| Pretax margin | 10.5% | Trailing 12 months |
| EPS | $10.39 | Trailing 12 months |
| Revenue growth (YoY) | 9.4% | Trailing 12 months |
| EPS growth (YoY) | 17.2% | Trailing 12 months |
| Return on equity | 56.0% | Trailing 12 months |
Sources: company report · earnings call