Darden Restaurants Q1 Fiscal 2027 Earnings: Revenue Misses $3.20 Billion Expectations

Quick Verdict

Darden Restaurants reported fiscal Q1 2027 diluted EPS from continuing operations of $2.05 on $3.20 billion in sales, narrowly missing consensus estimates. Revenue grew 5.1% year over year, and same-restaurant sales rose 3.1%, but shares initially fell as much as 5% premarket before trimming losses.

About Darden Restaurants

Darden Restaurants, Inc. (NYSE: DRI) is a U.S. full-service restaurant operator headquartered in Orlando, Florida. Founded in 1968 through the opening of the first Red Lobster restaurant, Darden now operates a portfolio centered on Olive Garden and LongHorn Steakhouse, alongside Yard House, Ruth’s Chris Steak House, Cheddar’s Scratch Kitchen, The Capital Grille, Chuy’s, Seasons 52 and Eddie V’s. Its continuing-operations restaurant base reached 2,218 company-owned locations as of August 30, 2026, compared with 2,165 a year earlier.

The company’s Q1 fiscal 2027 results showed broad-based comparable-sales growth across its operating segments, but Olive Garden’s 1.1% same-restaurant-sales gain trailed LongHorn Steakhouse’s 6.2% increase. Darden ended the quarter with $220.5 million in cash and cash equivalents, declared a $1.62-per-share quarterly dividend, and had $1.3 billion remaining in its repurchase authorization.

Top Financial Highlights

1. Total sales increased 5.1% year over year to $3.20 billion, from $3.04 billion in fiscal Q1 2026.
2. Reported diluted EPS from continuing operations was $2.05, compared with adjusted diluted EPS of $1.97 in the prior-year period, an increase of 4.1% on that adjusted comparison.
3. GAAP net earnings declined 9.5% to $233.4 million, from $257.8 million a year earlier. The prior-year quarter included a gain on the Olive Garden Canada sale, limiting direct comparability.
4. GAAP diluted net earnings per share were $2.04, down from $2.19 in Q1 fiscal 2026.
5. Operating income fell 5.9% to $319.3 million, from $339.2 million.
6. Operating margin was approximately 10.0%, calculated as $319.3 million of operating income divided by $3.20 billion of sales, versus roughly 11.1% a year earlier.
7. Total operating costs and expenses rose 6.5% to $2.88 billion, outpacing sales growth.
8. Food and beverage costs increased to $984.9 million from $929.1 million, while restaurant labor rose to $1.03 billion from $988.0 million.
9. Operating cash flow from continuing operations decreased 18.5% to $279.0 million, from $342.5 million.
10. Olive Garden sales rose 2.2% to $1.33 billion, while segment profit increased to $270.8 million from $267.6 million.
11. LongHorn Steakhouse sales grew 10.9% to $860.9 million, and segment profit rose 14.6% to $154.6 million.
12. Fine Dining sales advanced 6.2% to $304.2 million, with segment profit rising to $39.6 million.
13. Other Business sales increased 3.6% to $705.4 million, and segment profit reached $111.5 million.
14. Blended same-restaurant sales increased 3.1% on the fiscal-calendar basis; comparable-calendar growth was 3.2%.
15. Darden repurchased roughly 1.1 million shares for $222.3 million during the quarter.
16. Cash and cash equivalents were $220.5 million at quarter-end, essentially unchanged from $219.5 million at May 31, 2026.
17. Management reaffirmed fiscal 2027 EPS guidance of $11.10 to $11.35 and total-sales guidance of $13.60 billion to $13.75 billion.
18. The board declared a quarterly cash dividend of $1.62 per share, payable November 2, 2026, to shareholders of record on October 9, 2026.

Beat or Miss?

Darden narrowly missed Wall Street expectations on both earnings and revenue. The miss was small, but investors focused on slower Olive Garden comparable-sales growth and operating-profit pressure.

What Leadership Is Saying

“The first quarter was a solid start to our fiscal year with each of our segments delivering positive same-restaurant sales. The performance across our portfolio reinforces the importance of having distinctive brands, each with a clear strategy, supported by Darden’s scale and other competitive advantages.” — Rick Cardenas, President & CEO.

“The World Cup weighed on demand for Darden’s restaurants early in the quarter, dragging the company’s same-store sales down by 80 basis points.” — Raj Vennam, CFO, as reported by CNBC.

Historical Performance

Note: Darden cautioned that fiscal-period comparisons are affected by a shift from a 53-week to a 52-week fiscal year; the company also supplies comparable-calendar data to address the one-week timing difference. Further, Q1 fiscal 2026 GAAP earnings benefited from a $42.0 million gain on the Olive Garden Canada sale, making adjusted EPS the more comparable earnings measure.

Brand Performance

Darden does not report publicly traded restaurant-chain competitors in its quarterly segment table. The most relevant comparison available from its reported data is across the company’s own major business units.

LongHorn was the clearest growth engine: its same-restaurant sales rose 6.2%, and sales climbed 10.9% as it added locations and maintained strong guest demand. Olive Garden remained Darden’s largest brand by sales and restaurant count, but its 1.1% same-restaurant-sales growth was restrained relative to the rest of the portfolio.

How the Market Reacted?

Darden shares fell as much as 5% in premarket trading after the company narrowly missed consensus estimates for both EPS and revenue. The stock later recovered part of that decline and was down roughly 2% in morning trading as management reaffirmed fiscal 2027 guidance and discussed improving September trends.

Investor sentiment was therefore mixed: sales growth and LongHorn’s execution were constructive, but the market reacted negatively to the headline miss, Olive Garden’s modest 1.1% comparable-sales gain, and lower operating income.