DRI earnings analysis
What we found in DRI's 10-K: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Darden delivered a strong FY2026, with revenue up 9.4%, operating margin expanding 70 basis points to 12.0%, and continuing-operations diluted EPS up 17.6% to $10.44. LongHorn's 7.2% same-restaurant sales growth and Olive Garden's 4.0% gain demonstrate broad core-brand momentum, while Chuy's is now fully integrated. FY2027 calls for a more normalized 2.5%-3.5% same-restaurant-sales growth rate and 75-80 openings, with $875 million of planned capex; the principal execution overhang is the closure and conversion of the remaining Bahama Breeze estate.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Sales growth accelerated to 9.4%
- FY2026 sales rose 9.4% to $13.21 billion, versus $12.08 billion in FY2025 and $11.39 billion in FY2024. Growth reflected 4.5% blended same-restaurant sales, 43 net new restaurants, and a 2.1% sales benefit from the 53rd week.
- Margins and EPS inflected higher
- Operating income increased 16.2% to $1.58 billion and operating margin expanded to 12.0% from 11.3%. Diluted EPS from continuing operations rose 17.6% to $10.44; total diluted EPS was $10.38, versus $8.86 in FY2025 and $8.51 in FY2024.
- LongHorn and Olive Garden drove traffic-led growth
- LongHorn was the principal organic growth engine: sales rose 13.1% to $3.42 billion and same-restaurant sales increased 7.2%, driven by a 3.7% guest-count increase and 3.4% higher average check. Olive Garden added 7.3% sales growth and 4.0% same-restaurant sales growth, including 1.0% guest-count growth.
- Scale, brands and digital support strategy
- Darden positions its moat around scale, operating excellence and a diversified full-service portfolio: it operated 2,202 U.S. restaurants at year-end. Its roadmap combines same-restaurant sales, new-unit expansion, brand acquisitions and digital/off-premise initiatives; Uber delivery was completed at Cheddar's and expanded to Yard House during FY2026.
- Chuy's integration completed
- The Chuy's acquisition was fully integrated by May 31, 2026 after Darden paid $649.1 million in total consideration. The purchase allocation included $267.2 million of goodwill tied to expected sales and unit growth plus supply-chain and support-cost synergies.
- Returns balanced with reinvestment
- Capital returns remained substantial: Darden paid $693.0 million of dividends and repurchased $671.7 million of stock in FY2026, while capex increased to $734.0 million from $644.6 million. The Board also replaced the prior buyback authorization with a new $1.5 billion program on June 24, 2026, and declared a $1.62 per-share dividend payable August 3, 2026.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Bahama Breeze closures and conversion execution
- The Bahama Breeze portfolio is being wound down: Darden closed 14 restaurants during FY2026, leaving 13 at year-end after having 28 a year earlier. It expects to convert the remaining locations to other brands over the next 12-18 months; FY2026 restaurant impairments were $23.0 million, principally from expected closures and conversions.
- Inflation and limited pricing leverage
- Food-and-beverage costs increased to 30.6% of sales from 30.3%; management attributes a 1.2% impact to inflation, only partly offset by a 0.9% pricing benefit. LongHorn's segment margin fell 70 basis points to 18.6% and Fine Dining's fell 90 basis points to 17.7%, principally on higher food and labor costs.
- Near-term refinancing and lease commitments
- The $500.0 million 3.850% senior notes due May 2027 are now classified as current, alongside $194.0 million of commercial paper. Darden had $1.06 billion of remaining revolver capacity at May 31, 2026, but also has $2.86 billion of lease obligations and operates 2,104 of 2,202 U.S. restaurants in leased properties.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $10.38
- Operating margin
- 12.0%
- Segment
- Olive Garden: $5.595 billion FY2026 sales, +7.3% YoY; U.S. same-restaurant sales +4.0%.
- Segment
- LongHorn Steakhouse: $3.423 billion, +13.1%; same-restaurant sales +7.2%.
- Segment
- Fine Dining: $1.376 billion, +5.4%; same-restaurant sales +1.2%.
- Segment
- Other Business: $2.817 billion, +11.2%; same-restaurant sales +3.9%, including a full year of Chuy's sales.
What they said about what is next.
FY2027 MD&A outlook calls for continuing-operations sales of $13.60 billion-$13.75 billion, 2.5%-3.5% same-restaurant-sales growth, and 75-80 openings. It also expects an approximately 13.5% annual effective tax rate and approximately $875 million of capex. The 10-K does not provide an EPS range or characterize the outlook as raised, maintained, or lowered versus prior guidance.
The filing reads better than the one before it.
What came before.
- 10-Q · March 27, 2026
- Darden Restaurants' Q3 FY2026 results showed a 5.9% revenue growth to $3.35 billion, supported by strong same-restaurant sales across its segments. Although gross margin slightly improved to 53.5%, operating margins saw…
- 10-Q · December 30, 2025
- Darden Restaurants reported a 7.3% increase in revenue to $3.10 billion in Q2 FY2026, surpassing both estimates and the previous year. Gross and operating margins slightly declined while EPS rose 11.5% year-on-year to…
- 10-Q · September 26, 2025
- Darden Restaurants reported a strong Q1 fiscal 2026, with revenues of $3.04 billion, marking a 10.4% increase year-over-year. EPS from continuing operations rose to $2.19, up 25.9% from $1.74 in the prior year, despite…
- 10-K · July 18, 2025
- Darden Restaurants, Inc. reported a 6% increase in total sales to $12.08 billion for fiscal 2025, supported by a blended same-restaurant sales increase of 2% and the addition of net new restaurants including Chuy’s. The…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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