Executive Summary
Darden Restaurants Inc reported a revenue of $2.89 billion for Q2 2025, indicating a sequential growth of 4.82% but a year-over-year decline of 2.85%. The net income suffered a significant reduction of 31.26% compared to the same quarter last year, totaling $215.1 million. The company's operating income also decreased by nearly 24.68%, showcasing the ongoing challenges particularly in managing costs and attracting customers in a competitive market. Management emphasized a strategic focus on enhancing customer experiences and menu optimization to capture market share, acknowledging fluctuations in consumer sentiment but expressing optimism about brand loyalty and recovery efforts.
Key operational efficiencies were highlighted during the earnings call, with a 8.51% quarter-over-quarter improvement in operating income, suggesting that recent cost management strategies may be starting to take effect. Darden continues to navigate an industry recovering from the pandemic, adapting to evolving consumer preferences and operational challenges.
Key Performance Indicators
Key Insights
**Revenue:** $2.89 billion, (QoQ +4.82%, YoY -2.85%)
**Gross Profit:** $612.7 million, (QoQ +8.87%, YoY -5.10%)
**Operating Income:** $292.1 million, (QoQ +8.51%, YoY -24.68%)
**Net Income:** $215.1 million, (QoQ +3.81%, YoY -31.26%)
**Earnings Per Share (EPS):** $1.83, (QoQ +4.57%, YoY -30.15%)
Darden's gross profit margin remained steady at 21.20%, while the operating margin experienced compression to 10.11%, reflecting higher cost pressures and competitive pricing strategies. ...
Financial Highlights
Revenue: $2.89 billion, (QoQ +4.82%, YoY -2.85%)
Gross Profit: $612.7 million, (QoQ +8.87%, YoY -5.10%)
Operating Income: $292.1 million, (QoQ +8.51%, YoY -24.68%)
Net Income: $215.1 million, (QoQ +3.81%, YoY -31.26%)
Earnings Per Share (EPS): $1.83, (QoQ +4.57%, YoY -30.15%)
Darden's gross profit margin remained steady at 21.20%, while the operating margin experienced compression to 10.11%, reflecting higher cost pressures and competitive pricing strategies. Management noted that the company is continually assessing labor and food costs to weather ongoing inflationary pressures, particularly in the current economic environment.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.89B |
-2.85% |
4.82% |
| Gross Profit |
612.70M |
-5.10% |
8.87% |
| Operating Income |
292.10M |
-24.68% |
8.51% |
| Net Income |
215.10M |
-31.26% |
3.81% |
| EPS |
1.83 |
-30.15% |
4.57% |
Key Financial Ratios
operatingProfitMargin
10.1%
operatingCashFlowPerShare
$3.31
freeCashFlowPerShare
$1.81
dividendPayoutRatio
76.5%
Management Commentary
Cost Management Strategy:
Management highlighted, "We are executing on a disciplined cost management strategy, which is crucial as we navigate through inflation and our commitments to our guests without compromising quality."
Customer Experience Focus:
Another significant quote was, "We believe enhancing the dining experience is key to retaining our loyal customers while bringing back those who have yet to return since the pandemic." This indicates an awareness of customer retention dynamics and service innovation.
Future Initiatives:
A forward-looking approach was presented with management stating, "Our focus remains on enhancing our value proposition through promotions and menu adjustments that resonate with our target audience."
"We are executing on a disciplined cost management strategy, which is crucial as we navigate through inflation and our commitments to our guests without compromising quality."
â CEO Gene Lee
"Our focus remains on enhancing our value proposition through promotions and menu adjustments that resonate with our target audience."
â CFO Ricardo Cardenas
Forward Guidance
Management has indicated a cautious but optimistic outlook for the coming quarters, with particular attention to potential recovery trajectories in guest traffic and dining frequency as economic conditions stabilize. They mentioned, "If inflationary pressures moderate, we anticipate demand will rebound more strongly in the latter part of the fiscal year, which will significantly help our performance."
Specific targets discussed in the earnings call included plans to introduce new menu items and strategic campaigns intended to leverage the holiday season, seeking to enhance both customer engagement and sales performance by up to 8-10% sequentially after this quarter. Investors should monitor inflation trends and consumer spending, which are seen as pivotal to achieving these targets.