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03Detailed Report
DRI
Company DRI
Period
Q3 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 17, 2026
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Executive Summary
Darden Restaurants reported a solid QQ3 2025 performance highlighted by continued brand momentum, a dilutive weather impact on topline, and the strategic execution of growth initiatives. Total sales reached $3.158 billion, up 6.8% YoY, driven by 0.7% same-restaurant sales growth and the incremental contribution from the Chuy’s acquisition and 40 net new openings. The company reaffirmed and updated guidance, signaling confidence in sustaining above 3% same-store sales growth for the December quarter and mid-to-high single-digit earnings progression on adjusted metrics. Management underscored the benefits of its portfolio strategy (Olive Garden, LongHorn, and other brands) and ongoing investments in delivery via Uber Direct, smaller prototypes, and a technology-driven POS refresh, all designed to support margin resilience and unit growth. The quarter also featured promotional and marketing initiatives (Fan Favorites/Buy One, Take One) aimed at driving traffic while maintaining brand equity and price discipline. For investors, the key implications are: (1) Darden’s mix of high-quality, value-oriented offerings supports above-market SSS in a challenging macro backdrop; (2) delivery and new formats (prototype restaurants) are structurally additive to long-run growth and free cash flow; and (3) balance sheet leverage remains meaningful but with robust FCF generation and buybacks/dividends supporting shareholder value. Looking ahead, the company projects 60-65 new openings in FY2026, capex of $375-400 million for new restaurants, and a 53rd week providing incremental earnings upside, subject to commodity and labor cost dynamics.
Key Performance Indicators
Revenue
Increasing
3.16B
QoQ: 9.27% | YoY: 6.79%
Gross Profit
Increasing
2.20B
69.80% margin
QoQ: 259.78% | YoY: 310.50%
Operating Income
Increasing
418.20M
QoQ: 43.17% | YoY: 5.39%
Net Income
Increasing
323.40M
QoQ: 50.35% | YoY: 4.97%
EPS
Increasing
2.76
QoQ: 50.00% | YoY: 6.98%
Revenue Trend
Margin Analysis
Financial Highlights
Overview of QQ3 2025 financials and YoY/QoQ trends:
- Revenue: $3.158 billion, up 6.8% YoY; QoQ growth 9.3% (per earnings metrics). The YoY lift reflects the Chuy’s acquisition and 40 net new restaurants in the period, plus modest same-restaurant growth.
- Gross profit: $2.2044 billion; gross margin 69.80% (vs. 69.80% reported); YoY gross profit growth materially boosted by favorable mix and pricing discipline across concepts.
- Operating income: $418.2 million; operating margin 13.24%; QoQ and YoY expansion driven by mix, cost controls, and incremental contributions from new units and acquisitions.
- EBITDA: $551.0 million; EBITDA margin approximately 17.45% (EBITDAR 17.45%).
- Net income: $323.4 million; net income margin 10.24%; diluted EPS: $2.74; adjusted diluted EPS (continuing ops): $2.80 (YoY +6.9%).
- Cash flow: Operating cash flow $580.3 million; free cash flow $417.1 million. Net cash provided by operating activities $580.3 million, supporting deleveraging and capital returns.
- Balance sheet: Total assets $12.56 billion; total liabilities $10.36 billion; total stockholders’ equity $2.20 billion. Cash and cash equivalents $224.2 million at period end; net debt approximately $5.855 billion; debt-to-capitalization ~0.734.
- Capital allocation: Dividends paid $164.1 million; share repurchases $53.0 million; capex outlay reflected in both maintenance/upgrade and new restaurant development.
- Guidance: FY2025 updated to 118.3 million diluted shares; adjusted diluted EPS $9.45-$9.52 (excluding ~$47 million pre-tax transaction/integration costs). QQ4 guidance implies total sales of $3.23-$3.26 billion; same-restaurant sales >3%; adjusted diluted EPS $2.88-$2.95. For FY2026, plan 60-65 new restaurants with capex of $375-$400 million for new builds and $300-$325 million for maintenance/tech; tax rate 13%-13.5%; a 53rd week contributing about $0.20 per diluted share. These metrics imply continued earnings growth and material cash generation, even after absorbing the Chuy’s integration.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
3.16B
6.79%
9.27%
Gross Profit
2.20B
310.50%
259.78%
Operating Income
418.20M
5.39%
43.17%
Net Income
323.40M
4.97%
50.35%
EPS
2.76
6.98%
50.00%
Key Financial Ratios
Gross Profit Margin
Excellent
69.80%
Gross profit margin is exceptional, indicating strong pricing power and operational efficiency
Operating Profit Margin
Fair
13.20%
Operating margin is moderate, room for improvement in cost management
Net Profit Margin
Good
10.20%
Net profit margin is healthy and competitive within industry standards
Return on Assets
Weak
2.57%
Return on assets suggests inefficient capital allocation
Return on Equity
Good
14.70%
Return on equity shows solid performance and effective asset utilization
Current Ratio
Concern
0.39
Current ratio below safe levels, potential liquidity risk
Debt to Equity
High Risk
2.76
Debt-to-equity indicates high leverage and elevated financial risk
P/E Ratio
Fair Value
17.66x
P/E ratio in line with market averages
Price to Book
High Premium
10.37x
Very high premium suggests asset-light business model or lofty expectations
Management Insights Available for Members
Get exclusive access to management commentary, earnings call quotes, and forward guidance from company leadership.
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