01—Abstract
Summary
Summary of the 10-K filed July 21, 2023. Cited figures are marked; the original filing is the authoritative source.
Darden Restaurants, Inc. reported solid performance in its fiscal year ended May 28, 2023, demonstrating resilience despite ongoing macroeconomic challenges.
Total sales increased by 8.9% to $10.49 billiona, driven by a 6.8% increase in same-restaurant sales and the addition of 47 net new company-owned restaurants. Diluted earnings per share from continuing operations saw an 8.1% rise to $8.00. The company continues to strategically expand its portfolio, recently completing the acquisition of Ruth's Hospitality Group, Inc. (Ruth's Chris Steak House) in June 2023, which is expected to contribute to future sales growth.
Darden also noted continued inflationary pressures on food and labor costs, which were partially offset by pricing strategies and operational efficiencies. The company remains focused on its 'People Strategy' to attract and retain talent, highlighting low turnover rates compared to industry benchmarks.
02—Key points
Key Highlights
- Total sales grew 8.9% to $10.49 billion in fiscal year 2023.
- Same-restaurant sales increased by a blended 6.8%.
- Diluted earnings per share from continuing operations rose 8.1% to $8.00.
- Acquisition of Ruth's Hospitality Group, Inc. (Ruth's Chris Steak House) completed in June 2023, post-fiscal year-end.
- Inflationary pressures on food and labor costs were partially mitigated by pricing and operational efficiencies.
- Company maintains a strong focus on human capital, reporting below-industry average turnover rates.
- Projected fiscal 2024 sales growth between 9.5% and 10.5%, including contribution from Ruth's acquisition and new store openings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Darden Restaurants Inc kept $0.09.
- Revenue$10.49B100.0%
- Cost of revenue−$8.50B81.0%
- Gross profit$1.99B19.0%
- Operating costs−$789.2M7.5%
- Operating income$1.20B11.5%
- Interest, other & tax−$219.9M2.1%
- Net income$981.9M9.4%
Where FY2023 revenue went
$10.49B- Cost of revenue: $8.50B, 81% of revenue
- Net income: $981.9M, 9.4% of revenue
- Operating costs: $789.2M, 7.5% of revenue
- Interest, other & tax: $219.9M, 2.1% of revenue
Kept 9.4% as net incomeNet income $981.9M · 9.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed July 21, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $10.49B$9.63B | +8.9% |
| Gross Profit | $1.99B$1.90B | +4.7% |
| Operating Expenses | $9.29B$8.47B | +9.7% |
| Operating Income | $1.20B$1.16B | +3.4% |
| Interest Expense | $50.20M$40.90M | +22.7% |
| Net Income | $981.90M$952.80M | +3.1% |
| EPS (Basic) | $8.06$7.46 | +8.0% |
| EPS (Diluted) | $7.99$7.39 | +8.1% |
| Shares Outstanding (Basic) | 121.90M127.80M | −4.6% |
| Shares Outstanding (Diluted) | 122.90M129.00M | −4.7% |
05—Questions
Frequently Asked Questions
How did Darden Restaurants perform financially in Fiscal Year 2023?
Darden Restaurants reported an 8.9% increase in total sales to $10.49 billion for the fiscal year ended May 28, 2023. Same-restaurant sales grew by 6.8%, and diluted earnings per share from continuing operations increased by 8.1% to $8.00. This growth occurred despite ongoing inflationary pressures on costs.
What is the impact of the Ruth's Hospitality Group acquisition?
Darden completed the acquisition of Ruth's Hospitality Group, Inc. (Ruth's Chris Steak House) on June 14, 2023, which is after the close of fiscal year 2023. This acquisition is expected to contribute to future sales growth, with projections for fiscal year 2024 sales to increase between 9.5% and 10.5%, partly due to the addition of Ruth's Chris Steak House restaurants.
How is Darden managing inflationary pressures?
The company is experiencing higher than usual inflation in food and beverage costs, as well as labor costs. Darden is attempting to mitigate these impacts through menu price increases, operational efficiencies, and leveraging its scale for purchasing. While these measures have helped offset some of the inflation, its continued impact on profitability remains a focus.
What is Darden's strategy for growth?
Darden's strategy focuses on strengthening core operational fundamentals for an outstanding guest experience. Growth is driven by increasing same-restaurant sales, expanding its current portfolio of brands through new unit development, and acquiring new brands. The recent acquisition of Ruth's Chris Steak House is part of this growth strategy.
06—Continue