10-KPeriod: FY2023

DARDEN RESTAURANTS INC Annual Report, Year Ended May 28, 2023

Filed July 21, 2023For Securities:DRI

Summary

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 billion, 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.

Financial Highlights

52 data points
Beta

Revenue

$10.49B

19.0% Gross Margin

Net Income

$981.90M

9.4% Net Margin

EPS (Diluted)

$7.99

Total Assets

$10.24B

Cash & Equivalents

$367.80M

Free Cash Flow

$987.90M

Financial Statements
Beta
Revenue$10.49B
Gross Profit$1.99B
Operating Expenses$9.29B
Operating Income$1.20B
Interest Expense$50.20M
Net Income$981.90M
EPS (Basic)$8.06
EPS (Diluted)$7.99
Shares Outstanding (Basic)121.90M
Shares Outstanding (Diluted)122.90M

Key Highlights

  • 1Total sales grew 8.9% to $10.49 billion in fiscal year 2023.
  • 2Same-restaurant sales increased by a blended 6.8%.
  • 3Diluted earnings per share from continuing operations rose 8.1% to $8.00.
  • 4Acquisition of Ruth's Hospitality Group, Inc. (Ruth's Chris Steak House) completed in June 2023, post-fiscal year-end.
  • 5Inflationary pressures on food and labor costs were partially mitigated by pricing and operational efficiencies.
  • 6Company maintains a strong focus on human capital, reporting below-industry average turnover rates.
  • 7Projected fiscal 2024 sales growth between 9.5% and 10.5%, including contribution from Ruth's acquisition and new store openings.

Frequently Asked Questions

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.

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.

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.

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.