Olive Garden parent company Darden Restaurants saw its shares jump 8.5% on Thursday after saying sales have picked up lately following a weak summer and announced a new delivery partnership with Uber.
Darden reported weaker-than-expected earnings on Thursday but reaffirmed its full-year outlook and said sales have been improving since the quarter ended Aug. 25.
“While we did not meet our expectations for the first quarter, I firmly believe in the strength of our business,” CEO Rick Cardenas said in a statement. “I am confident in the steps all of our brand teams are taking to address the needs of their guests, which do not compromise the long-term health of our business in exchange for short-term profits.”
The company also announced that it had signed a two-year exclusive contract with Uber Technologies, reversing its previous aversion to third-party delivery services.
Customers will be able to order Olive Garden fan favorites, such as pasta and breadsticks, through the Olive Garden app. Uber’s network of drivers will be used to deliver the food.
“Guests have been asking us for delivery options and continue to show they are willing to pay for convenience,” Cardenas said in a statement.
Dish prices will reflect in-store prices and customers will pay a delivery fee that will average $7 per order. According to the Wall Street Journal.
The company’s shares had fallen 1.9% this year before Thursday’s boost as the restaurant industry has struggled to win back inflation-hit customers who continue to eat at its restaurants and save on meals.
Olive Garden same-store sales fell 2.9%.
Like many fast-food restaurants, Olive Garden is turning to deals to win over customers. The company will be bringing back its Never Ending Pasta Bowl to its menus later this month.
“The significant decline in traffic in July caused our first quarter earnings to be lower than expected,” Chief Financial Officer Raj Vennam said in a statement.
“Following weakness in July, our sales trend has continued to improve. Given this recovery, as well as planned initiatives to support the remainder of the fiscal year, we reiterate our guidance for fiscal year 2025,” Vennam said.
Darden’s fine-dining segment, which includes Eddie V’s and The Capital Grille and will include the newly acquired Ruth’s Chris Steak House next quarter, was hardest hit. Its same-store sales declined 6%.
The company reported net income of $207.2 million, or $1.74 per share, up from $194.5 million, or $1.59 per share, a year earlier.
Excluding costs related to the purchase of the Tex-Mex chain Chuy’s, Darden reported adjusted earnings per share of $1.75, below LSEG analysts’ expectations of $1.83 per share.
Darden reported revenue of $2.76 billion, below estimates of $2.80 billion.
While total sales increased 1%, same-store sales decreased 1.1% over the same period.
LongHorn Steakhouse was the only Darden business to report same-store sales growth.
Its comparable-store sales rose 3.7%. The casual steakhouse was one of Darden’s best performers during the pandemic.
In July, Darden purchased Chuy’s Holdings, a Tex-Mex chain based in Austin, Texas, with about 100 locations in the southern United States, for approximately $605 million. The acquisition is expected to take place in the next fiscal quarter.
Chuy’s is Darden’s second acquisition in two years, after purchased Ruth’s Chris Steak House in June 2023 for approximately $715 million.
Darden reiterated its full-year 2025 guidance. The company expects earnings per share of $9.40 to $9.60 and net sales of $11.8 billion to $11.9 billion.
