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Olive Garden is one of Darden Restaurants’ two largest chains.
Photo:
Justin Sullivan/Getty Images
Restaurants Inc. said sales rose 9.4% in its latest quarter as diners continue to eat out, while profit edged lower as the restaurant company faced soaring costs for food and labor.
The owner of Olive Garden, LongHorn Steakhouse and other sit-down restaurants on Friday also raised its guidance for its current fiscal year.
The Orlando, Fla.-based company posted sales of $2.49 billion in the quarter ended Nov. 27, topping analyst expectations of $2.43 billion, according to FactSet. Same-restaurant sales, which strip out the effects of openings and closings, rose 7.3%, led by Olive Garden and LongHorn, its two largest chains.
Its profit, however, slipped 3% to $187.2 million, as total operating expenses rose 11% from a year ago, with large increases in food and beverage costs, and restaurant labor expenses.
On a per-share basis, the company’s earnings ticked up slightly to $1.52 a share on a smaller base of shares outstanding. Analysts had been expecting $1.44 a share.
Darden and other restaurant operators have been raising menu prices this year to offset ballooning costs. The price of eating out is up 8.5%, according to the latest data from the Labor Department.
Sales at Darden have held up, with the company now projecting sales as high as $10.45 billion this year, slightly higher from a prior forecast. It now expects same-restaurant sales to rise 5% to 6.5%, up from a range of 4% to 6%.
The company also raised the low end of its earnings guidance by 20 cents to $7.60 a share for the year. Total cost inflation is expected to be up 7%, up from 6%.
Shares of Darden, down 5.2% this year through Thursday’s close, rose slightly in premarket trading.
Write to Dean Seal at dean.seal@wsj.com
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Appeared in the December 17, 2022, print edition as ‘Darden’s Sales Rise, But Higher Costs Dent Its Profit.’
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