stockrowWhat it does
Darden Restaurants is a full-service restaurant company. It owned and operated 2,202 restaurants in the United States as of May 31, 2026, across Olive Garden, LongHorn Steakhouse, Yard House, Ruth’s Chris Steak House, Cheddar’s Scratch Kitchen, The Capital Grille, Chuy’s, Seasons 52, Eddie V’s Prime Seafood, Bahama Breeze and The Capital Burger.
Its restaurants sell prepared food and beverages for lunch, dinner and other dining occasions. The brands span Italian food, steakhouses, American casual dining, Mexican and Tex-Mex food, seafood, wine-oriented concepts, burgers and fine dining. Olive Garden offers Italian food, soup or salad and breadsticks with entrées. LongHorn Steakhouse centers on steaks alongside chicken, seafood, ribs, pork chops and burgers. Fine Dining includes Ruth’s Chris, The Capital Grille and Eddie V’s.
Darden runs most locations itself and sets operating, menu, food-safety, training and marketing standards across the portfolio. Restaurant-level management teams handle day-to-day operations, while directors of operations oversee multiple restaurants. The company also has franchised locations and a small number operated through contractual arrangements. Its brands are managed in North America as operating segments, principally within U.S. full-service dining.
The company uses menu, service and atmosphere differences to position each brand for different occasions and price points. It also offers online and mobile ordering and payment systems across its brands.
How it makes money
Darden earns most of its revenue when guests buy food and beverages at company-operated restaurants. It also earns ongoing royalties and other fees from franchise operations and contractually managed locations. Because restaurant sales are generally paid in cash or cash equivalents, operating cash flow is the company’s principal source of liquidity.
The company reports four segments. Olive Garden generated $5.6 billion in FY2026 revenue, or 42.3% of revenue. LongHorn Steakhouse generated $3.4 billion, or 25.9%. Fine Dining combines Ruth’s Chris, The Capital Grille and Eddie V’s. Other Business includes Yard House, Cheddar’s Scratch Kitchen, Chuy’s, Seasons 52, Bahama Breeze, The Capital Burger, franchise royalties and fees from contractually managed locations.
Each restaurant’s sales depend on guest traffic, average check and restaurant openings. Average check reflects menu prices and what guests order, including alcoholic drinks and add-ons. The company uses different menus across trade areas, dinner and lunch menus at certain brands, and smaller or lower-priced children’s menus. It says it does not rely on any major customers as a source of sales.
FY2026 total sales were $13.21 billion; Q1 FY2027 total sales were $3.2 billion.
Sales also recur through repeat restaurant visits, gift-card redemption, catering and off-premise orders. In fiscal 2026, Olive Garden’s same-restaurant sales increase reflected higher average check, including off-premise catering sales, and higher guest counts. The company’s reported fiscal years can contain either 52 or 53 weeks, which affects comparisons between periods.
| Segment | Revenue, FY2026 | Share | Change on the year |
|---|---|---|---|
| Olive Garden | $5.6 billion | 42.3% | 7.33% |
| LongHorn Steakhouse | $3.4 billion | 25.9% | 13.1% |
| Other Business | $2.8 billion | 21.3% | 11.2% |
| Fine Dining | $1.4 billion | 10.4% | 5.43% |
Customers and how it sells
Darden serves restaurant guests across a broad range of full-service dining occasions. Its brands target different food preferences, spending levels and settings, from Olive Garden and Cheddar’s Scratch Kitchen to the fine-dining restaurants Ruth’s Chris, The Capital Grille and Eddie V’s. The company says its restaurants appeal to a broad spectrum of consumers.
The business is predominantly U.S.-based. It owned and operated 2,202 restaurants in the United States as of May 31, 2026. Customers and long-lived assets for its reportable segments are predominantly in the U.S. Olive Garden is the largest full-service dining Italian restaurant operator in the United States, while LongHorn locations are primarily in the eastern United States. Yard House operates in metropolitan areas across the country, and several fine-dining concepts concentrate in major metropolitan cities.
Darden also had 167 franchised restaurants operated by independent third parties. Those locations included restaurants in the United States, Latin America, Canada, Europe, Asia, the Middle East and the Caribbean. Recipe operates current and future Olive Garden restaurants covered by its Canadian area-development and franchise agreements, paying royalties for use of the Olive Garden trade name.
Guests can use dine-in, carryout, delivery, online ordering and mobile payment channels. The company uses customer relationship management, data analytics and marketing based on guest visit history, preferences and brand loyalty.
| Segment | Revenue, FY2026 | Share | Change on the year |
|---|---|---|---|
| Olive Garden | $5.6 billion | 42.3% | 7.33% |
| LongHorn Steakhouse | $3.4 billion | 25.9% | 13.1% |
| Other Business | $2.8 billion | 21.3% | 11.2% |
| Fine Dining | $1.4 billion | 10.4% | 5.43% |
Suppliers and costs
Darden sources food and supplies from more than 1,400 suppliers whose products originate in more than 30 countries. Its sourcing staff negotiates purchases, uses competitive bids, long-term contracts and supplier relationships, and usually buys directly from producers. Suppliers must meet its quality-control standards, and the company relies on independent parties to inspect suppliers and distributors.
Darden Direct Distribution, Inc. keeps ownership of food and supply inventory while third-party national distribution companies deliver products to restaurants under long-term agreements. Perishable inventory turns rapidly, so restaurant inventories have a modest aggregate dollar value relative to sales.
The main operating costs include food and beverages, restaurant labor, restaurant expenses, marketing, pre-opening costs, general and administrative expenses, depreciation and amortization, and asset impairments or disposals. Food commodity costs include beef, pork, chicken, seafood, cheese, butter and produce. In fiscal 2026, food and beverage costs rose as a percentage of sales, primarily because of inflation, while restaurant labor and restaurant expenses were flat as a percentage of sales.
The company expects commodities inflation of 3% for fiscal 2027. It has stated that its fiscal 2027 beef inflation outlook remained in the low-single-digit range.
- Revenue$13.2B
- Cost of revenue−$10.3B
- Selling, general and administrative−$694.8M
- Other operating costs−$584.9M
- Operating income$1.6B
Competitive position
Darden competes in the full-service dining segment against national and regional chains, locally owned restaurants, fast-casual restaurants, quick-service restaurants, grocery and deli prepared-food offerings, meal kits, delivery aggregators and food-delivery services. Competition covers food quality and variety, price, service, location, staffing, facilities, advertising, ordering technology, carryout and delivery.
The company states that full-service dining is highly fragmented and that it competes within each market for guests, management and hourly personnel, and suitable real-estate sites. It also faces competition from lower-priced alternatives and from delivery services that give consumers access to a wide range of restaurant chains and food retailers. No individual restaurant-company competitor is named in the available company information.
Darden’s brands use trademarks, differentiated menus, location selection, operating standards and marketing to compete. The company has scale in sourcing, national advertising, technology investment, restaurant training and its portfolio of brands. It also uses guest data, customer relationship marketing and digital media.
Our reading: Darden’s scale in procurement and distribution is a meaningful operating advantage because it directly sources product, uses long-term distribution arrangements and serves a large company-operated restaurant base. [item1]
Our reading: Its brand portfolio is a meaningful moat source because its concepts cover multiple full-service occasions and price points, but restaurants still compete market by market on value, service, convenience and food. [item1, item1a]
Our reading: Restaurant operations and training are important but execution-dependent advantages; the company’s growth and guest experience depend on recruiting, retaining and training restaurant teams. [item1, item1a]
Growth opportunities
Darden’s growth plan combines same-restaurant sales, new company-operated restaurants, franchise development and conversion of underperforming sites to other brands. It added 43 net new restaurants in the United States in fiscal 2026. The company expects fiscal 2027 sales from continuing operations of $13.60 billion to $13.75 billion, driven by same-restaurant sales growth of 2.5% to 3.5% and 75 to 80 new restaurant openings.
Its fiscal 2027 new-unit plans include openings across Olive Garden, LongHorn Steakhouse and Yard House. It expects to open 13 Yard House restaurants in fiscal 2027, including five conversions of Bahama Breeze restaurants. The company expects a smaller Yard House prototype to become the primary format, with lower construction costs and a broader set of potential sites.
Management said its current initiatives include Olive Garden lunch marketing and testing a new lunch platform; LongHorn menu additions and enhancements; digital and social-media marketing; and added branding and marketing support for Chuy’s. The company also expects to convert remaining Bahama Breeze restaurants to other Darden brands over the next 12–18 months following fiscal 2026.
Expansion depends on recruiting and training staff, finding sites, negotiating acceptable property terms, securing permits and completing construction. The company estimates that constructing and opening a new restaurant takes approximately 250 days on average after site acquisition and permits.
- $9.6BFY2022
- $10.5BFY2023
- $11.4BFY2024
- $12.1BFY2025
- $13.2BFY2026
Structural risks
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Food, labor, health-care, utilities and other cost inflation can compress margins. The company may be unable to offset higher costs through purchasing actions, menu changes or pricing without reducing guest traffic.
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Consumer spending, economic conditions, unemployment, energy prices, interest rates, severe weather and local traffic patterns can reduce restaurant visits or spending per visit. The business also has seasonal sales patterns, and quarterly results may not represent full-year results.
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Hiring, training, rewarding and retaining restaurant employees and leaders is necessary to staff existing restaurants and support openings. A competitive labor market, turnover, wage increases, benefit costs, immigration changes or unionization can increase costs or limit operations and growth.
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Food-borne illness, contamination, outbreaks of disease and failures in food safety can damage brand reputation, reduce sales, disrupt supply or increase ingredient costs. The company depends on suppliers, distributors and restaurant teams to maintain food safety.
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Darden relies heavily on technology for e-commerce, guest engagement, point-of-sale processing, supply-chain management, marketing and internal operations. System failures, cyber-attacks, privacy breaches or third-party provider failures can disrupt operations, expose personal or financial data, and create remediation, litigation or regulatory costs.
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Restaurant competition may constrain pricing and traffic. Delivery services, grocery prepared foods, meal kits, quick-service and fast-casual alternatives can draw guests to lower-cost or more convenient options.
Bottom line
Our reading
Our reading: Darden is a U.S.-centered, company-operated full-service restaurant portfolio, with Olive Garden and LongHorn Steakhouse accounting for its largest reported revenue shares and with food-and-beverage sales as its main revenue source. [item1, segment.olive_garden.share.fy2026, segment.longhorn_steakhouse.share.fy2026]
Our reading: Its operating model rests on repeat guest visits, restaurant execution, labor availability, food purchasing and disciplined site development; scale in sourcing, distribution and multi-brand support is material, while competition and cost inflation remain ongoing constraints. [item1, item1a]
Our reading: Near-term expansion includes new restaurants and Bahama Breeze conversions, but the pace depends on people, sites, permits and construction. [item1, item7, call_prepared]