Darden Restaurants, Inc. faced a challenging third quarter, as its recent earnings report sparked a negative reaction from the market. Shares of the Orlando-based restaurant group slipped after the company reported same-restaurant sales growth but fell short of Wall Street’s profit expectations. While Darden’s management, led by CEO Ricardo Cardenas, pointed to solid performances at Olive Garden and LongHorn Steakhouse, ongoing cost pressures and slightly weaker-than-anticipated revenue and guidance weighed on investor sentiment. (Read the original report)

Executives highlighted that both Olive Garden and LongHorn Steakhouse benefited from recent menu innovations and an increased emphasis on first-party delivery—a trend further supported by a high-profile advertising campaign offering millions of free deliveries. According to Darden, this promotion concluded in the first quarter, with all free deliveries now completed.

Despite strong same-restaurant sales gains, Darden faced increased margin pressures, particularly due to elevated beef costs and strategic investments in menu affordability. Revenue for the quarter did not meet analyst expectations, and management’s guidance for the full year came in slightly below consensus estimates. Nevertheless, year-over-year same-restaurant sales continued to advance.

During the Q3 2025 earnings call, held with analysts and reported in a detailed transcript at GuruFocus, several key topics were addressed:

• Beef Cost Coverage and Pricing: Management acknowledged that beef remains Darden’s largest variable cost. With limited hedging in place and continued market volatility, executives signaled the possibility of further menu price increases if beef costs remain high and demand stays steady in the coming months.
• Affordability Initiatives and Delivery Cost Impact: Analysts asked about measures to maintain restaurant traffic while controlling costs. Darden said that both delivery and lighter-portion menu options reduced margins by about 30 basis points, though these were described as deliberate investments to stimulate guest visits.
• Sustainability of Strength in Casual Dining: On sustaining traffic amidst mounting consumer headwinds, Darden maintained that value perception remains a key differentiator and announced additional initiatives to support guest traffic as economic conditions evolve.
• Guest Income Trends and Visit Growth: Visit growth was confirmed across all income segments, with higher frequency observed—potentially as consumers trade down from pricier dining alternatives.
• Impact of Weather and Holiday Shifts: Darden revealed that adverse weather and a shift in the Thanksgiving holiday reduced same-restaurant sales by about 190 basis points during the quarter.

Executives also addressed the rollout of Olive Garden’s partnership with Uber Direct for delivery. The collaboration has been described as a success, with delivery order volume increasing weekly, and orders achieving higher check averages compared to curbside pickup. The company remains focused on expanding delivery capabilities while striving to control costs.

Consumers appear to remain committed to dining out, Darden noted, even as overall consumer confidence has slipped. While there has been some spending pullback among guests earning less than $50,000 annually, the company does not see a major impact on overall sales, as eating out is perceived as an affordable indulgence for many.

Other topics addressed on the call included the performance of new, smaller restaurant prototypes for brands such as Yard House and Cheddar’s Scratch Kitchen. Management reported that these prototypes are meeting or exceeding expectations, with sales and traffic comparable to larger locations. The smaller formats have helped cut construction costs and opened up more site options for future expansion, potentially accelerating unit growth for these brands.

On the marketing front, Darden plans to increase advertising spend by 10 to 20 basis points year-over-year. However, the upcoming campaign’s impact on total advertising expense is expected to be modest and span only a few weeks, according to CFO Rajesh Vennam.

Looking ahead, Darden’s main objectives include restoring margin growth, growing delivery, and maintaining guest traffic—all while resisting the temptation to push average check sizes higher at the risk of losing value-seeking customers. The coming quarters will be crucial in determining whether these strategies can offset commodity cost pressures and shifting market dynamics. For detailed analysis, see the Yahoo Finance article and conference call transcript.