Darden Restaurants, a dominant force in the casual dining sector, is embarking on a dual strategy of aggressive expansion for its flagship brands while concurrently optimizing its diverse portfolio. The company’s recent earnings call highlighted ambitious plans for new Olive Garden and LongHorn Steakhouse locations, signaling a clear commitment to leveraging its most successful concepts for sustained growth, even as it evaluates the strategic fit of other assets within its extensive brand roster.
During its fourth-quarter earnings call, Chief Financial Officer Rajesh Vennam outlined Darden’s projected openings of 40 to 45 new restaurants across its Olive Garden and LongHorn Steakhouse chains in the upcoming fiscal year. This aggressive build-out reflects a long-term vision, with Vennam indicating that LongHorn has the potential for 25 to 30 new locations annually, while Olive Garden is targeted for approximately 20 new units per year for the foreseeable future. Darden concluded fiscal 2025 with over 930 Olive Garden and more than 590 LongHorn Steakhouse company-owned restaurants, contributing to its total of over 2,100 locations across all brands. The company expects total new unit growth to reach 60-65 restaurants in fiscal 2026, aiming for a consistent 3% plus growth rate over the next five years.
Beyond its primary growth engines, Darden’s portfolio includes chains such as Ruth’s Chris, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Chuy’s, Seasons 52, and Eddie V’s. While Olive Garden and LongHorn lead the expansion, other brands are also slated for measured growth. Yard House, for instance, is projected to add a mid-single-digit number of new units, with the remaining brands collectively contributing around 15 additional openings. Management anticipates these diverse concepts will play an increasingly significant role in the overall brand mix and unit growth strategy in the coming years.
Financial Performance and Market Position
Darden Restaurants reported robust financial results for fiscal 2025, generating nearly $12.08 billion in total sales and achieving net earnings of $1.05 billion. Looking ahead, the company forecasts a 7-8% increase in sales for fiscal 2026. The two lead brands significantly contributed to these results: Olive Garden recorded $5.2 billion in sales, a 2.8% increase from the previous year, while LongHorn Steakhouse’s annual sales rose by 7.8% to $3.03 billion. This strong performance is underpinned by customer satisfaction; the American Customer Satisfaction Index Restaurant and Food Delivery Study recently ranked LongHorn Steakhouse second among full-service chains, with Olive Garden closely following, scoring 81.
Strategic Portfolio Optimization
In a move to refine its brand portfolio, Darden is exploring strategic alternatives for its 28-location Bahama Breeze chain. CEO Ricardo Cardenas stated that the brand is no longer considered a strategic priority for the company, despite its potential. The evaluation includes options such as a potential sale of the brand or converting existing Bahama Breeze restaurants into other Darden concepts. This decision underscores Darden’s focus on maximizing efficiency and allocating resources to brands that align more closely with its long-term growth objectives.
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