Darden, the owner of Olive Garden, surpasses earnings expectations and raises forecasts as sales increase.

• Olive Garden owner Darden beat earnings-per-share estimates for its fiscal second quarter.
• The company reported a 9.7% increase in revenue, which was attributed to the inclusion of Ruth's Chris Steak House locations and growth in same-store sales at other major chains.
• Darden also raised its outlook for the full fiscal year.

On Friday, the company reported quarterly earnings that surpassed expectations and increased its annual forecast, thanks to sales growth at restaurants like Olive Garden and LongHorn Steakhouse.

According to a survey of analysts by LSEG, formerly known as Refinitiv, the company's fiscal second quarter ending Nov. 26 exceeded Wall Street's expectations.

• Earnings per share: $1.84, adjusted vs. $1.74 expected
• Revenue: $2.73 billion vs. $2.74 billion expected

The company attributed the 9.7% increase in sales from the previous year to the addition of Ruth's Chris Steak House locations and a 2.8% increase in sales at the same restaurant.

While Olive Garden experienced a 4.1% increase in same-restaurant sales, LongHorn Steakhouse had a 4.9% jump in sales for the quarter. However, fine dining sales fell by 1.7% for the quarter.

In the company's earnings call on Friday, CEO Rick Cardenas stated that the consumer seems to be robust but more discerning.

Households with incomes above $200,000 ate out less frequently than before Covid, but more than the previous year, according to Cardenas. On the other hand, households with incomes below $75,000 ate out less frequently than before the pandemic, but more than the previous year, he said.

During the call, Raj Vennam, the Chief Financial Officer, stated that Darden anticipates an improvement in the inflation environment halfway through the fiscal year. However, he added that restaurant foot traffic is expected to decline for the entire year.

Darden shares remained flat, closing down less than 1% Friday.

Darden completed its acquisition of Ruth's Hospitality Group in June, but will not include same-store sales from Ruth's Chris Steak House until it has owned and operated the restaurant for 16 months.

Cardenas stated that we again grew our market share profitably this quarter by outperforming industry same-restaurant sales and traffic.