Darden Restaurants on Thursday reported quarterly earnings and revenue that narrowly missed analysts' expectations as same-store sales growth at Olive Garden slows.

Shares of the company fell as much as 5% in premarket trading but pared back their losses as executives reassured investors on the company's earnings conference call. The stock was down about 2% in morning trading.

Short-term challenges like consumers' cyclospora concerns and the World Cup tournament weighed on Darden's same-store sales during the quarter, executives said. However, CEO Rick Cardenas said that Darden's restaurant chains are performing better in September, and costs of key commodities, like beef, are projected to improve later in the fiscal year.

Here's what the company reported for the quarter ended Aug. 30 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

  • Earnings per share from continuing operations: $2.05 vs. $2.06 expected
  • Revenue: $3.20 billion vs. $3.21 billion expected

Darden reported fiscal first-quarter net income of $233.4 million, or $2.04 per share, down from $257.8 million, or $2.19 per share, a year earlier.

The company's same-store sales increased 3.1% during the fiscal quarter as each of Darden's business units reported growth. But the World Cup weighed on demand for Darden's restaurants early in the quarter, dragging the company's same-store sales down by 80 basis points, or 0.8%, CFO Raj Vennam said.

LongHorn Steakhouse was once again the top performer of the portfolio this quarter, as same-store sales rose 6.2%. The chain has overtaken Olive Garden to become Darden's top performer, although it still accounts for a smaller share of the company's overall revenue.

Olive Garden saw its same-store sales inch up 1.1%. While it is still the company's largest chain by both number of locations and sales, Olive Garden has seen its growth weaken as diners have become more choosy about their spending.

And while many consumers may think about pasta or breadsticks when they consider dining at Olive Garden, the chain was not immune to industry concerns about the deadly cyclospora outbreaks this summer tied to fresh produce.

"During the quarter, Olive Garden was prepared to communicate about one of its core brand equities, unlimited soup, salad and breadsticks, but quickly pivoted away from their planned marketing support in response to external events that led to broader consumer concern about lettuce," Cardenas told analysts on the company's quarterly earnings call.

Instead, Olive Garden will run the campaign during the current quarter.

To fuel sales further, Olive Garden is going to lean into weekday lunch occasions. Cardenas said the team is working on "several opportunities" focused on value to drive more traffic during the relatively sleepy daypart.

Darden's fine-dining business reported same-store sales growth of 1.6%. The segment includes chains like The Capital Grille and Ruth's Chris.

Executives said that traffic to the company's fine-dining restaurants is still below pre-pandemic levels. However, traffic trends have been improving, and those restaurants have taken lower price increases than the rest of Darden's portfolio.

"We are seeing that business spending is still low," Cardenas said. "We're starting to see some growth in private dining."

The company's remaining chains, which are grouped under its "other business" division, saw same-store sales grow 3.8% in the quarter. The segment includes Yard House, which saw same-store sales climb 10%, fueled by the World Cup. It was the only Darden chain to report a benefit from the tournament.

"Yard House is a high potential growth brand," Cardenas said, adding that the beer-centric chain is the company's third billion-dollar brand, as of last week.

Yard House will open 13 new restaurants in fiscal 2027. Five of those openings will be conversions from Darden's now-shuttered Bahama Breeze chain.

Darden also reiterated its forecast for fiscal 2027. The company is projecting total sales of $13.60 billion to $13.75 billion and net earnings per share from continuing operations in a range of $11.10 to $11.35.