Darden Restaurants Reports Mixed Quarterly Results and Acquisition of Ruth’s Hospitality Group
In a surprising move, Darden Restaurants announced their acquisition of Ruth’s Hospitality Group, the parent company of Ruth’s Chris Steak House, for $715 million. This acquisition comes at a time when Darden reported mixed quarterly results, with same-store sales shrinking for the first time since the pandemic.
The quarterly report showed that Darden’s net income increased to $312.9 million, or $2.60 per share, up from $286.6 million, or $2.34 per share, a year earlier. Despite this increase in net income, Darden’s overall same-store sales fell by 1% in the quarter, with almost all of its restaurant segments reporting declines. Only LongHorn Steakhouse saw growth in same-store sales, while Olive Garden reported a decline of 1.8%.
With the acquisition of Ruth’s Chris Steak House and additional restaurant locations, Darden’s net sales rose by 6.8% to $2.97 billion. However, the overall performance of Darden’s portfolio was not as strong as expected, with same-store sales for many of its chains falling short of analyst estimates.
Looking ahead, Darden updated its outlook for fiscal 2024, expecting adjusted earnings per share of $8.80 to $8.90, narrowing its previous forecast. The company also lowered its revenue projection and adjusted its same-store sales outlook, reflecting the challenges they face in the current market environment.
Overall, Darden Restaurants’ acquisition of Ruth’s Hospitality Group and the mixed quarterly results highlight the challenges facing the restaurant industry in the post-pandemic era. It will be interesting to see how Darden navigates these challenges and continues to grow its business in the coming year.
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