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December 31, 2025 • 4 min read
Darden Restaurants, Inc. (DRI), the powerhouse operator behind ubiquitous dining brands such as Olive Garden, LongHorn Steakhouse, and Yard House, continues to navigate a complex economic environment characterized by persistent inflationary pressures. For investors and market observers, the company’s financial statements provide a window into how large-scale dining operators are managing the delicate balance between menu pricing, guest traffic, and rising input costs.
We are digging into the numbers from Darden's latest 10-Q filing to dissect the company's performance for the second quarter of fiscal 2026, which ended November 23, 2025.
The following visualization illustrates the flow of Darden's finances, tracking how revenue from its various restaurant concepts translates into bottom-line earnings:
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Darden reported total sales of $3.1 billion for the quarter, a 7.3% increase compared to $2.89 billion in the same period last year. This top-line expansion was driven by growth across all reported segments, supported by a mix of new restaurant openings and positive movement in Same-Restaurant Sales (SRS).
As of November 23, 2025, Darden operated 2,182 restaurants, a net increase from 2,152 locations in the comparable prior year period.
While sales grew, the cost of running those restaurants climbed at a faster pace in certain areas, putting pressure on restaurant-level margins. Total operating costs and expenses rose 7.1% to $2.78 billion.
Food and beverage costs significantly outpaced sales growth, rising to $963.7 million. As a percentage of sales, these costs increased to 31.1%, up from 30.2% in the prior year period.
Restaurant labor expenses also grew, hitting $1.0 billion and representing 32.2% of sales. Management explicitly noted the mechanics behind this figure: labor costs faced a 1.0% unfavorable impact from inflation. While the company utilized a 0.8% benefit from pricing leverage and a 0.1% benefit from productivity improvements, these measures could not fully offset the inflationary headwinds on the labor line.
Despite the rising costs of food and labor squeezing margins at the restaurant level, Darden managed to grow its Operating Income by 9.7% to $320.4 million.
The primary driver of this profitability was a sharp reduction in corporate overhead. General and administrative expenses decreased by 18.3%, falling to $117.8 million compared to $144.1 million in the prior year. By significantly reducing these expenses—dropping them from 5.0% of sales down to 3.8%—Darden effectively shielded its operating income from the commodity and wage inflation occurring in its kitchens.
Additionally, the quarter benefited from a shift in asset disposals. The company recorded a net gain on the disposal of assets of $2.9 million, compared to a break-even result in the same quarter last year.
Darden’s second quarter results for fiscal 2026 reflect a company leveraging its scale to manage a high-cost environment. While food and beverage costs consumed a larger share of revenue, strong topline performance at LongHorn Steakhouse and consistent growth at Olive Garden provided a solid foundation. Ultimately, strict discipline regarding General and Administrative expenses allowed the company to convert sales growth into a 10.3% increase in Net Earnings, which landed at $237.2 million. As the industry continues to face input cost volatility, Darden’s ability to control corporate costs appears to be a vital lever in maintaining profitability.
Last updated: December 31, 2025