Darden Restaurants (DRI) 10-K: Growth, Costs, and Brand Profitability

When you sit down for a meal at Olive Garden, LongHorn Steakhouse, or The Capital Grille, you're dining with Darden Restaurants (DRI), one of the largest full-service restaurant companies in the world. But how is the business behind the breadsticks and steaks actually performing? We're diving into their latest annual 10-K filing, covering the fiscal year that ended on May 25, 2025, to see where their money comes from and where it goes.

A Year of Growth and New Flavors

Darden served up a solid year, growing its total sales to $12.1 billion, a 6% increase from the $11.4 billion reported in the previous year. This growth was driven by a combination of new restaurant openings and steady performance from its established brands. A significant development this year was the acquisition of Chuy's, a Tex-Mex chain, which adds a new dimension to Darden's portfolio.

The company's revenue is generated across four main business segments:

• Olive Garden remains the powerhouse, bringing in $5.2 billion in sales.
• LongHorn Steakhouse continues its strong performance with $3.0 billion.
• The Fine Dining segment, which includes high-end brands like The Capital Grille and Ruth's Chris, contributed $1.3 billion.
• The Other Business segment, a collection of brands including Cheddar’s Scratch Kitchen and now Chuy's, accounted for $2.5 billion.

From Sales to Profit: Where Does the Money Go?

While top-line revenue growth is important, profitability tells the real story. Darden's primary costs, like for any restaurant, are food and beverage ($3.7 billion) and restaurant labor ($3.8 billion). These two categories alone consume about 62 cents of every dollar in sales.

To get a clearer picture of how Darden converts its massive sales into profit, this flow diagram illustrates the journey from revenue to net income.

After all costs and expenses, Darden reported an operating income of $1.36 billion, resulting in a healthy operating margin of 11.3%. The final net income, or the bottom-line profit, landed at $1.05 billion. This translates to a net margin of 8.7%, meaning the company kept about $8.70 in profit for every $100 of sales—a strong figure in the competitive restaurant industry.

How Profitable Is Each Brand?

Darden also reports "segment profit," which reveals how profitable each brand is before accounting for corporate-level expenses like general and administrative costs. This metric is a great indicator of each brand's operational efficiency.

• Olive Garden leads the pack with an impressive segment profit margin of 22.3%.
• LongHorn Steakhouse isn't far behind, boasting a margin of 19.3%.
• The Fine Dining and Other Business segments posted solid margins of 18.6% and 15.7%, respectively.

These figures show that Darden’s core brands are not just popular, but also highly efficient and profitable operations.

In conclusion, Darden's latest filing paints a picture of a well-managed company experiencing steady growth and maintaining strong profitability across its diverse portfolio. While facing industry-wide challenges like inflation and labor costs, its iconic brands and operational discipline have allowed it to continue thriving in the full-service dining landscape.