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Darden Restaurants Dividend Returns to Pre-COVID-19 Levels

Darden Restaurants Inc. (DRI) owns more than 1,800 restaurants that employ 175,000 people and serve nearly 360 million guests each year. The company’s brands include Olive Garden, LongHorn Steakhouse, and Yard House, among others.

The company generated 51% of its revenue from Olive Garden, 22% of its revenue from LongHorn Steakhouse, 7% of its revenue from Cheddar’s Scratch Kitchen, 7% of its revenue from Yard House, and the remainder from other brands in 2020. In addition to being its largest share of revenue, Olive Garden also has the highest segment profit margins at 18.3% in 2020.

Surpassing Expectations in 2021

Darden Restaurants reported fiscal third quarter revenue that fell 26.4% to $1.37 billion, beating consensus estimates by $100 million, with non-GAAP earnings of $0.98 per share, beating consensus estimates by 30 cents. Same-store sales fell 26.7%, which was better than the 31.2% that analysts expected to see for the quarter.

Looking ahead, management projects total sales of about $2.1 billion during its fiscal fourth quarter, which was better than the $1.96 billion consensus, along with earnings of $1.60 to $1.70 per share, which was much higher than the $1.25 per share consensus estimates.

The company raised its quarterly dividend by 137.8% to $0.88 per share, which represents a 2.43% forward yield. The dividend is payable on May 3, 2021 to shareholders on record as of April 9, 2021. The board of directors also authorized a new buyback program to repurchase $500 million of its outstanding common stock.

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