Market Hit: Consumer Edge Transact Data Tracks Darden’s Earnings Miss and Guest Traffic Growth

As consumers still face uncertain macroeconomic conditions, Darden Restaurants (DRI) continues to outperform the Casual Dining sub-industry, driven by its value-driven LongHorn Steakhouse, even as customers pull away from discretionary dining.  In this report, we leverage CE sub-industry and demographic data to explore how income affects spending among the Darden restaurant portfolio.

DRI’s Sales Growth Year-Over-Year

CE’s US Transaction data was predictive of Darden Restaurants Inc’s (DRI) sales, as the restaurant group reported total sales growth of +6.8%, close to CE Implied Reported Growth of +6.4% against consensus estimates of +7.5%.  

Olive Garden and LongHorn Steakhouse outperform Industry Traffic Year-Over-Year

As consumers are struggling  to adapt to inflation, Darden commented that guest count growth was near the top quartile of the industry for Olive Garden and top decile for LongHorn Steakhouse even as many competitors had increased levels of discounting and promotional activity.  CE data shows that LongHorn Steakhouse (+4%) and Olive Garden (+1%) have sustained their guest traffic throughout the year – edging out both industry (-1%) and sub-industry (-2%) growth on a Fiscal Year level. 

Olive Garden’s deceleration in Q4 is likely due to their increased pricing in the last weeks of the year.  DRI commented that it will keep raising prices at Olive Garden, even as top executives admitted that sales dropped in the latest quarter as inflation-hammered customers pulled back on visits.

Low Income Households Pull Away from Spending

The company further explained that guest traffic for households with incomes below the median (~$75K) saw the greatest declines across its restaurant portfolio, particularly for the Fine Dining segment.  CE data captured the guest traffic decline in the Fine Dining and Other Business segments.

CE data also shows the resilience of LongHorn Steakhouse customers as guest traffic increased across income groups. As DRI focuses on “giving the consumers… a great value and a great experience”, LongHorn Steakhouse continues to edge out Olive Garden as the best performing business within its portfolio.

As consumers continue to face inflation, DRI’s commitment to value may incentivize more guests into their business away from other dining options as prices rise across all industries.

Consumer Edge is the leading provider of alternative data for consumer spending behavior, and the only provider of global revenue signals. If you’d like to benefit from using CE Transact US, CE Vision, or other products for restaurant insights, retail data, and other industry data year-round to track trends like these, reach out to schedule a demo.

About the Authors

Katherine Bjorkman is the Director of Insights for the CEIC. Explore more of her insights here and follow her on LinkedIn.

Rachel Zucker is an Insights Analyst for the CEIC. Follow her on LinkedIn.