Market Hit: Leveraging CE Data to Understand the Role of Income in Darden Earnings Miss

In its recent earnings call following its sales miss, Darden Restaurants (DRI) described a tough operating environment where lower-income consumers are pulling back, even as the company outperforms industry benchmarks. In this report, we leverage CE demographic data to explore how income affects spending among Darden restaurants and its respective subindustries. 

Darden Restaurants (DRI) Earnings Miss: 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 +6.5% against consensus estimates of +8.7%.  As a result of the miss, the stock was down -5% post-earnings.

Darden Difference of Spend Growth by Income vs. Casual and Fine Dining

With 3Q24’s softer than expected earnings, DRI mentioned how January’s winter weather negatively impacted traffic results, but it was February’s weakness that exposed underlying consumer weakness.  

CE data shows that spend growth in the <$100k income group underperformed at Darden segments in the quarter, with the exception of LongHorn Steakhouse, as it has been able to retain and attract customers in both income groups. DRI’s other reported segments: Olive Garden, Fine Dining, and Other Business all saw substantial growth among higher income individuals; particularly among Bahama Breeze and Cheddar’s Scratch Kitchen within their Other Business banner. 

As the tough operating environment continues to impact the lower-income consumer the most, DRI could stick to its strategy of everyday value as it continues to grow market share in the Casual Dining subindustry as diners look for cost effective alternatives to Fine Dining.

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.