Darden Restaurants, Inc. (NYSE:DRI) Q1 2024 Earnings Call Transcript

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So we — the carryover from last year represents 3%. So overall, from a pricing strategy perspective, we feel like we’re in a great place. We feel like we have created the gap to our competitors and that gap is not going to get any narrower. We don’t expect that when we end the year that maybe quarter-to-quarter, there may be tens of basis points of delta to our peers. But when we look at it overall, we feel like we’re going to be still ahead of competition. Part of that is because our inflation that we experience is better than most of our peers and we try to target our own inflation in terms of how we price. But our inflation because of our scale ends up being generally much less than especially some of the local peers you’re talking about.

Danilo Gargiulo: Extremely clear. Thank you, Raj. And one more question, if you don’t mind. So can you comment on the pace of integration efforts, especially in the light of the new synergies that you have found, do you think there is a potential to accelerate the full integration? And if so, is there any timing upside to the EPS accretion in fiscal ’24 and ’25?

Rick Cardenas: Hey, Danilo. As we mentioned earlier, we are finished the planning process and we’re about to embark on the hardest part, but it’s only going to take us nine months. So think about integrating 80 owned and operated Ruth’s Chris restaurants, thinking about the franchise systems, getting all of our operated restaurants on our point-of-sale system, on our payroll system and all of the other systems. We don’t want to go too much faster than nine months just because that’s a lot of disruption in the restaurant. So we’re going to pace it at the right level. We’ve already — as we’ve said, we’ve brought our synergy estimate up for this year from $5 million to $10 million, I believe, to $12 million this year about and that includes reinvesting some of the synergies that we found.

So that would tell you that we got a little bit faster. But we wanted to make investments just like we do in our other brands. So if we get even faster on some of the synergies we see that the synergies are even higher than we’ve just analyzed then we may make more investments. And so, we’ll do what is right for the long-term health of the business, but we’re not going to try to integrate too fast and we’re going to stay at our pace.

Danilo Gargiulo: Great. Thank you very much.

Operator: Thank you. Our next questions come from the line of Jeff Farmer with Gordon Haskett. Please proceed with your questions.

Jeffrey Farmer: Great. Thank you. Some big picture casual dining questions. So some of the NAP data, some of the other traffic source data, so that casual lining traffic growth slowed in August, has slow it into early September. You guys are obviously taking a lot of market share. But again, bigger picture from your perspective, what sort of consumer or macro factors are contributing most to that softening traffic trend for that casual dining consumer?

Rick Cardenas: Yeah, Jeff. I’m going to start with seasonality, as we’ve talked a couple of times, this is — September is typically the low seasonal pattern. Last year, it wasn’t, the same thing with August. And so I would start by saying seasonal patterns are getting back — more back to normal when you compare all of our segments to pre-COVID levels, over the last four quarters, we’ve been pretty consistent. And so the other thing, as we’ve already mentioned, is there is — the consumer is starting to have a little bit less confidence and they’re a little bit more selective. And so we’re going to continue to work on what we’ve worked on. But I think that pricing in the industry may have caused a little bit of this, but we’ve been pricing well below the industry and we feel good about where our pricing position is compared to everybody else and we’re just going to execute.

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