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

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David Palmer: Okay. Thank you.

Operator: Thank you. Our next questions come from the line of Jeffrey Bernstein with Barclays. Please proceed with your question.

Jeffrey Bernstein: Great. Thank you very much. Two questions. One, just on the competition. Rick, I know you were pretty clear that you’re not keen to start being more aggressive with discounting, doesn’t benefit you long term. But are you seeing any changes in the broader competitive behavior? I think there are some that are concerned of an uptick in promos and discounting to drive traffic, especially with the commodity inflation easing. So contrary to your strategy, just wondering what you’re seeing across the broader landscape. And then I had one follow-up.

Rick Cardenas: Yeah, Jeff. One thing, yeah, commodities might be easing, but labor is still pretty high. If not — it’s getting a little bit better. But even if commodities are deflationary, there’s still net inflation, at least in our business, and I’m guessing in other business too. That said, we have seen a slight increase in promotional activity, but particularly with one barn grill competitor and in the family dining segment. We’re really not seeing a whole lot of competitive increase in competitive activity in kind of the Olive Garden range and above other than, as I said, that one bar and grill competitor that seems to be ramping up a little bit. Well, I said, Olive Garden is usually one of the top brands in share of voice.

So no matter what this competitive activity is and television activity. Olive Garden is usually one of the top few brands in share of voice, but our message is about more and more and more. Come in to Olive Garden for more, more food, more value, more refills. And that’s what we’re talking about. And as I said, we’ll stick to our strategy. And I’d tell you, that’s reinforced Never Ending Pasta Bowl. So Never Ending Pasta Bowl is about never ending craveable by an Italian food at a great value, and it’s right on our plan. We’re doing exactly what we planned for at the beginning of this fiscal year with Never Ending Pasta Bowl, nothing new.

Jeffrey Bernstein: Got you. And then just a follow-up. I know earlier you mentioned something about seasonality. I know you’re referring specifically to fine dining relative to last year. But as you think about broader casual dining historically, I get the feeling right sales slow in September post maybe a stronger summer and battling now back-to-school. But I feel like the past couple of years, there was a lot of pent-up demand post-COVID and therefore, maybe there was no seasonality. People are willing to go out even during this time frame, and therefore, less seasonality. I’m just wondering, should we now expect to return to seasonality that maybe could explain if you were to see a slowdown in coming weeks. I’m just wondering how you kind of think about that if seasonality were to return, how you decipher whether it’s traditional seasonality or slow in consumer? Any thoughts there around that would be great. Thanks.

Rick Cardenas: Yeah, Jeff. We actually do think seasonality is getting back to historic trends. And the data we talked about for fine dining with getting back to kind of 100% of pre-COVID levels. We’re seeing the same thing. I’m not saying at the 100%, but the same kind of trends back towards similar trends of pre-COVID levels now, where last year, we do think there was a little bit of pent-up demand. And so we’re going to watch it. We’re going to see what happens for the rest of this month and the rest of next month. But it appears like, now we’re getting much closer to what the seasonal patterns were.

Jeffrey Bernstein: Thank you.

Rick Cardenas: Yeah.

Operator: Thank you. Our next questions come from the line of Joshua Long with Stephens. Please proceed with your question.

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