Darden Restaurants, Inc. (NYSE:DRI) Q4 2023 Earnings Call Transcript

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Raj Vennam: Yeah. Our labor did — overall labor inflation ticked down about 100 basis points from Q3 to Q4. We were at 6% in Q4. That included wage inflation close to 7%. And — so that’s also a tick down from prior quarter, a meaningful step down. And that actually was a little bit better than we thought for the quarter. Now as we look to the future, as we said, so we ended the year with 6.9% total labor inflation and we said we expect that to step down by about 100 basis points as we go to next year. That’s why we talked about that mid-single-digit inflation.

Brian Harbour: Thank you.

Operator: Thank you. Our next questions come from the line of Dennis Geiger with UBS. Please proceed with your questions.

Dennis Geiger: Thank you. Raj, I’m just curious if there’s any update to share on how you think continued margin gains longer term. I know you’ve spoken a bit more to the long-term total shareholder return algorithm of late. But just curious if anything new on long-term margin considerations and of 10 bps to 30 bps annually is kind of the right way to think about it still?

Raj Vennam: Yes, Dennis. We do think that 10 to 30 is the way to think about it from where we are starting this fiscal year. So that’s how we restated our framework. And the only change we made is to the share repurchase because we still believe that that 10 to 30 is a good target for us to have for the foreseeable future.

Dennis Geiger: Thank you. And then just on the to-go sales across the portfolio to some extent. Sort of where you sit now? And if any kind of latest thoughts on what that could look like, either growth there, sales mix opportunities as we look to ’24? Thank you very much.

Raj Vennam: Well, so our to-go sales are actually pretty consistent with where we were in Q3. So I think we’re still running at Olive Garden close to 25%, LongHorn on 14 and Cheddar at 12%, which is not that dissimilar to what we had a quarter ago. And we’re doing that without third-party delivery. And we continue to see that we’re able to kind of still get overall sales growth and outperformance versus the industry, while not tapping into these other channels and actually, we’re managing the experience better. We feel like we have continued to execute on that. As we’ve said before, this is higher than we would have expected a couple of years ago. But we’re very happy with it. And our teams are focused on executing at the highest level possible to make sure that we can sustain and grow from here.

Dennis Geiger: Great. Thank you, Raj.

Operator: Thank you. Our next questions come from the line of John Ivankoe with JPMorgan. Please proceed with your questions.

John Ivankoe: Hi. Thank you. I know you have actually famously done at a brand level customer segmentation work. You used to talk about that in Analyst Day as many years ago. So I guess using that data or using your current, can you explain how you think about the upcoming repayment of student loans, something that you’ve been asked about today, it’s coming, I think, in September, obviously, the press itself has kind of gotten smart that that’s something that’s coming and actually might be fairly significant change for at least some cohort of the population. Can you think of — is there any impact to Darden specifically, have you thought through that? And what might potential responses be?

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