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

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There’s still some delays in permitting and utility connections with local agencies and stuff like that. But all that said, we do see some green shoots. We think that we believe that the inflation on the action side has peaked it’s still elevated, but it’s not going – continuing to go up. And in fact, I think we – the last few bids we’ve had last few construction starts we’ve had – they were in line with our budget or better. So just make – starting to see some positive signs there.

Andrew Strelzik: Great. Thank you very much.

Operator: Thank you. Our next questions come from the line of Brian Vaccaro with Raymond James. Please proceed with your questions.

Brian Vaccaro: Hi. Thanks. Good morning. I just wanted to circle back on the strength at LongHorn — it seems like the brand took another step up at least through the lens of average weekly sales volumes, which I think are now up in the mid-30s versus pre-COVID levels. I know the brain has gained a lot of share through the pandemic, but anything incremental worth highlighting that you think is driving this incremental uptick?

Rick Cardenas: Yeah, Brian. LongHorn has been executing well for the last few years. And I keep — I want to comment Todd and his team, they’ve been on this journey in quality, simplicity and culture. That’s what Todd talks about every day, investing in quality and portions that continue to pay off. They had almost 7.1% same-restaurant sales growth in the quarter. That was driven by some pricing. They’ve had more inflation, but they also have had record weekly sales and Mother’s Day, and yes, they’re 34% above pre-COVID levels in sales versus Q4. And traffic is positive over pre-COVID. So I can’t tell you it’s any silver bullet and we’ve talked about that in the past that there aren’t silver bullets here. It’s about having great execution, investing in your team, investing in your product to drive profitable same-restaurant sales growth. And that’s what they’ve been doing.

Brian Vaccaro: All right. And then I also just wanted to circle back on the Roots acquisition and your customer segmentation work. Could you elaborate a little bit on the overlap or maybe more interestingly, the key differences between Roots customer base versus your other fine dining brands or any other differences you think are worth highlighting regarding the brand?

Rick Cardenas: Yeah, Brian. Let me talk about differences and why we believe that there’s not a whole – a lot of overlap between the Ruth’s customer and a capital growth customer. But I will preface this by saying, we’ve only owned them for 8 days. And before we closed the deal, we were not allowed to see their consumer data, right? We were still competitors, and we couldn’t see their consumer data other than looking at third-party data that we would have. So we want to start looking at their data to understand it a little bit better. But one of the primary reasons is geography. If you look at – they have 150-ish restaurants, including the franchise system, and they have restaurants in markets that Capital Grille doesn’t have restaurants in.

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