For the quarter, DRI is expected to generate EPS of $0.91 on revenue of $1.98 bln, equating to yr/yr growth of 25% and 11%, respectively. While its revenue growth rate slipped a bit last quarter to 6.5%, DRI has posted double-digit top-line growth in each of the four quarters preceding that. For a mature company, in a tough competitive market, that is pretty exceptional in our view.
What has been driving its improved growth has mainly been the stronger performance of its Olive Garden brand, leading to continued market share gains. Last quarter, total sales grew by 6.3% at Olive Garden restaurants, driven by same-restaurant sales growth of 5.3%. In fact, that was its 16th consecutive quarter of positive same-restaurant sales growth for that brand. Overall, DRI credits Olive Garden's unparalleled value proposition and menu innovation as the key to its strategy.
DRI owns several other brands, including LongHorn Steakhouse, The Capital Grille, Eddie V's, Cheddar's Scratch Kitchen, Yard House, Season's 52, and Bahama Breeze. From a combined viewpoint, DRI attained same-restaurant sales growth of 3.3%, easily exceeding the industry rate of 0.8%.
In addition to the solid top-line performance, DRI has also been executing well from an operational standpoint. In Q1, restaurant level EBITDA margin expanded by 20 basis points to 18.2%. Drilling down on this further, food and beverage costs were favorable by 40 basis points as continued cost saving initiatives more than offset investments made in food quality, as well as an unfavorable 70 basis point impact from labor costs.
On top of the margin improvement, the company has been steadily buying back stock. Specifically, it repurchased $31 mln in shares last quarter, further boosting its EPS.
As for its outlook, DRI raised its FY19 EPS, revenue, and comps guidance last quarter. For EPS, it moved it to $5.52-$5.65 from $5.40-$5.56, also above the $5.55 Capital IQ consensus at the mid-point ($5.59). For revenue and comps, it raised its outlook to revenue growth of 5.00-5.50% from 4.50-5.00%, and comps growth of 2.0-2.5% from 1.0-2.0%. Investors will be looking for at least a reaffirm of these expectations tomorrow morning.
To conclude, DRI has proven that it is "best in class" when it comes to outperforming expectations and delivering industry-leading comparable sales growth. That said, given this recent track record, expectations will be rather high as investors have come to expect strong results.