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Darden Restaurants is trading higher despite missing on EPS for the second consecutive quarter, as investors focused on solid top-line performance and meaningfully improved outlook. The company reported in-line revenue, reaffirmed FY26 EPS guidance of $10.50-10.70, and raised both FY26 revenue and comp guidance, underscoring improving demand trends across its portfolio (Olive Garden, LongHorn Steakhouse, Ruth's Chris, Chuy's).

• Olive Garden delivered robust comps of +4.7%, driven by the success of the Never Ending Pasta Bowl promotion and continued momentum in first-party delivery. The $13.99 starting price resonated strongly with guests, while the partnership with Uber Direct continues to attract younger, more affluent customers who value convenience and order more frequently. The strength in delivery is helping fund investments such as the rollout of a lighter portion menu, featuring seven existing dishes with smaller portions and lower prices, which is expected to be completed systemwide in January.
• LongHorn Steakhouse posted standout comps of +5.9%, aided by the return of a guest-favorite seasonal item, the 14 oz 7-pepper crusted New York strip, which received strong guest and social media engagement. The Other segment saw comps of +3.1%, driven by solid performance at Yard House, while Fine Dining comps rose +0.8%, supported by strength at Ruth's Chris Steak House.
• The EPS miss was largely attributable to elevated commodity costs, particularly near-record beef prices, which weighed on margins across all brands except Olive Garden. Management noted beef costs are likely to remain elevated into Q3 (Feb), with some relief expected in Q4 (May).

Briefing.com Analyst Insight:

Investors appear willing to look past the EPS miss, as it was driven primarily by persistently high beef costs rather than demand weakness. The more important takeaway is the strong and consistent comp performance and the significant increase in FY26 comp and revenue guidance. This suggests Darden is executing well in an environment where consumers are increasingly value-conscious. Olive Garden's pricing discipline, promotions, and delivery strategy highlight management's strong grasp of current consumer behavior. In our view, Darden "gets it," and the market is rewarding the company for delivering value-driven traffic growth despite ongoing commodity cost pressures.