Darden Restaurants, Inc. (NYSE:DRI) Q1 2024 Earnings Call Transcript - Page 14 of 19 - InvestingChannel

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

Rick Cardenas: Yes, Sara. Our marketing versus prior year was up 20 basis points, about half of that was just roots mix. So bringing roots into the mix. Our marketing was a little bit higher. And the other 10% was already in our plan. So the planned performance included the tenth in marketing. So we believe we’re getting an ROI on that. And we’ve learned over during the COVID times how to — we’ve been able to analyze marketing better because when you completely eliminate it and you start adding back, you can really see the impact of it versus when you have a lot of it and you add a little bit, it’s harder to see. So we’re able to read the marketing much better in the ROIs and marketing, and we believe there is one.

Sara Senatore: Thank you.

Operator: Thank you. Our next questions come from the line of Peter Saleh with BTIG. Please proceed with your question.

Peter Saleh: Great. Thanks. I just wanted to come back to the conversation around menu mix. I think you mentioned some declines in alcohol mix as some of the fine dining brands, but you also mentioned something similar at the core brands, some alcoholics and entree mix (ph) that was a little bit less than you expected. Can you elaborate a little bit more on that on what you’re seeing? Is this the first time you’ve seen this pull back in this — or change in consumer behavior since pre-COVID?

Raj Vennam: Yeah, Peter. I would say on the casual brands, we’re only seeing it at Olive Garden and LongHorn and it’s not alarming. What we’re talking about is tens of basis points of negative mix. So it’s not at a point where we’re like, hey, we’re missing check by quite a bit. But it’s about — in an environment where you have a pricing in that 6% range in the — take an example, the last quarter, to have maybe 50 basis points of negative mix. It doesn’t feel like it’s a huge impact, but it was a little bit worse than we expected. But we’re not reading too much into that, primarily because when we look at what’s happening at Cheddar’s, we’re not seeing a negative mix there. So — and the other part of it is we have introduced some menu items that are more — at LongHorn, for an example, we have some items that are better margin, pricing difference there might be causing people to trade down, but it’s not hurting our margins.

So we’re actually okay with that some negative entree mix we’re seeing. So it’s too early to draw too much into the — to kind of read too much into this negative mix that we’re seeing on the check at the casual brands. From fine dining, yeah, we truly believe it is a function of exuberance last year. We were seeing a huge positive mix last year and that’s going away. I mean we’ve actually had that for four or five quarters until — I think until we got through to the second quarter of last year. And so now we’re starting to things normalize. And this is — that’s why when we wanted to look at it versus pre-COVID and when we look at it through that lens, we did not see any big drop off at the fine dining.

Peter Saleh: Thanks for that. And then, Rick, I think you mentioned that labor obviously is still inflationary, but has improved. Can you give us a little bit more color on what you’re seeing on the labor side? Is it just more availability of labor are starting wages lightening out or coming down? Any more detail on that front would be helpful. Thanks.

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