Darden Restaurants, Inc. (NYSE:DRI) Q1 2024 Earnings Call Transcript - Page 18 of 19 - InvestingChannel

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

Jake Bartlett: Okay. Great. I’m going to go with kind of an odd question, but I think it’s — I think it’s something that investors are focusing more and more on and I’m not sure how valid it is or not. But I’m wondering your perspective on GLP1 drugs and the impact on restaurant demand, maybe Darden’s restaurant demand. I’m not going to ask your average BMI for your customers, but any perspective there, any perspective? I know it’s something that’s on investors’ minds, so I figured I’d ask.

Rick Cardenas: Yeah. I didn’t mean to laugh. But when you talked about my BMI, I’m not going to get into that.

Jake Bartlett: I know yours as well.

Rick Cardenas: I don’t know about that. Let me start by saying full-service dining occasions are driven by desire to connect with family and friends. Our — if you think about the frequency of our full servers dining gas is a couple of times 2 times, 3 times a year for a good guess. So over the years, we have spent a lot of time designing our menus to ensure guests have a wide range of choices to suit their individual needs. And we’re going to react to whatever happens, but we don’t think it’s going to be a meaningful impact to us because of the celebratory nature with for people, why people come out to eat. And if it suppresses appetite a little bit, they’re still going to eat. So we’re going to be there for them when they do.

Jake Bartlett: Great. I appreciate it.

Operator: Thank you. Our next questions come from the line of John Parke with Wells Fargo. Please proceed with your questions.

John Parke: Hey. Good morning. I guess can you guys just talk about the margin recovery at LongHorn kind of in face of deep inflation? And I guess, should we expect that to tail a little bit worse as we kind of move through the year?

Raj Vennam: Hey, John. I think we — what we talked about, if you recall, a year ago, was there was opportunity to get some margin back at LongHorn. Part of that was we had made — LongHorn’s team had made some strategic choices along the way to make investments in food quality and invest well below — at pricing well below inflation as they were growing traffic. And LongHorn, by the way, does have significant — actually positive traffic in the dining room relative to pre-COVID. And so we’re at a place where we now can pivot a little bit back to getting some of the margin that we wanted to get and so LongHorn team has done a great job getting to some of that margin growth. And we feel like we’re in a much better place from an overall business model perspective, especially given the top line momentum they have to be able to see the margins where they are. It’s just — it provides strong returns within our portfolio.

John Parke: Great. Best of luck, guys.

Operator: Thank you. Our next questions come from the line of Andrew Strelzik with BMO. Please proceed with your questions.

Andrew Strelzik: Hey. Good morning. Thanks for taking the questions. I just had two quick ones for me. The first is on your commodity baskets. It looks like you have less lock than you did with the last update. Now I’m just wondering if that’s typical. Is it intentional or things getting a little bit more difficult there with those conversations with suppliers. So that would be the first question. The second one, on the off-premise numbers that you gave in terms of the mix it sounds like you think that’s seasonality or due to the kind of lower volume nature of the quarter. I mean — we know that delivery also is softening up a little bit across the industry. Do you think that there’s more shifting to food at home or any other dynamics that might be play there? Thanks.

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