Darden Restaurants, Inc. (NYSE:DRI) Q1 2024 Earnings Call Transcript - Page 5 of 19 - InvestingChannel

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

Brian Bittner: Thanks for that Rick. And Raj, just my follow-up is, on the commodity costs. They were up 1% in the first quarter, which is obviously below your full year guidance of up 2.5%. And you did suggest that some non-beef items have been a bit more favorable. What’s driving the reiteration of the 2.5% commodity guide? Is it just conservatism after one quarter? Is there anything offsetting the recent favorability as we move throughout the rest of the year?

Raj Vennam: Yeah, Brian. So if you think about our inflation expectation for the first quarter, we were about 1 point better than we thought, mostly driven by, as I mentioned in my prepared remarks, other categories. The beef is still a lot of uncertainty around beef and you saw from our coverage that we don’t have a lot of coverage beyond, especially, as we get into the holidays and past. So there is some uncertainty around it. Now that favorability in the first quarter helps us a little bit. So what that might mean is that we might be a little bit lower in that guidance range we provided of approximately 2.5%. So maybe it’s a little bit south of that. But there’s three more quarters to go, and beef is really — I mean, there’s a lot of risk with beef, so…

Brian Bittner: Okay. Hey, thanks, guys.

Operator: Thank you. Our next questions come from the line of Eric Gonzalez with KeyBanc Capital Markets. Please proceed with your questions.

Eric Gonzalez: Thanks and good morning. My question is about the guidance as it relates to Olive Garden. And specifically, I’m curious how you’re thinking about the second quarter, which is typically a seasonal low volume period for the industry. Historically, there’s been a bit of a step down in revenue in Olive Garden from 1Q to 2Q, but last year was a little bit different with the return of the possible. So perhaps you can help us think about how to model that second quarter relative to your guidance and your own expectations, whether you see that fiscal second quarter revenue increasing or decreasing sequentially? Thanks.

Raj Vennam: Look, I think it’s — I don’t — we don’t expect a huge quarter-to-quarter sequential change. Obviously, we are relaunching now running possible that does help and that’s part of the reason why we do it in the second quarter is with the back-to-school and there’s a little bit of a lull and a slowdown in the casual dining and that’s really the time frame. And basically, that’s within our range. I mean, I think as we look at last year to this year, there’s going to be some nuances with respect to pricing being a little bit lower this — as we get into the second quarter than first quarter. But I don’t want to contemplate exactly what it’s going to look quarter-to-quarter.

Eric Gonzalez: Fair enough. Thanks.

Operator: Thank you. Our next questions come from the line of Brian Harbour with Morgan Stanley. Please proceed with your questions.

Brian Harbour: Yeah. Thank you. Maybe just on the risk synergies, what were some of the additional things that you found? And then when you talk about reinvesting, would that primarily kind of be in staffing or are you also referring to kind of food and menu? Where would we kind of see that impact?

Raj Vennam: Yeah. So route synergies, generally, where we’re getting them is between both the entire supply chain as well as in the G&A, right? So we initially started with an estimate as we go through the year, we’re finding that as we are now in the process, we’ve been able to identify more, and it’s in both places. So from an investment perspective, we have a long history of investing in the guest and team member experience across our brands. And so we’re investing some of these additional synergies and cost savings in a similar manner, with investments that the routes guests and team members will notice and appreciate.

Related posts

Advisors in Focus- January 6, 2021

Gavin Maguire

Advisors in Focus- February 15, 2021

Gavin Maguire

Advisors in Focus- February 22, 2021

Gavin Maguire

Advisors in Focus- February 28, 2021

Gavin Maguire

Advisors in Focus- March 18, 2021

Gavin Maguire

Advisors in Focus- March 21, 2021

Gavin Maguire