Darden Restaurants, Inc. (NYSE:DRI) Q1 2020 Earnings Conference Call - Final Transcript

Sep 19, 2019 • 08:30 am ET


Darden Restaurants, Inc. (NYSE:DRI) Q1 2020 Earnings Conference Call - Final Transcript


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Thank you for standing by. We now welcome you to Darden Restaurants First Quarter Earnings Conference Call. [Operator Instructions]

Now, let me hand the call over to your host, Kevin Kalicak. You may begin.

Kevin Kalicak

Thank you, Ray. Good morning, everyone, and thank you for participating on today's call. Joining me on the call today are Gene Lee, Darden, CEO; and Rick Cardenas, CFO.

As a reminder, comments made during this call will include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning and in its filings with the Securities and Exchange Commission. We are simultaneously broadcasting a presentation during this call, which is posted in the Investor Relations section of our website at darden.com.

Today's discussion and presentation include certain non-GAAP measurements and reconciliations of these measurements are included in the presentation. We plan to release fiscal 2020 second quarter earnings on December 19 before the market opens, followed by a conference call. This morning Gene will share some brief remarks about our quarterly performance and business highlights and Rick will provide more detail on our financial results from the first quarter.

As a reminder, all references to the industry benchmark during today's call refer to estimated Knapp-Track excluding Darden, specifically, Olive Garden and LongHorn. During our first fiscal quarter, industry total sales growth was flat, industry same-restaurant sales declined 1.2% and industry same-restaurant guest counts decreased 3.3%.

Now, I'll turn the call over to Gene.

Gene Lee

Thank you, Kevin, and good morning, everyone. As you've seen from our press release this morning, we had a solid quarter. Total sales from continuing operations were $2.1 billion, an increase of 3.5%. Same-restaurant sales increased 0.9% and diluted net earnings per share were $1.38.

Comparable same-restaurant sales for the industry continued to weaken during the quarter, as the industry once again faced tougher comparisons. However, the industry comping negative is surprising, considering unemployment remains at all-time low and there continues to be strong wage growth, which is historically has been positive for the industry.

I'm particularly pleased with the performance of Olive Garden and LongHorn Steakhouse, given the industry performance and their difficult comparisons over the first quarter of last year. We remain focused on our back-to-basics operating philosophy and leveraging our four competitive advantages. And I'm pleased, we continued to take share and protect our margins.

Turning to brand highlights for the quarter. Olive Garden had strong quarter, which resulted in its 20th consecutive quarter same-restaurant sales growth. Total sales grew 3.6%, driven by same-restaurant sales growth of 2.2% and 1.4% growth in new restaurants. Olive Garden same-restaurant sales gap to the industry was 340 basis points this quarter, representing the largest gap to the industry since the first quarter of fiscal '19. And on a two-year basis Olive Garden grew total sales by