Shares of Darden Restaurants, Inc. (DRI Quick QuoteDRI - Free Report) have gained 14.2% in the past three months, outperforming the Zacks Retail - Restaurants industry’s 7.6% growth.

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The company continues to strengthen its market position by leveraging solid sales performance across its portfolio, supported by strong guest demand, effective pricing actions and resilient traffic, particularly at its largest brands. Darden’s disciplined expansion strategy, partnership with Uber Direct and ongoing menu innovation, combined with a well-executed pricing approach, are driving strong results, underscoring the resilience of the company’s operational execution and reinforcing its long-term relevance in the competitive restaurant industry.

However, DRI has had its 2026 EPS estimate revised downward to $10.58 from $10.61 over the past 60 days. Darden faces near-term headwinds from elevated beef and commodity costs, margin pressure stemming from pricing below inflation, and ongoing macroeconomic uncertainty that continues to weigh on consumer demand.

Darden currently has a Zacks Rank #3 (Hold). Let’s take a closer look at the key factors supporting the stock’s performance and the challenges that may hold it back.

Factors Aiding DRI Stock

Brand-Led Growth: Darden’s results continue to be anchored by the strong performance of its core brands, which remain the primary engines of growth and profitability. In the second quarter of fiscal 2026, Olive Garden sales increased 5.4% year over year to $1.36 billion, driven by strong same-restaurant sales and traffic growth, along with the addition of 11 net new restaurants. LongHorn Steakhouse also delivered strong results, with sales rising 9.3% year over year to $775.9 million, supported by same-restaurant sales growth of 5.9% and the addition of 21 new restaurants. This sustained outperformance once again placed same-restaurant sales and traffic in the top decile during the quarter.

Beyond the core brands, Fine Dining sales increased 3.3% year over year to $316.4 million, driven by positive same-restaurant sales and the addition of three net new restaurants. Sales in the Other Business segment grew 11.3% year over year to $647.3 million, reflecting positive same-restaurant sales growth of 3.1% and a partial-quarter contribution from the Chuy’s acquisition.

Expansion Efforts: Darden continues to execute a disciplined and methodical expansion strategy that remains a meaningful driver of revenue growth and long-term value creation. During the second quarter of fiscal 2026, the company opened 17 new restaurants and raised its full-year outlook to 65-70 new openings, reflecting confidence in site availability, development pacing and capital allocation discipline. Accelerated build timelines are generating incremental operating weeks, enhancing near-term revenue contributions, while management remains focused on balancing growth with operational consistency, labor availability and return thresholds. This measured approach enables Darden to scale its leading brands efficiently while preserving margin integrity and capital efficiency, supporting sustainable long-term growth.
 
Focus on Menu Innovation: Darden continues to prioritize menu innovation as a key growth driver, leveraging targeted product launches and limited-time offerings to sustain guest interest and support traffic and check growth. At Olive Garden, momentum was driven by the success of the $13.99 Never Ending Pasta Bowl, alongside the limited-time return of two fan favorites — Ravioli di Portobello and Braised Beef Tortellini — brought back in response to strong guest demand, including widespread online petitions. LongHorn Steakhouse also leaned into proven favorites, reintroducing the 14-ounce, 7-Pepper Crusted New York Strip with brown butter sauce for the holidays, which generated enthusiastic guest feedback and strong engagement across social media. Additional offerings, including a popular $5 refillable beer stein and a value-oriented lineup featuring a new 8-ounce Prime Fit Cut Strip and returning favorites such as Stuffed Chicken and Salmon & Shrimp, further reinforced the brand’s value proposition.

Factor Likely to Hurt DRI Stock

Elevated Beef Cost: Elevated beef costs remained a notable headwind for the company. Management highlighted that beef inflation was higher and more persistent than initially expected, contributing to overall commodity cost inflation and limiting margin expansion despite solid sales performance. While disciplined pricing actions, menu mix management and operational efficiencies helped partially offset the impact, Darden intentionally priced below inflation to preserve guest value and traffic.

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