Darden Restaurants management expressed optimism regarding their expectations for casual dining, which is favorable news for Texas Roadhouse. Although Darden missed on fiscal 2025 third-quarter revenue and same-store sales due to bad weather, similar to Texas Roadhouse, their LongHorn Steakhouse reported a quarterly same-store sales growth of 2.6%. In the first few weeks of March, LongHorn experienced strong traffic despite concerns about President Donald Trump’s tariffs affecting an already slowing economy.
Darden owns Olive Garden, its largest segment, which also saw similar quarterly results and guidance. CEO Ricardo Cardenas stated on Darden’s post-earnings call that dining out remains the top category where consumers indulge themselves. He added that changes in consumer sentiment have not significantly impacted consumer spending, and casual dining is performing better than other segments.
Darden’s shares closed up nearly 5.8% following the announcement. This outlook is promising for Texas Roadhouse, which reported a strong fourth quarter ending December 31. However, Texas Roadhouse mentioned sluggishness in the first seven weeks of its current quarter due to weather and external factors. Darden’s fiscal third quarter ended February 23, indicating a similar sluggishness in its financials.
Darden’s optimism in March suggests that the casual dining space might be improving. Texas Roadhouse’s shares closed modestly higher, with investors gaining confidence after Darden’s March outlook. Jim Cramer advises against chasing Texas Roadhouse on up days due to its volatile swings.
— news from CNBC