Key Points
- Darden Restaurants, owner of Olive Garden and LongHorn Steakhouse among other brands, has outpaced the consumer discretionary sector and reached a 52-week high in 2026.
- Strong brand-specific gains helped push Darden's fiscal 2026 total sales past $13 billion for the first time.
- Meanwhile, competitors Domino's and Chipotle struggled with weak sales growth and falling share prices.
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It has been a challenging year for the consumer discretionary sector, which has lagged the broader S&P 500 in 2026.
But sectors are not monoliths, and one company operating in that corner of the market hasn’t only outperformed the index in 2026, it recently hit its 52-week high.
Darden Restaurants (NYSE: DRI), the multi-brand, full-service restaurant company that owns and operates Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, Ruth’s Chris Steak House, The Capital Grille, and Seasons 52—among others—is outperforming much of the sector.
But the company’s success this year is also providing clues about the economy and the nuances within the restaurant services industry.
Darden’s Evolution Has Underpinned Its Success
The Orlando-based company, whose portfolio is composed of casual and fine-dining businesses, has seen its stock rise more than 18% this year. Much of that has been the result of investments made in its evolving brands.
Olive Garden, for instance, has spent years modernizing and updating its brand image. It has invested heavily in first-party delivery options and online order platforms, improved kitchen productivity by adopting streamlined technology, and updated its menu to offer trendy, less conventional dishes and lighter fare.
Olive Garden’s resurgence isn’t alone. Darden’s Q4 2026 sales from LongHorn Steakhouse reached $1 billion for the first time ever, with same-restaurant sales increasing 9.5% year-over-year (YOY) and 7.2% for full-year 2026. And while many restaurants experienced dwindling foot traffic, Yard House—the chain of high-end sports bars offering an extensive menu of trendy fare and draft beers—has grown to to 97 locations (as of August 2026).
With consumer sentiment remaining near record lows, Darden’s management team has been focused on providing value-seeking diners with restaurants that deliver without feeling cheap. The results have been tangible.
For fiscal year 2026, Darden’s total sales surpassed $13 billion for the first time ever. In its Q4, revenue of $3.72 billion represented a 13.7% YOY increase, while earnings per share (EPS) growth was 37.1% YOY, and free cash flow growth was 195.4% YOY.
Olive Garden, LongHorn, and Yard House all posted positive comparable sales for the fifth consecutive year. That success has fueled growth for the 88-year-old company.
In his Q4 earnings call comments, CEO Rick Cardenas highlighted how Darden’s success has contributed to global expansion, with new international franchising partners in Canada, India, and Spain opening their first locations.
While Other Restaurants Suffer, Darden Is Bucking the Trend
The company’s successful 2026 was highlighted by a new share repurchase plan and strong 2027 guidance.
In Q4, the company bought 700,000 shares of its common stock for $138 million, with the board authorizing a new share repurchase program for $1.5 billion without an expiration.
Darden CFO Raj Vennam highlighted that the company has delivered 9% annualized adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth since 2019, adding that the consistent cash generation provides “more than sufficient capacity” to fund core requirements of the business each year, as well as growing its dividend—which currently yields 2.92%, or $6.48 per share annually—as well as investing in new locations.
Guidance for 2027 includes:
Sales in the range of $13.6 billion to $13.75 billion
Same-restaurant sales growth of 2.5% to 3.5%
Between 75 and 80 new restaurant openings
Total capital spending of $875 million
Diluted net earnings per share of $11.10 to $11.35
But the broader restaurant industry hasn’t fared nearly as well. In fact, Darden’s success has been something of an exception.
Cardenas acknowledged that in the company’s Q4 earnings call, stating that Darden offers “a collection of brands” that gives [it] reach across multiple dining occasions, guest demographics, price points, geographies, and cuisine types.”
In turn, the company doesn’t rely on a single brand or consumer segment, like many of its competitors. That’s particularly true of companies operating in the fast and fast-casual segments. For comparison,Grand View Research forecasts the U.S. fast-food and quick-service restaurant market will grow at a compound annual rate of 3.4% from 2025 through 2030.
That’s already showing for some chains. Domino’s (NASDAQ: DPZ) saw just 0.1% same-store sales growth when it reported Q2 results in late July. Its EPS miss was the third in a row and the fifth in seven quarters. Income from operations only grew 2.6% in Q2. The stock is down more than 20% over the past year.
Shares of Chipotle (NYSE: CMG) are down around 18% over the past year, and after years of double-digit revenue growth, the company has averaged just 6.42% over the past five quarters. Insider buying has dried up, with zero purchases over the past three years against nine sells.
Meanwhile, analysts assign Darden a consensus Moderate Buy rating, current short interest is less than 6% of the float, and institutional owners have injected $6.76 billion into DRI over the past 12 months compared to $2.41 billion in outflows.
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