A Member of Pat McKeough’s Inner Circle recently asked for his advice on Darden Restaurants Inc., the largest full-service dining company in North America, a firm operating2,165 restaurant locations across 11 major brands and serving more than 440 million guests annually.
Pat likes the firm’s disciplined execution and shareholder-friendly capital allocation while its dominant market leadership gives it strong purchasing power, operational efficiencies, and stability in an otherwise fragmented and intensely competitive dining sector.
Darden Restaurants Inc. (Symbol DRI on New York; www.darden.com) is a full-service restaurant company.
Darden got its start in 1995, when General Mills Inc. spun the company off to its shareholders.
As of August 24, 2025, Darden owned 2,165 restaurants in the U.S. and Canada and operated under 11 banners. Those banners are the Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Chuy’s, Yard House, Ruth’s Chris Steak House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s, and The Capital Burger. All the company’s brands are full-service restaurants.
The latest addition to the group is Chuy, which it acquired in October 2024. Darden paid $605 million for this American Tex-Mex restaurant chain.
Currently, the company operates through four segments: Olive Garden; LongHorn Steakhouse; Fine Dining; and Other Business.
Olive Garden is an internally developed brand and the largest full-service Italian restaurant chain in the U.S. Its 933 locations are company owned.
LongHorn Steakhouse is a restaurant brand, with locations concentrated in the eastern U.S. It has an American West theme.
The Fine Dining segment includes the popular Ruth’s Chris steakhouse, The Capital Grille, and Eddie V’s.
Other Business includes banners Cheddar’s Scratch Kitchen, Yard House, Bahama Breeze, Seasons 52, and The Capital Burger. It also includes ongoing royalties and other fees from franchisees.
Beyond in-store dining, Darden has now teamed up with Uber Technologies, Inc. to provide on-demand delivery. An initial September 2024 pilot project has since been expanded to several of the company’s restaurant chains.
Darden’s attractive forward valuation offers growth at a reasonable price
For the three months ended August 24, 2025, Darden’s revenue rose 10.4%, to $3.04 billion from $2.76 billion a year earlier. Revenue was higher due to a 4.7% increase in same-restaurant sales (sales at restaurants open a year or more). Revenue growth also reflects the addition of Chuy’s 103 restaurants and 22 net new restaurants.
Excluding one-time items, Darden earned $231.4 million, or $1.97 a share, in the latest quarter. That’s up 10.8% from $208.8 million, or $1.75 a share. Earnings growth lagged revenue growth partly because the company spent more on marketing, up 20.2%, to $128.9 million from $107.2 million.
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The company operates in an intensely competitive industry. Well-established competitors include Applebee’s, Denny’s, IHOP, Texas Roadhouse and Waffle House.
Regardless, Darden benefits from significant scale, which lets it create deep relationships with suppliers and creates the kind of cost advantages unavailable to a single brand.
The stock trades at a low 16.7 times the $10.62 a share that Darden should earn in 2026.
In addition, the company raised its quarterly dividend by 7.1% with the August 2025 payment, to $1.50 a share from $1.40. The shares yield 3.4%.
Recommendation in Pat’s Inner Circle: Darden Restaurants Inc. is a buy.
