Rick Cardenas, CEO of Darden Restaurants, discussed the company's first quarter results and its acquisition of Chuy's. He emphasized the company's four competitive advantages and back-to-basics operating philosophy as key to navigating the competitive industry. He also highlighted the brand teams' focus on culinary innovation, attentive service, and effective marketing strategies. Examples of menu innovations were provided for the four largest revenue brands, including the return of guest favorites at Olive Garden with higher quality ingredients and easier execution for restaurant teams.

The addition of new menu items at Olive Garden, LongHorn Steakhouse, Yard House, and Cheddar's Scratch Kitchen has filled gaps and received positive feedback from guests. These new items include protein-forward dishes, a healthier chicken dish, a new margarita, improved pizza, and value-driven options. The teams at these restaurants continue to search for opportunities to provide exceptional value and have reintroduced a popular menu item at Cheddar's Scratch Kitchen.

Cheddar's has seen success with the return of onion rings, which was their most engaged post on Facebook. They are also focusing on improving the pace of meals and creating an engaging atmosphere for guests. Each brand has its own unique atmosphere, such as Yard House's bar with over 100 beers on tap. The Yard House team recently held a competition to certify their bartenders and instill pride in their role. Marketing efforts are tailored to each brand's priorities. The company also invests in maintenance and remodels to keep their restaurants fresh and inviting.

The Olive Garden team is committed to following their marketing filters and has found success with their Never Ending Pasta Bowl promotion. They have extended the promotion and introduced a new sauce to keep it exciting. The promotion offers great value to guests and the company plans to continue pricing below competitors and inflation. The team is also focusing on communicating this value to guests through their advertising. They are prepared to adapt to market conditions in the coming year.

Olive Garden has successfully utilized connected TV and other digital marketing methods to drive brand equity and sales across all of their brands. They have also announced a partnership with Uber to offer small order home delivery options at Olive Garden without disrupting the team member or guest experience. The solution involves drivers picking up orders curbside, protecting the in-restaurant experience and enhancing the takeout experience for guests.

The partnership with Uber for delivery-as-a-service will enhance the takeout experience for guests and maintain the same everyday value menu price for dine in, pickup, or delivery. The added cost for delivery will be transparent and guests can track their order through Uber's technology platform. The team member experience will not be negatively impacted and they will continue to earn tips on these orders. The partnership will also strengthen the company's competitive advantages and protect their simple operating model. The rollout will begin at Olive Garden and if successful, will be phased in at all locations offering curbside ToGo. The company is confident in their actions to address guest needs and believes they fit their operating philosophy and marketing filters.

The speaker thanks the team members for their hard work and commitment, and notes that the company's engagement levels have reached an all-time high. The first quarter earnings were lower than expected due to sales softness in July, but have rebounded in August and September. Despite this, the company has still generated more adjusted EBITDA than the previous year and outperformed the industry in terms of sales and guest counts.

Adjusted diluted net earnings per share from continuing operations were slightly lower than last year at $1.75. The company generated $392 million of adjusted EBITDA and returned $338 million to shareholders through dividends and share repurchases. Food and beverage expenses were lower due to minimal inflation in commodities, but restaurant labor expenses were higher due to inflation and sales deleverage. Restaurant level EBITDA was 18.8%, 20 basis points lower than last year. Adjusted G&A expenses were favorable, offset by higher interest expense related to the Ruth's Chris acquisition. The adjusted effective tax rate was 10.6%, driven by mark-to-market hedge and favorable tax planning. In total, the company earned $209 million in adjusted earnings from continuing operations, which was 7.6% of sales.

The paragraph discusses the sales performance of Olive Garden, LongHorn, Fine Dining, and the other business segment for the first quarter. Olive Garden saw a decrease in sales and same-restaurant sales, while LongHorn had an increase in both. Fine Dining and the other business segment also saw growth, but at a slower rate. The company has reaffirmed its guidance for the rest of the fiscal year and provided an update on the pending Chuy's acquisition.

The company is on track to close a deal in mid-October and has secured financing for it. They have a team ready to handle the integration, and expect the transaction to have a neutral impact on earnings. The company is confident in their ability to navigate challenges and is focused on their long-term strategy. They have a partnership with Uber for Olive Garden and plan to expand it to other brands if successful, but are currently focused on the pilot program.

The speaker, Brian Bittner, asks about the improvement in sales in September and the use of promotions at Olive Garden. Rick Cardenas responds that the increase in sales is in line with industry trends and that they are planning to add more price points at Olive Garden due to consumer demand for price certainty. He also mentions that they may have some limited time offers, but they will still fit their marketing filters of being simple to execute and not at a deep discount.

During a conference call, Rick Cardenas, the operator of Olive Garden, was asked about the possibility of piloting Uber at other brands in the future. He stated that they are currently focused on Olive Garden, but have the ability to pilot at other brands in this fiscal year. They want to ensure a seamless experience for guests, drivers, and team members before expanding to other brands. Additionally, Cardenas discussed their focus on improving speed and pace of meals to keep up with the fast-paced world and changing guest needs. This will take time to implement.

Darden is implementing speed initiatives to cater to guests who have less time to eat at full-service restaurants. They want to improve their speed scores and make the experience faster for those who want it. They do not plan on advertising on Uber Eats, but will use other marketing channels to promote their delivery option on their own apps and website.

The company has a large number of potential customers through their eClub at Olive Garden and plans to market to them. The partnership with Uber is already included in their guidance for the fiscal year and may require additional investments in technology and staffing to improve speed, but they believe it can be managed without significant changes.

The company has technology solutions to help managers schedule better and improve productivity. They plan to increase advertising spend if they see a good return on investment. The fine dining business has been struggling due to factors like international travel during the summer.

The speaker discusses the sales trends for the luxury consumer and how they have been impacted by the pandemic. They mention that there has been a gradual build back in spending, but there is a clear difference between suburban and urban markets. They also note that there has been a decline in fine dining due to a pullback in spending by those with incomes up to $200,000. The speaker then addresses a question about sales trends for their brands and the industry as a whole, stating that there was a decline in July but an improvement since then. They attribute this to various factors and express confidence that the worst is behind them.

July was a month of interesting weather and events, including storms, hurricanes, and the Olympics. There was also an increase in COVID cases and political volatility. However, the company's brands are all improving and they are confident in their ability to react to unexpected events. They have avoided aggressive promotional activity but plan to have more limited time offers in the second half of the year. They will not compromise long-term health for short-term benefits.

Darden Restaurants, specifically Olive Garden and Cheddar's, are shifting their marketing strategies to focus on highlighting the value and affordability of their menu items in order to attract more guests. This includes bringing back fan favorites and utilizing opportunity buys to offer limited time offers at a lower price. However, this does not mean a return to constant deep discount promotions that were used before COVID.

The company has some limited time items coming to the menu in the back half of the fiscal year. They will not be offering deep discounts to attract customers, as it is not a sustainable business strategy. The company had already planned to advertise on television this year, but the approach may change. The delivery fee for the new delivery service will be paid by the guest and will not be a significant cost.

The paragraph discusses the delivery fee for Olive Garden orders and how it is broken down into a fixed fee and a percentage of the order. The fee is transparent and there is no additional cost for Darden. The company believes that customers should pay for the convenience of delivery and not have it hidden in menu prices. The fee is not a major disruption to margins and is lower for larger orders. There may be a slight difference in margin percentage due to how the fee is recorded in the P&L.

The speaker, Rick Cardenas, is responding to a question about the performance of Olive Garden compared to LongHorn in the restaurant industry. He notes that LongHorn is doing well due to their strong operations and investments in quality, which has led to people trading down from fine dining to steak. However, Olive Garden has seen a decrease in first-time or infrequent customers, which could be due to promotional activities from competitors.

The speaker, Rick Cardenas, discusses the impact of discounts on Olive Garden's business and shares that their data shows they are not losing guests to other brands that are offering discounts. He also mentions that they are focusing on promoting their everyday low prices and that they have decided to make their relationship with Uber Eats solely first party, as they believe many guests come directly to their website for delivery.

The acquisition of Chuy's and the potential for a third-party marketplace may not solve the challenges faced by the company. The Olive Garden segment saw a decrease in margin due to lower sales and unexpected declines in July. The company's strong marketing and technology capabilities may give them an advantage over other brands sourcing through third-party marketplaces. If the situation changes, the company may consider joining the marketplace.

The speaker says that there are some timing differences between quarters due to COVID-19, but they haven't looked at pre-COVID data to compare. They mention strong margins and expect mid to high single digit earnings growth for the next three quarters. They also mention a potential benefit in the second quarter due to Thanksgiving shifting. The next question is about the percentage of Olive Garden guests who already have the app downloaded, as the potential for delivery incrementality will come from existing guests.

The speaker, Rick Cardenas, is discussing the plans for promoting the Olive Garden app in the restaurant. He mentions that over 60% of ToGo orders are already digital, but they may do more to market the app. He also gives some statistics on the traffic and mix components for Olive Garden and LongHorn during the quarter. The question is then posed about what changes will remain after COVID, and the speaker mentions some add backs on the menu.

The speaker explains that the menu simplification at Olive Garden is still a priority, but they have added a few items back after careful consideration. The new items at LongHorn and Yard House were chosen to fill gaps in the menu and have not significantly increased the number of menu items. The focus is on maintaining a simple menu while also continuously innovating and making changes as needed.

Jake Bartlett asks about pricing and inflation for the rest of the year. Raj Vennam responds that pricing will likely stay in the range of 2.5% to 3% and that the company is monitoring costs and commodity inflation. While some costs have improved, there is still potential risk with chicken contracts, so the full year inflation is expected to be around 2%.

Katherine Griffin from Bank of America asks about the performance of the stay category and the curbside mix in the context of the broader category. Raj Vennam clarifies that there has been no slowdown in LongHorn's business and they are actually trending above August levels. Rick Cardenas explains that almost all Olive Garden locations have curbside ToGo, with a few exceptions. Peter Saleh from BTIG asks for clarifications on the Uber Eats partnership.

Olive Garden's Chief Operating Officer, Rick Cardenas, explains that their partnership with Uber Eats allows for the entire menu to be ordered for delivery, with the exception of alcohol. Delivery has been surprisingly popular and is a convenience for customers, not limited to a specific mealtime. This is a new occasion for many customers who do not typically dine in the restaurant.

The speaker discusses potential new occasions for the company, such as the convenience of not having to pick up food in person. They also mention a recent pricing increase of 1.9%, but do not plan on taking any further action until the new year. They emphasize their thoughtful approach to pricing and mention that there are already price differences across regions and tiers.

The company takes a lot of factors into consideration when setting prices for their menu items. They have different tiers of pricing across their brands and geographies, and use data analytics to determine the best places to take price. They are very focused and surgical in their pricing, which makes it difficult to advertise a single price everywhere. The Never Ending Pasta Bowl promotion has historically shown to attract customers from various income levels, with a larger lift seen among middle income customers. It also helps bring in new and infrequent guests.

Jeff Farmer asks a follow-up question about Olive Garden's diminished market share and if not fully capturing the individual or small party delivery opportunity has contributed to this. Rick Cardenas clarifies that they have only lost share in one quarter over the last five years and that the recent quarter's loss may be due to not reaching delivery customers. Danilo Gargiulo asks about how tighter migration controls may affect labor costs for the brand, and Raj Vennam responds that labor costs are holding up well.

The speaker discusses the current labor situation, stating that labor inflation is at 4% and hourly wages at 3.9%. They also mention that there is a higher number of applicants, making them feel positive about the availability of labor. They expect labor to remain at 4% for the full year. The speaker also addresses challenges in the fine dining segment, but states that their focus is on maintaining their discerning customer base rather than attracting aspirational customers. They mention bringing back a popular promotion, Wagyu and Wine, as a potential way to attract new customers.

During a conference call, Olive Garden's operator, Lauren Silberman from Deutsche Bank, asked about the increased demand for value in the industry and how it is affecting the Never Ending Pasta Bowl promotion. Rick Cardenas, Olive Garden's representative, responded that there is a slight increase in preference for the add-on option for the Never Ending Pasta Bowl due to its value. He also mentioned that the off-premise sales are already at mid-20% without delivery and the company expects delivery to be incremental in sales. The pilot program for delivery will include 100 restaurants and the company will learn from this and continue to expand.

The pilot for the new technology will start with about 100 restaurants in the second quarter and will be expanded after the holidays if everything works well. The Never Ending Pasta Bowl promotion will be extended by 4 weeks this year and will continue to be a 12-week promotion. The addition of a new sauce and media support will help to keep it strong, but it may wear off towards the end when last year's promotion is still going strong.

The company does not expect to have the same level of success with Never Ending Pasta Bowl this year as it did last year, as there was a decline in sales towards the end of last year. This year's compares will be slightly better due to this decline. The company also discusses the performance of Olive Garden over the past few quarters and how some markets and stores perform better than others. They mention potential factors that may contribute to this, such as income, demographics, and competition. They also mention that they have tools to improve the performance of underperforming stores.

The speaker discusses the performance of various regions in the country, noting that some areas were softer than others. They mention the impact of weather and events on business, but ultimately attribute success or failure to the quality and commitment of the management team. The speaker highlights specific factors, such as offering refills and properly cooking steaks, that drive success at various restaurants. They express confidence in their management teams and attribute their success to their strong leadership. The next question is then introduced from a participant on the call.

Jim Sanderson asks about the pricing strategy for create-your-own pasta at Olive Garden. Rick Cardenas explains that they had initially raised the price to over $13, but then lowered it back to $12.99. This resulted in a better performance and increased customer preference. They plan to continue offering the dish at $12.99 and will also promote other value offers on the menu.

Raj Vennam, the CFO of Darden Restaurants, estimates the G&A budget for the year to be around $450 million, with $125 million in the first quarter and $105-110 million in subsequent quarters. In terms of Olive Garden's off-premise business, 80% of sales are from small orders and 20% from catering. The overall sales mix for Never Ending Pasta Bowl is up slightly, with a majority of customers (60-65%) choosing to trade up and add proteins to their order. The second quarter results will be released on December 19 with a conference call to follow.

The teleconference and webcast is now over and participants can disconnect their lines. The speaker thanks everyone for their participation and wishes them a wonderful day.

This summary was generated with AI and may contain some inaccuracies.