Darden Restaurants released its quarterly earnings on Thursday, revealing mixed results as the strength of Olive Garden and LongHorn Steakhouse helped balance ongoing challenges in the fine-dining segment. Despite reporting solid revenue growth, the company’s shares dropped more than 9% in morning trading following the announcement.

For the quarter ending August 24, Darden posted adjusted earnings of $1.97 per share, just shy of Wall Street’s $2 estimate, according to data from LSEG. Total revenue reached $3.04 billion, matching analysts’ expectations. The company’s net income climbed to $257.8 million, or $2.19 per share, up from $207.2 million, or $1.74 per share, during the same period last year. When excluding one-time items — including gains from the sale of its Canadian Olive Garden restaurants and costs related to restaurant closures — earnings came to $1.97 per share.

Overall, Darden’s net sales rose 10.4% year over year, driven largely by the acquisition of Chuy’s Tex-Mex restaurants, which was finalized last October. Same-store sales — a key metric tracking performance at locations open for at least a year — increased by 4.7%. This figure excludes Chuy’s and Bahama Breeze, as Darden plans to sell the latter before the end of the fiscal year.

“All our casual-dining brands saw a rise in guest traffic across income levels, with particularly strong engagement from higher-income customers,” said CEO Rick Cardenas during the company’s earnings call. “Interestingly, we may be seeing both trade-down from premium dining and trade-up from lower-income groups, attracted by the value we offer in casual dining.”

In recent quarters, casual dining chains have outperformed other restaurant categories by emphasizing affordability as prices continue to rise at fast-casual and quick-service competitors. Darden has intentionally limited its menu price increases to remain below inflation, appealing to cost-conscious diners. CFO Raj Vennam noted that prices across Darden’s brands were about 0.3% below inflation during the fiscal first quarter.

Olive Garden, Darden’s flagship brand and the company’s largest revenue contributor, reported a 5.9% increase in same-store sales. Executives attributed the growth to strong marketing efforts such as the popular “Never-Ending Pasta Bowl” promotion and new first-party delivery options through its partnership with Uber. According to Cardenas, delivery customers tend to order more often than those dining in.

LongHorn Steakhouse also delivered impressive results, with same-store sales up 5.5% and customer traffic growing 3.2%. Even as beef prices surge, Darden executives remain committed to keeping menu price increases below inflation, believing the brand’s value proposition will continue to attract loyal diners.

Other brands in Darden’s portfolio — including Cheddar’s Scratch Kitchen and Yard House — recorded a 3.3% increase in same-store sales. Meanwhile, the fine-dining division showed signs of stabilization. Although same-store sales for that segment declined by 0.2%, the drop was smaller than Wall Street’s projected 0.9% decrease.

Vennam noted that softer weekday performance, particularly from reduced business travel, continues to weigh on the fine-dining category.

Looking ahead, Darden raised its full-year forecast for revenue growth, now expecting an increase between 7.5% and 8.5%, compared with its previous outlook of 7% to 8%. The company reaffirmed its projection for adjusted earnings in the range of $10.50 to $10.70 per share for fiscal 2026, signaling steady confidence in its long-term strategy despite short-term market volatility.