Darden Restaurants (DRI) 10-K risk factor changes: FY2021 vs FY2020

The COVID-19 pandemic has disrupted and [removed: is expected to] [added: may] continue to disrupt our business, which has affected and could continue to materially affect our operations, financial condition and results of [removed: operations for an extended period of time.][added: operations.]

The COVID-19 pandemic, federal, state and local government responses to COVID-19 and our Company’s responses to the outbreak have all disrupted and [removed: will] [added: may] continue to disrupt our business.

The COVID-19 pandemic and these responses have affected and [removed: will] [added: may] continue to adversely affect our guest traffic, sales and operating costs and we cannot predict [removed: how long the outbreak will last] [added: whether an increase in cases] or [removed: what other] [added: localized or widespread outbreaks will occur and whether future] government responses [added: thereto] may impact us.

[removed: If our suppliers’ employees are unable to work, whether because of illness, quarantine, limitations on travel] [added: In addition, future increases in cases] or [removed: other government restrictions] [added: further localized or widespread outbreaks of COVID-19] in [removed: connection with COVID-19,] [added: the United States or elsewhere could negatively impact our suppliers, and] we could face shortages of food items or other supplies at our restaurants and our operations and sales could be adversely impacted by such supply interruptions.

The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, a material network breach in the security of these systems as a result of a cyber attack, phishing [added: attack, ransomware] attack or any other failure to maintain a continuous and secure cyber network could result in substantial harm or inconvenience to the Company, our team members or guests.

This could include the theft of our intellectual property, trade secrets or sensitive financial [removed: information, or the improper use of personal information or other “identity theft” of either guest or employee] information.

Any such [removed: failures, disruptions] [added: failures] or [removed: data privacy breaches] [added: disruptions] may cause delays in guest service, reduce efficiency in our operations, require significant capital investments to remediate the problem, result in customer, employee or advertiser dissatisfaction or otherwise result in negative publicity that could harm our reputation.

As [removed: privacy and] information security laws and regulations change and cyber risks evolve, we may incur additional costs to ensure we remain in compliance and protect guest, employee and Company information.

In addition, regardless of the source or cause, any report of food-borne illnesses such as E. coli, hepatitis A, norovirus or salmonella, [removed: and] [added: or] other food safety issues including food tampering or [removed: contamination,] [added: contamination] at one of our restaurants could adversely affect the reputation of our brands and have a negative impact on our sales.

Maintaining adequate staffing in our existing restaurants and hiring and training staff for our new restaurants requires precise workforce planning which has been complicated by the impacts of the COVID-19 pandemic on our [removed: business] [added: business, the relevant labor market] and on consumer preferences.

Personal or public health concerns related to COVID-19 [removed: might] [added: may continue to] make some existing team members or potential candidates reluctant to work in enclosed restaurant environments.

We are subject to a number of risks relating to public policy changes and federal, state and local regulation of our business, including in the areas of health care reform, environmental matters, minimum wage, unionization, [removed: data privacy,] menu labeling, immigration requirements and taxes, and an insufficient or ineffective response to legislation or government regulation may impact our cost structure, operational efficiencies and talent availability.

We are subject to laws relating to information security, [removed: privacy,] cashless payments and consumer credit, protection and fraud.

Negative publicity also may result from health concerns including food safety and flu or virus outbreaks, publication of government or industry findings concerning food products, environmental disasters, crime incidents, data security breaches, scandals involving our employees, or operational problems at our restaurants, all of which could make our brands and menu [removed: offerings less appealing to our guests and negatively impact our guest counts and sales.]

A majority of our restaurants are operated in leased properties and [added: as a result,] we are committed to long-term [removed: and non-cancelable leases] [added: lease obligations] that we may [added: not be able to cancel if we] want to [removed: cancel,] [added: close a restaurant location] and [added: we] may be unable to renew the leases that we may want to extend at the end of their terms.

Labor shortages, increased employee turnover and health care and other benefit mandates [removed: could] also [added: have increased and may continue to] increase our labor costs.

The ability to open and profitably operate restaurants is subject to various risks, such as the identification and availability of suitable and economically viable locations, the negotiation of acceptable lease or purchase terms for new locations, the need to obtain all required governmental permits (including zoning approvals and liquor licenses) on a timely basis, the need to comply with other regulatory requirements, the availability of necessary contractors and subcontractors, the ability to meet construction schedules and budgets, the ability to manage union activities such as picketing or hand billing which could delay construction, increases in labor and building material costs, [added: supply chain disruptions,] the availability of financing at acceptable rates and terms, changes in [added: patterns or severity of] weather or other acts of God that could result in construction delays and adversely affect the results of one or more restaurants for an indeterminate amount of time, our ability to hire and train qualified management personnel and general economic and business conditions.

At each potential location, we compete with other restaurants and retail businesses for desirable development sites, construction contractors, management personnel, hourly employees and other [removed: resources.]

[removed: In addition, interruptions to the availability of gas, electric, water or other utilities, whether due to aging infrastructure, weather conditions,] fire, animal damage, trees, digging accidents or other reasons largely out of our control, may adversely affect our operations.

Shortages, delays or interruptions in the supply of food items and other supplies to our restaurants may be caused by [removed: inclement] [added: severe] weather; natural disasters such as hurricanes, tornadoes, floods, [removed: droughts] [added: droughts, wildfires] and earthquakes; labor issues or other operational disruptions at our suppliers, vendors or other service providers; the inability of our vendors or service providers to manage adverse business conditions, obtain credit or remain solvent; or other conditions beyond our control.

If we temporarily close a restaurant or remove popular items from a restaurant’s menu, that restaurant may experience a significant reduction in sales during the time affected by the shortage or thereafter as a result of our guests changing their dining [removed: habits.][added: habits]

[removed: Adverse] [added: Climate change, adverse] weather conditions and natural disasters could adversely affect our restaurant [removed: sales.][added: sales or results of operations.]

Adverse weather conditions [removed: can] [added: have in the past and may continue to] impact guest traffic at our restaurants, cause the temporary underutilization of outdoor patio seating and, in more severe cases such as hurricanes, [removed: tornadoes] [added: tornadoes, wildfires] or other natural disasters, cause temporary closures, sometimes for prolonged periods, which [removed: would] negatively impact our restaurant sales.

[removed: Changes in weather] [added: Climate change and government regulation relating to climate change] could result in construction [removed: delays,] [added: delays and increased costs,] interruptions to the availability [added: or increases in the cost] of utilities, and shortages or interruptions in the supply [added: or increases to the costs] of food items and other [removed: supplies, which could increase our costs.][added: supplies.]

[removed: Some climatologists] [added: Climatologists] predict that the long-term effects of climate change and global warming [removed: may] [added: will] result in more severe, volatile weather or extended droughts, which could increase the frequency and duration of weather impacts on our operations.

However, because these hedges also net settle on a cash basis quarterly, we have been and may in the future be required to make cash payments at those quarterly settlement dates and the amounts of those payments are difficult to [removed: predict due to the recent] [added: during periods of] extreme volatility [removed: of] [added: in] the equity markets.

General economic conditions, including economic downturns related to the COVID-19 [removed: pandemic,] [added: pandemic and uncertainty about the strength or pace of economic recovery,] have also adversely affected our results of operations and may continue to do so.

[removed: The current economic] [added: Economic] recession, a protracted economic slowdown, a worsening economy, increased unemployment, increased energy prices, rising interest rates, a downgrade of the U.S. government’s long-term credit rating, imposition of retaliatory tariffs on important U.S. imports and exports or other industry-wide cost pressures have affected and can continue to affect consumer behavior and spending for restaurant dining occasions and [added: lead to a decline in sales and earnings.]

[added: However,] we are aware of names and marks identical or similar to our service marks being used from time to time by other persons.

We cannot accurately predict the amount and timing of any [removed: further] impairments of these or other assets.

Changes in tax laws [removed: or treaties] and unanticipated tax liabilities could adversely affect our financial results.

We are [added: primarily] subject to income and other taxes in the United [removed: States and certain foreign jurisdictions.][added: States.]

Our effective income tax rate and other taxes in the future could be adversely affected by a number of factors, including changes in the [removed: mix of earnings in countries with different statutory tax rates, changes in the] valuation of deferred tax assets and liabilities, changes in tax laws or other legislative [removed: changes, certain international tax treaties] [added: changes] and the outcome of income tax audits.

Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that we would prevent or detect [removed: a misstatement of our financial statements or fraud.]

[added: A significant financial reporting failure or material weakness in] internal control over financial reporting could cause a loss of investor confidence and decline in the market price of our common stock, increase our costs, lead to litigation or result in negative publicity that could damage our reputation.

Risks Relating to the COVID-19 Pandemic

In the United States over the course of fiscal 2021, state and local governments imposed a variety of restrictions on people and businesses and public health authorities offered regular guidance on health and safety.

As a result, we began fiscal 2021 with significant limitations on our operations, which over the course of the fiscal year varied widely from time to time, state to state and city to city.

During November 2020, rising case rates resulted in certain jurisdictions implementing restrictions that again reduced dining room capacity or mandated the re-closure of dining rooms.

Once COVID-19 vaccines were approved and moved into wider distribution in the United States in early 2021, public health conditions improved and almost all of the COVID-19 restrictions on businesses have eased.

As of the date of this report, all of our restaurants were able to open their dining rooms and few capacity restrictions or other COVID-19 restrictions remained in place in the United States.

However, it is possible that future increases in cases or further localized or widespread outbreaks of COVID-19 in the United States could require us to again reduce our capacity or suspend our in-restaurant dining operations.

Risks Relating to Health and Safety

Risks Related to Human Capital

We have experienced and may continue to experience challenges in recruiting and retaining team members in various locations.

Risks Relating to Information Technology and Privacy

We may incur increased costs to comply with privacy and data protection laws and, if we fail to comply or our systems are compromised, we could be subject to government enforcement actions, private litigation and adverse publicity.

We receive and maintain certain personal, financial and other information about our customers, employees, vendors and suppliers.

In addition, certain of our vendors receive and maintain certain personal, financial and other information about our employees and customers.

The use and handling, including security, of this information is regulated by evolving and increasingly demanding data privacy laws and regulations in various jurisdictions, as well as by certain third-party contracts and industry standards.

Complying with newly developed laws and regulations, which are subject to change and uncertain interpretations and may be inconsistent from jurisdiction to jurisdiction, may lead to a decline in guest engagement or cause us to incur substantial costs or modifications to our operations or business practices to comply.

In addition, if our security and information systems are compromised as a result of data corruption or loss, cyber attack or a network security incident, or if our employees or vendors fail to comply with these laws and regulations or fail to meet industry standards and this information is obtained by unauthorized persons or used inappropriately, it could result in liabilities and penalties and could damage our reputation, cause interruption of normal business performance, cause us to incur substantial costs and result in a loss of customer confidence, which could adversely affect our results of operations and financial condition.

Additionally, we could be subject to litigation and government enforcement actions as a result of any such failure.

Risks Related to the Restaurant Industry

In response to the COVID-19 pandemic, during periods of high public health risk, many consumers chose to order food To Go or for delivery rather than dining in at full-service restaurants.

If COVID-19 cases increase or other future public health issues cause these preferences to increase, we may need to further adapt our offerings to respond to these additional changes.

In addition, interruptions to the availability of gas, electric, water or other utilities, whether due to aging infrastructure, weather conditions,

Risks Relating to Our Business Model and Strategy

As of May 30, 2021, 1,761 of our 1,834 restaurants operating in the United States and Canada operate in leased locations and the leases are generally non-cancellable for some period of time.

resources.

The equity markets in the U.S. were extremely volatile due to the COVID-19 pandemic and due to the unpredictability of the recovery of the United States economy as a result of the pandemic and due to government and other responses thereto.

Market volatility has contributed to and may continue to contribute to fluctuations in the Company’s stock price.

General Risks

offerings less appealing to our guests and negatively impact our guest counts and sales.

a misstatement of our financial statements or fraud.

In the United States, individuals are being encouraged to practice social distancing, restricted from gathering in groups and for portions of the fourth quarter of fiscal 2020, placed on complete restriction from non-essential movements outside of their homes in some areas.

As of the date of this report, we have 89.0% of our dining rooms open in at least a limited capacity.

We have closed certain restaurants, modified work hours for our team members and identified and implemented cost savings measures throughout our operations.

As the COVID-19 pandemic continues to spike in certain areas of the country, there could be additional federal, state or local responses that restrict in-person dining and/or movement of guests or otherwise impact our business.

The COVID-19 pandemic has also adversely affected our ability to open new restaurants.

Due to the uncertainty in the economy and to preserve liquidity, we paused nearly all construction of new restaurants and certain remodeling projects at existing restaurants during the fourth quarter of fiscal 2020.

While we resumed most of these construction projects as of the date of this report, these pauses may materially adversely affect our ability to grow our business.

In order to reinforce our liquidity position, we entered into a new, $270.0 million 364-day Term Loan Credit Agreement in April 2020.

A material increase in our level of debt or material impairments of our assets could cause our debt to total capitalization ratio to exceed the maximum level permitted under the covenants in our Revolving Credit Agreement and Term Loan Credit Agreement.

We also raised $505.1 million in a public offering of the Company’s common stock that closed in April 2020.

If the business interruptions caused by COVID-19 last longer than we expect, we may continue to seek other sources of liquidity.

There can be no guarantee that additional liquidity will be readily available or available on favorable terms, especially the longer the COVID-19 outbreak lasts.

Our restaurant operations could be further disrupted if large numbers of our employees are diagnosed with COVID-19.

If a significant percentage of our workforce is unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, our operations may be negatively impacted, potentially materially adversely affecting our liquidity, financial condition or results of operations.

Our suppliers could be adversely impacted by the COVID-19 outbreak.

We provide PPE to our team members and have added additional supplies of sanitization products to our restaurants for team member and guest use.

A shortage of supply of PPE or sanitization products could adversely impact our restaurant operations.

Additional government regulations or legislation as a result of COVID-19 in addition to decisions we have made and may make in the future relating to the compensation of and benefit offerings for our restaurant team members could also have an adverse effect on our business.

We cannot predict the types of additional government regulations or legislation that may be passed relating to employee compensation as a result of the COVID-19 outbreak.

We have implemented paid sick leave, emergency pay policies and taken other compensation and benefit actions to support our restaurant team members during the COVID-19 business interruption, but those actions may not be sufficient to compensate our team members for the entire duration of the business interruption resulting from COVID-19.

Those team members might seek and find other employment during that interruption, which could materially adversely affect our ability to properly staff and reopen our restaurants with experienced team members when the business interruptions caused by COVID-19 abate or end.

Depending on the length of restaurant team member furloughs, team members may seek other employment and decline to return when we recall them to work in our restaurants.

An increasing number of governments and industry groups worldwide have established data privacy laws and standards for the protection of personal information, including social security numbers, financial information (including credit card numbers), and health information.

As of May 31, 2020, 1,730 of our 1,804 restaurants operating in the United States and Canada operate in leased locations.

In response to the COVID-19 pandemic, many consumers have preferred to order food To Go or for delivery rather than dining in at full-service restaurants, and if these preferences continue and consumers continue to avoid gathering in public places in large groups, we may need to further adapt our offerings to accommodate these changes.

The equity markets in the United States have been extremely volatile due to the COVID-19 pandemic and the recessionary cycle affecting the United States economy and the Company’s stock price has fluctuated significantly.

lead to a decline in sales and earnings.

However,

Subsequent to our fiscal 2020 annual analysis, we identified an indication of impairment related to the impacts of the COVID-19 pandemic requiring us to assess our goodwill and trademarks for impairment as of May 31, 2020.

As a result of these analyses, we recorded impairments of our Cheddar’s Scratch Kitchen® trademark and the related goodwill from acquiring that brand.

A significant financial reporting failure or material weakness in

Fiscal [removed: 2020,] [added: 2021,] which ended May [removed: 31, 2020,] [added: 30, 2021,] consisted of [removed: 53] [added: 52] weeks and fiscal [removed: 2019,] [added: 2020,] which ended May [removed: 26, 2019,] [added: 31, 2020,] consisted of [removed: 52] [added: 53] weeks.

At May [removed: 31, 2020,] [added: 30, 2021,] we operated [removed: 1,804] [added: 1,834] restaurants through subsidiaries in the United States and Canada under the Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capital Grille®, Seasons 52®, Bahama Breeze® and Eddie V’s Prime Seafood® trademarks.

We own and operate all of our restaurants in the United States and Canada, except for [removed: 3] [added: 2] joint venture restaurants managed by us and [removed: 30] [added: 33] franchised restaurants.

We also have [removed: 32] [added: 24] franchised restaurants in operation located in Latin [removed: America and the Middle East.][added: America.]

[removed: In March 2020,] [added: For much of fiscal 2021,] the COVID-19 [removed: outbreak was declared a national public health emergency resulting] [added: pandemic resulted] in a significant reduction in guest traffic at our restaurants due to changes in consumer behavior as public health officials encouraged social distancing and [added: required personal protective equipment and] state and local governments mandated restrictions including suspension of dine-in operations, reduced restaurant seating capacity, table spacing requirements, bar closures and additional physical barriers.

[removed: The COVID-19 pandemic negatively impacted this strong performance, and for most of the fourth quarter of fiscal] [added: Beginning in late March] 2020, we operated with all of our dining rooms closed and served our guests in a To Go only or To Go and delivery format.

[removed: As we continue to navigate through the pandemic,] [added: Accordingly,] we [removed: have taken] [added: took] significant steps to adapt our [removed: business to allow] [added: business, which allowed] us to continue to serve guests, support our team members and secure our liquidity position to provide financial [removed: flexibility, including:][added: flexibility.]

[removed: As a result of the economic impact of the COVID-19 pandemic, during] [added: During] the fourth quarter of fiscal 2020, we recorded non-cash impairment charges of [removed: $390.0] [added: $220.8] million related to a portion of our [removed: goodwill,] other indefinite-lived intangible assets, [added: restaurant-level] and other assets.

In late April 2020, state and local governments began to allow us to open dining rooms at limited capacities, along with other operating [removed: restrictions, and as of the date of filing this report, 89.0 percent of our restaurants were able to open their dining][added: restrictions.]

[removed: While increasing] [added: As] our [removed: in-restaurant] dining [removed: capacity is subject] [added: rooms have returned] to [removed: the ordinances in the jurisdictions we operate,] [added: full or close-to-full capacity,] we are focused on [removed: increasing capacity where possible,] continuing to provide a safe environment for our team members and guests, and maintaining many of the [added: operating] efficiencies established [removed: over these past few months.][added: during fiscal 2021.]

[removed: Although we expect our restaurants’ dining room capacity to increase as public health conditions improve and restrictions are eased,] [added: However,] it is possible additional outbreaks could require us to [added: again] reduce our capacity or [removed: further] [added: limit or] suspend our in-restaurant dining operations.

[removed: | • | Same-restaurant] [added: (1)Same-restaurant] sales [removed: – which] is a year-over-year [removed: 52-week] comparison of each period’s sales volumes for [added: a 52-week year and is limited to] restaurants open at least 16 [removed: months; and |][added: months.]

Fiscal [removed: 2020] [added: 2021] Financial Highlights

Our sales from continuing operations were [removed: $7.81] [added: $7.20] billion in fiscal [removed: 2020] [added: 2021] compared to [removed: $8.51] [added: $7.81] billion in fiscal [removed: 2019.][added: 2020.]

The [removed: 8.3] [added: 7.8] percent decrease in sales from continuing operations was primarily driven by negative combined Darden same-restaurant sales of [removed: 11.0] [added: 7.8] percent [added: and one less week of operations in fiscal 2021,] partially offset by revenue from the addition of [removed: 19] [added: 30] net new company-owned restaurants.

Net [removed: loss] [added: earnings] from continuing operations for fiscal [removed: 2020] [added: 2021] was [removed: $49.2] [added: $632.4] million [removed: ($0.40] [added: ($4.80] per diluted share) compared with [added: a] net [removed: earnings] [added: loss] from continuing operations for fiscal [removed: 2019] [added: 2020] of [removed: $718.6] [added: $49.2] million [removed: ($5.73] [added: ($0.40] per diluted share).

Our results from continuing operations for fiscal [removed: 2020 decreased] [added: 2021 increased] compared to fiscal [removed: 2019] [added: 2020] primarily due to the economic impacts of COVID-19 which had a material adverse effect [added: specifically] on the fourth quarter of fiscal [removed: 2020.][added: 2020, including $390.0 million of impairments.]

Our net loss from discontinued operations was [removed: $3.2] [added: $3.1] million ($0.03 per diluted share) for fiscal [removed: 2020,] [added: 2021,] compared with a net loss from discontinued operations of [removed: $5.2] [added: $3.2] million [removed: ($0.04] [added: ($0.03] per diluted share) for fiscal [removed: 2019.][added: 2020.]

continuing operations, our diluted net [removed: loss] [added: earnings] per share was [removed: $0.43] [added: $4.77] for fiscal [removed: 2020] [added: 2021] and diluted net [removed: earnings] [added: loss] per share was [removed: $5.69] [added: $0.43] for fiscal [removed: 2019.][added: 2020.]

In fiscal [removed: 2021,] [added: 2022,] we expect [added: our annual effective tax rate] to [removed: open 35-40 net new restaurants] [added: be between 13.0 percent] and [added: 14.0 percent and] we expect capital expenditures incurred to build new restaurants, remodel and maintain existing restaurants and technology initiatives to be between [removed: $250.0] [added: $375.0] million and [removed: $300.0] [added: $425.0] million.

RESULTS OF OPERATIONS FOR [removed: FISCAL 2020 AND 2019][added: FISCAL 2021 AND 2020]

All information is derived from the consolidated statements of earnings for the fiscal years ended May [removed: 31, 2020] [added: 30, 2021] and May [removed: 26, 2019:][added: 31, 2020:]

| | [added: | |] Fiscal Year Ended | | | | | | | | [added: | | | |] Percent Change | | [added: | | | | | | |]

| (in millions) | [added: | |] May [removed: 31, 2020] [added: 30, 2021] | | | | [added: | |] May [removed: 26, 2019] [added: 31, 2020] | | | | [removed: 2020] [added: | | 2021] vs [removed: 2019] [added: 2020] | | [added: | | | | | | |]

| Costs and expenses: | | | | | | | | | | | [added: | | | | | | | | | | | | |]

| Food and beverage | [added: | | 2,072.1 | | | | | |] 2,240.8 | | | | [removed: 2,412.5] | | [added: (7.5)] | | [removed: (7.1] [added: %] | [removed: )%] | [added: | | | | |]

| Restaurant labor | [added: | | 2,286.3 | | | | | |] 2,682.6 | | | | [removed: 2,771.1] | | [added: (14.8)] | | [removed: (3.2] [added: %] | [removed: )%] | [added: | | | | |]

| Restaurant expenses | [added: | | 1,344.2 | | | | | |] 1,475.1 | | | | [removed: 1,477.8] | | [added: (8.9)] | | [removed: (0.2] [added: %] | [removed: )%] | [added: | | | | |]

| Marketing expenses | [added: | | 91.1 | | | | | |] 238.0 | | | | [removed: 255.3] | | [added: (61.7)] | | [removed: (6.8] [added: %] | [removed: )%] | [added: | | | | |]

| General and administrative expenses | [added: | | 396.2 | | | | | |] 376.4 | | | | [removed: 405.5] | | [added: 5.3] | | [removed: (7.2] [added: %] | [removed: )%] | [added: | | | | |]

| Depreciation and amortization | [removed: 355.9] | | [added: 350.9] | | [removed: 336.7] | | | | [removed: 5.7] [added: 355.9] | [added: | | | | | (1.4) | |] % | [added: | | | | | |]

| Impairments and disposal of assets, net | [added: | | 6.6 | | | | | |] 221.0 | | | | [removed: 19.0] | | [added: (97.0)] | | [removed: NM] [added: %] | | [added: | | | | |]

| Goodwill impairment | [added: | | — | | | | | |] 169.2 | | | | [removed: —] | | [added: (100.0)] | | [removed: NM] [added: %] | | [added: | | | | |]

| Total operating costs and expenses | [added: | |] $ | [removed: 7,759.0] [added: 6,547.4] | | | [added: | |] $ | [removed: 7,677.9] [added: 7,759.0] | | | [removed: 1.1] | [added: | (15.6) | |] % | [added: | | | | | |]

| Operating income | [added: | | 648.7 | | | | | |] 47.9 | | | | [removed: 832.5] | | [added: NM] | | [removed: (94.2] | [removed: )%] | [added: | | | | |]

| Interest, net | [removed: 57.3] | | [added: 63.5] | | [removed: 50.2] | | | | [removed: 14.1] [added: 57.3] | [added: | | | | | 10.8 | |] % | [added: | | | | | |]

| Other (income) expense, net | [added: | | 8.7 | | | | | |] 151.6 | | | | [removed: —] | | [added: (94.3)] | | [removed: NM] [added: %] | | [added: | | | | |]

| Earnings (loss) before income taxes | [removed: (161.0] | | [removed: )] [added: 576.5] | | [removed: 782.3] | | | | [added: (161.0) | | | | | |] NM | | [added: | | | | | | |]

| Income tax expense (benefit) (1) | [removed: (111.8] | | [removed: )] [added: (55.9)] | | [removed: 63.7] | | | | [removed: NM] [added: (111.8)] | | [added: | | | | (50.0) | | % | | | | | | |]

| Earnings (loss) from continuing operations | [added: | |] $ | [removed: (49.2] [added: 632.4] | [removed: )] | | [added: | |] $ | [removed: 718.6] [added: (49.2)] | | | [added: | |] NM | | [added: | | | | | | |]

As a result, we began fiscal 2021 with significant limitations on our operations, which over the course of the fiscal year varied widely from time to time, state to state and city to city.

During November 2020, rising case rates resulted in certain jurisdictions implementing restrictions that again reduced dining room capacity or mandated the re-closure of dining rooms.

Once COVID-19 vaccines were approved and moved into wider distribution in the United States in early 2021, public health conditions improved and almost all of the COVID-19 restrictions on businesses have eased.

As of the date of this report, all of our restaurants were able to open their dining rooms to some extent and few capacity restrictions or other COVID-19 restrictions remained in place in the United States.

As we navigated through the pandemic, we took significant steps to adapt our business model to allow us to continue to serve guests and support our team members, including investing in our team members through enhanced pay and benefits, streamlining our restaurant processes, simplifying our menus, and accelerating the rollout of technology to all of our brands to enhance the off-premise and in-restaurant guest experience.

The decrease in same-restaurant sales was driven by the impact of COVID-19.

We expect fiscal 2022 sales from continuing operations to increase between 28 percent and 32 percent, driven by Darden same-restaurant sales growth of 25 percent to 29 percent and approximately 35-40 new restaurants.

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| Sales | | | $ | 7,196.1 | | | | | $ | 7,806.9 | | | | | (7.8) | | % | | | | | | |

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| Olive Garden | | | $ | 3,593.4 | | | | | $ | 4,013.8 | | | | | (10.5) | | % | | | | (9.9) | | % | | | | $ | 4.1 | | | | | $ | 4.5 | |

| LongHorn Steakhouse | | | $ | 1,810.4 | | | | | $ | 1,701.1 | | | | | 6.4 | | % | | | | 5.5 | | % | | | | $ | 3.4 | | | | | $ | 3.2 | |

| Fine Dining | | | $ | 446.9 | | | | | $ | 541.1 | | | | | (17.4) | | % | | | | (19.2) | | % | | | | $ | 5.3 | | | | | $ | 6.5 | |

| Other Business | | | $ | 1,345.4 | | | | | $ | 1,550.9 | | | | | (13.3) | | % | | | | (13.5) | | % | | | | $ | 4.0 | | | | | $ | 4.5 | |

| | | | $ | 7,196.1 | | | | | $ | 7,806.9 | | | | | | | | | | | | | | | | | | | | | | | | | |

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LongHorn Steakhouse’s sales increase for fiscal 2021 was driven by a same-restaurant sales increase combined with revenue from new restaurants, partially offset by one less week of operations.

The increase in same-restaurant sales in fiscal 2021 resulted from a 3.3 percent increase in same-restaurant guest counts combined with a 2.2 percent increase in average check.

The decrease in same-restaurant sales in fiscal 2021 was driven by the impact of COVID-19 and resulted from a 15.5 percent decrease in same-restaurant guest counts offset by a 2.0 percent increase in average check.

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

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- Restaurant expenses decreased as a percent of sales primarily due to a 1.4% impact from lower repairs and maintenance expenses, utility costs, and rent expense, and a 0.4% impact from pricing, partially offset by a 1.6% impact from sales deleverage.

- Marketing expenses decreased as a percent of sales primarily due to a 2.0% impact from lower media spending at Olive Garden and LongHorn Steakhouse, partially offset by a 0.3% impact from sales deleverage.

- General and administrative expenses increased as a percent of sales primarily due to a 0.6% impact related to our corporate restructuring actions during the first quarter of fiscal 2021, a 0.4% impact from the mark to market of our deferred compensation plans, and a 0.4% impact due to sales deleverage, partially offset by a 0.6% impact from cost savings initiatives and a 0.2% impact from a legal recovery.

- Impairments and disposal of assets, net decreased as a percent of sales due to the economic impact of the COVID-19 pandemic on fiscal 2020.

- Goodwill impairment decreased as a percent of sales due to the economic impact of COVID-19 on fiscal 2020.

The significant change was driven primarily by the fact that we had $576.5 million in earnings before taxes in fiscal 2021, compared to a net loss before taxes $161.0 million in fiscal 2020.

For fiscal 2021, our effective tax rate was also impacted by the generation of a net operating loss for tax purposes that will be carried back to the previous five tax years.

We generated a net operating loss for tax purposes due to several factors, including the impact of COVID-19, accelerated tax depreciation, increased tax deductions for equity vestings and exercises, tax accounting method changes and various other tax planning initiatives.

An income tax benefit is generated due to the difference in federal tax rates between fiscal year 2021 and the years to which the federal net operating loss will be carried back.

Through the first three quarters of fiscal 2020, our financial results were strong as sales from continuing operations for the first nine months of fiscal 2020 were $6.54 billion, an increase of 4.1 percent over the prior year period.

Our sales for the fourth quarter of fiscal 2020 declined 43.0 percent from the fourth quarter of fiscal 2019.

| | |

| --- | --- |

| • | Modifying our business operations in order to continue serving guests at our restaurants as safely and effectively as possible, including, initially transitioning all restaurant locations to a To Go only or To Go and delivery model; |

| | |

| --- | --- |

| • | Reducing or eliminating fixed costs in our restaurants and restaurant support center as well as eliminating or delaying most nonessential capital spending; |

| | |

| --- | --- |

| • | Furloughing a substantial number of hourly restaurant employees as a result of the closure of our dining rooms and reduction in sales; |

| | |

| --- | --- |

| • | Protecting our team members’ safety and wellbeing, including sourcing additional sanitation supplies and personal protective equipment, implementing paid sick leave for all hourly restaurant team members, providing a $75.0 million emergency pay program and covering $4.1 million of health and welfare insurance premiums for furloughed team members; |

| | |

| --- | --- |

| • | Suspending the quarterly cash dividend, with the intention of reviewing our dividend policy as developments warrant; |

| | |

| --- | --- |

| • | Fully drawing on our $750.0 million Revolving Credit Agreement, which was subsequently repaid in May 2020; |

| | |

| --- | --- |

| • | Securing a $270.0 million term loan; |

| | |

| --- | --- |

| • | Raising $505.1 million in net proceeds from a follow-on equity offering; |

| | |

| --- | --- |

| • | Suspending our share repurchase activity; and |

| | |

| --- | --- |

| • | Implementing a careful, phased reopening of our dining rooms where permitted by local regulations. |

The impact on our operating results as well as the operational and financial measures we have implemented in response to the COVID-19 pandemic have been included throughout this document.

See Note 1 and Note 3 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report) for additional information.

Additionally, on March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law in the United States.

The provisions of the CARES Act provide for, among other items, refundable employee retention tax credits for which we intend to claim $39.2 million related to our emergency pay program mentioned above.

See Note 12 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report) for additional information.

rooms to some extent.

For most of the fourth quarter of fiscal 2020, our cash flows from operations were negative, but by the end of the quarter, with the increasing dining room capacity, we were back to near break-even cash flow levels.

We believe that capable operators of strong, multi-unit brands have the opportunity to increase their share of the restaurant industry’s full-service segment.

At May [removed: 31, 2020,] [added: 30, 2021,] our potential losses in future net earnings resulting from changes in equity forwards, commodity instruments and floating rate debt interest rate exposures were approximately [removed: $23.9] [added: $74.3] million over a period of one year.

The value at risk from an increase in the fair value of all of our long-term fixed-rate debt, over a period of one year, was approximately [removed: $89.7] [added: $72.6] million.

The fair value of our long-term fixed-rate debt outstanding as of May [removed: 31, 2020,] [added: 30, 2021,] averaged [removed: $1.02] [added: $1.01] billion, with a high of [removed: $1.20] [added: $1.06] billion and a low of [removed: $828.7] [added: $917.3] million during fiscal [removed: 2020.][added: 2021.]

| | |

| --- | --- |

Darden Restaurants, Inc. is a full-service restaurant company, and as of May [removed: 31, 2020,] [added: 30, 2021,] we owned and operated [removed: 1,804] [added: 1,834] restaurants through subsidiaries in the United States and Canada under the Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Yard House®, The Capital Grille®, Seasons 52®, Bahama Breeze® and Eddie V’s Prime Seafood® trademarks.

As of May [removed: 31, 2020,] [added: 30, 2021,] we also had [removed: 62] [added: 57] restaurants operated by independent third parties pursuant to area development and franchise agreements.

The following table details the number of company-owned and operated restaurants, as well as those operated under franchise agreements, as of May [removed: 31, 2020:][added: 30, 2021:]

| Number of restaurants | | [removed: Olive Garden] | | [removed: LongHorn Steakhouse] | | [added: Olive Garden | | | | | | LongHorn Steakhouse | | | | | |] Cheddar’s Scratch [removed: Kitchen (2)] [added: Kitchen] | | [added: | | | |] Yard [removed: House] [added: House (1)] | | [added: | | | |] The [removed: Capital Grille (3)] [added: Capital Grille (2)] | | [added: | | | |] Seasons 52 | | [added: | | | |] Bahama Breeze | | [added: | | | |] Eddie V’s | | [added: | | | |] Total | [added: | |]

| Owned and operated: | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Canada | | [removed: 7] | | [added: | | 8 | | | | | |] — | | [added: | | | |] — | | [added: | | | |] — | | [added: | | | |] — | | [added: | | | |] — | | [added: | | | |] — | | [added: | | | |] — | | [removed: 7] | [added: | | | 8 | | |]

| [removed: Total] [added: 2020] | | [added: | | | |] 868 | | [added: | | | |] 522 | | [added: | | | |] 165 | | [added: | | | |] 81 | | [added: | | | |] 60 | | [added: | | | |] 44 | | [added: | | | |] 41 | | [added: | | | |] 23 | | [added: | | | |] 1,804 | [added: | | | | | $7,806.9 | | |]

| Franchised: | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| United States [removed: (4)] [added: (3)] | | [removed: 7] | | [removed: 16] | | [removed: 6] [added: 9] | | [added: | | | | 18 | | | | | | 5 | | | | | |] — | | [added: | | | |] — | | [added: | | | |] — | | [added: | | | |] 1 | | [added: | | | |] — | | [removed: 30] | [added: | | | 33 | | |]

| Latin America | | [removed: 26] | | [removed: 1] | | [added: 23 | | | | | |] — | | [added: | | | |] — | | [removed: 2] | | [added: | |] — | | [added: | | | | 1 | | | | | |] — | | [added: | | | |] — | | [removed: 29] | [added: | | | — | | | | | | 24 | | |]

| Total | | [removed: 36] | | [removed: 17] | | [removed: 6] [added: 32] | | [added: | | | | 18 | | | | | | 5 | | | | | |] — | | [removed: 2] | | [added: | | 1 | | | | | |] — | | [added: | | | |] 1 | | [added: | | | |] — | | [removed: 62] | [added: | | | 57 | | |]

[removed: | (1) | Includes three] [added: (1)Includes two] restaurants that are owned jointly by us and third parties, and managed by us. [removed: |]

[removed: | (3) | Includes two] [added: (2)Includes three] company-owned The Capital Burger restaurants. [removed: |]

[removed: | (4) | Includes] [added: (3)Includes] Puerto Rico and Guam. [removed: |]

Our fiscal year [removed: 2020] [added: 2021] ended May [removed: 31, 2020] [added: 30, 2021] and consisted of [removed: 53] [added: 52] weeks, fiscal [removed: 2019] [added: 2020] ended May [removed: 26, 2019] [added: 31, 2020] and consisted of [removed: 52] [added: 53] weeks, and fiscal [removed: 2018] [added: 2019] ended May [removed: 27, 2018] [added: 26, 2019] and consisted of 52 weeks.

[removed: In March 2020,] [added: For much of fiscal 2021,] the COVID-19 [removed: outbreak was declared a national public health emergency resulting] [added: pandemic resulted] in a significant reduction in guest traffic at our restaurants due to changes in consumer behavior as public health officials encouraged social distancing and [added: required personal protective equipment and] state and local governments mandated restrictions including suspension of dine-in operations, reduced restaurant seating capacity, table spacing requirements, bar closures and additional physical barriers.

[removed: The COVID-19 pandemic negatively impacted this strong performance, and for most of the fourth quarter of fiscal] [added: Beginning in late March] 2020, we operated with all of our dining rooms closed and served our guests in a To Go only or To Go and delivery format.

In late April 2020, state and local governments began to allow us to open dining rooms at limited capacities, along with other operating [removed: restrictions, and as of the date of filing this report, 89.0 percent of our restaurants were able to open their dining rooms to some extent.][added: restrictions.]

[removed: While increasing] [added: As] our [removed: in-restaurant] dining [removed: capacity is subject] [added: rooms have returned] to [removed: the ordinances in the jurisdictions where we operate,] [added: full or close-to-full capacity,] we are focused on [removed: increasing capacity where possible,] continuing to provide a safe environment for our team members and guests, and maintaining many of the [added: operating] efficiencies established [removed: over these past few months.][added: during fiscal 2021.]

[removed: Although we expect our restaurants’ dining room capacity to increase as public health conditions improve and restrictions are eased,] [added: However,] it is possible additional outbreaks could require us to [added: again] reduce our capacity or [removed: further] [added: limit or] suspend our in-restaurant dining operations.

Most dinner menu entrée prices range from [removed: $9.00] [added: $10.00] to [removed: $19.50,] [added: $20.00,] and most lunch menu entrée prices range from $8.00 to $10.00.

During fiscal [removed: 2020,] [added: 2021,] the average check per person (defined as total sales divided by number of entrées sold) was approximately [removed: $19.50,] [added: $20.00,] with alcoholic beverages accounting for [removed: 5.9] [added: 4.7] percent of Olive Garden’s sales.

Olive Garden maintains different menus [removed: for dinner and lunch and different menus] across its trade areas to reflect geographic differences in consumer preferences, prices and selections, as well as a smaller portioned, lower-priced children’s menu.

LongHorn Steakhouse restaurants feature a variety of menu items including signature fresh steaks and chicken, as well as salmon, shrimp, ribs, pork [removed: chops, burgers] [added: chops] and [removed: prime rib.][added: burgers.]

Most [removed: dinner menu entrée prices range from $12.00 to $30.00, and most] lunch [added: and dinner] menu entrée prices range from $8.00 to [removed: $16.50.][added: $19.00.]

During fiscal [removed: 2020,] [added: 2021,] the average check per person was approximately [removed: $22.50,] [added: $23.00,] with alcoholic beverages accounting for [removed: 8.9] [added: 7.9] percent of LongHorn Steakhouse’s sales.

Cheddar’s Scratch Kitchen is a full-service restaurant operating [added: primarily] in Texas and throughout the southern, midwestern and mid-Atlantic regions of the United States.

The casual dining menu features modern classics and American favorites cooked [removed: from scratch.]

Most lunch and dinner menu entrée prices range from [removed: $6.50] [added: $9.50] to [removed: $18.50.][added: $43.00.]

During fiscal [removed: 2020,] [added: 2021,] the average check per person was approximately [removed: $15.00,] [added: $16.00,] with alcoholic beverages accounting for [removed: 8.6] [added: 8.1] percent of Cheddar’s Scratch Kitchen’s sales.

Most lunch and dinner menu entrée prices range from [removed: $9.00] [added: $8.00] to [removed: $36.00.][added: $24.00.]

During fiscal [removed: 2020,] [added: 2021,] the average check per person was approximately $32.00, with alcoholic beverages accounting for [removed: 35.4] [added: 33.8] percent of Yard House’s sales.

During fiscal [removed: 2020,] [added: 2021,] the average check per person was approximately [removed: $84.00,] [added: $85.50,] with alcoholic beverages accounting for [removed: 29.0] [added: 26.7] percent of The Capital Grille’s sales.

During fiscal [removed: 2020,] [added: 2021,] the average check per person was approximately $46.50, with alcoholic beverages accounting for 25.1 percent [added: of Seasons 52’s sales.]

Most [removed: lunch and] dinner menu entrée prices range from [removed: $7.50] [added: $11.50] to [removed: $26.00.][added: $31.50, and most lunch menu entrée prices range from $8.00 to $12.00.]

During fiscal [removed: 2020,] [added: 2021,] the average check per person was approximately $31.00, with alcoholic beverages accounting for [removed: 23.5] [added: 23.3] percent of Bahama Breeze’s sales.

The menu is inspired by the great classic restaurants of New Orleans, San Francisco and Boston, with an emphasis on prime seafood creations, USDA prime beef and chops, and fresh [removed: oyster bar selections.]

Most dinner menu entrée prices range from [removed: $27.00] [added: $35.00] to [removed: $100.00.][added: $102.00.]

During fiscal [removed: 2020,] [added: 2021,] the average check per person was approximately [removed: $103.00,] [added: $101.00,] with alcoholic beverages accounting for [removed: 31.7] [added: 28.3] percent of Eddie V’s sales.

The following table shows our growth [added: over the last five years] and lists the number of restaurants owned and operated by each of our brands as of the end of the fiscal years indicated.

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| United States | | | | | | 867 | | | | | | 533 | | | | | | 170 | | | | | | 81 | | | | | | 63 | | | | | | 44 | | | | | | 42 | | | | | | 26 | | | | | | 1,826 | | |

| Total | | | | | | 875 | | | | | | 533 | | | | | | 170 | | | | | | 81 | | | | | | 63 | | | | | | 44 | | | | | | 42 | | | | | | 26 | | | | | | 1,834 | | |

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As a result, we began fiscal 2021 with significant limitations on our operations, which over the course of the fiscal year varied widely from time to time, state to state and city to city.

During November 2020, rising case rates resulted in certain jurisdictions implementing restrictions that again reduced dining room capacity or mandated the re-closure of dining rooms.

Once COVID-19 vaccines were approved and moved into wider distribution in the United States in early 2021, public health conditions improved and almost all of the COVID-19 restrictions on businesses have eased.

As of the date of this report, all of our restaurants were able to open their dining rooms to some extent and few capacity restrictions or other COVID-19 restrictions remained in place in the United States.

As we navigated through the pandemic, we took significant steps to adapt our business model to allow us to continue to serve guests and support our team members, including investing in our team members through enhanced pay and benefits, streamlining our restaurant processes, simplifying our menus, and accelerating the rollout of technology to all of our brands to enhance the off-premise and in-restaurant guest experience.

from scratch.

oyster bar selections.

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2021 | | | | | | 875 | | | | | | 533 | | | | | | 170 | | | | | | 81 | | | | | | 63 | | | | | | 44 | | | | | | 42 | | | | | | 26 | | | | | | 1,834 | | | | | | $7,196.1 | | |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

(1)Includes cash investments for building, equipment, furniture and other construction costs; excludes internal capitalized overhead, pre-opening expenses, tenant allowance and future lease obligations.

Actual costs can vary significantly depending on the specific location.

(4)Fiscal 2021 restaurant openings include one The Capital Burger restaurant.

Over the course of fiscal 2021, as the COVID-19 pandemic impacted our business, the staffing levels of each our restaurants changed frequently, as our dining rooms operated under a range of capacity limitations that also varied from time to time, from state to state and city to city.

Our total quality team verifies the application of preventative controls through on-site support visits ensuring an effective and robust food safety system.

Total quality managers provide support to operations staff with education and training in food safety and sanitation.

As the pandemic recedes in the United States, many of the additional COVID-19 protocols have been relaxed or removed as of the date of this report.

Nevertheless, we are remaining vigilant and may reinstate any of the additional safety or health and wellness precautions if public health conditions worsen in any of our service areas or future government regulations require us to do so.

We implement periodic promotions, as appropriate, to increase frequency of guest visits while maintaining overall profitability.

Human Capital

Darden prioritizes our team members through our People Strategy that includes four strategic imperatives:

- Hire - Attract and select diverse team members that reflect our values and are committed to our results-oriented culture;

- Train - Teach our team members to perform in today’s environment and develop the skills to meet tomorrow’s needs;

- Reward - Invest in compelling programs that recognize team members when goals are achieved and further motivate our culture of winning; and

- Retain - We keep our team members engaged and motivated, ready to deliver results and grow their careers.

We closely track and assess a variety of metrics that help us to evaluate our performance of each of these imperatives.

We track a variety of workforce statistics to help us understand the gender, racial and ethnic diversity of our team members, including the following:

Key Team Member Statistics as of the end of fiscal 2021

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| Total team members (hourly and salaried) | | | 156,883 | | |

| Total number of hourly team members | | | 147,426 | | |

| Percent of hourly team members – female | | | 58% | | |

We served over 355 million meals in fiscal 2020.

| | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | |

| United States (1) | | 861 | | 522 | | 165 | | 81 | | 60 | | 44 | | 41 | | 23 | | 1,797 |

| Middle East | | 3 | | — | | — | | — | | — | | — | | — | | — | | 3 |

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| --- | --- |

| | |

| --- | --- |

| (2) | Includes seven franchised locations acquired in fiscal 2020. |

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| --- | --- |

| | |

| --- | --- |

Through the first three quarters of fiscal 2020, our financial results were strong as sales from continuing operations for the first nine months of fiscal 2020 were $6.54 billion, an

increase of 4.1 percent over the prior year period.

Our sales for the fourth quarter of fiscal 2020 declined 43.0 percent from the fourth quarter of fiscal 2019.

As we continue to navigate through the pandemic, we have taken significant steps to adapt our business to allow us to continue to serve guests, support our team members and secure our liquidity position to provide financial flexibility, including:

| | |

| --- | --- |

| • | Modifying our business operations in order to continue serving guests at our restaurants as safely and effectively as possible, including, initially transitioning all restaurant locations to a To Go only or To Go and delivery model; |

| | |

| --- | --- |

| • | Reducing or eliminating fixed costs in our restaurants and restaurant support center as well as eliminating or delaying most nonessential capital spending; |

| | |

| --- | --- |

| • | Furloughing a substantial number of hourly restaurant employees as a result of the closure of our dining rooms and reduction in sales; |

| | |

| --- | --- |

| • | Protecting our team members’ safety and wellbeing, including sourcing additional sanitation supplies and personal protective equipment, implementing paid sick leave for all hourly restaurant team members, providing a $75.0 million emergency pay program and covering $4.1 million of health and welfare insurance premiums for furloughed team members; |

| | |

| --- | --- |

| • | Suspending the quarterly cash dividend, with the intention of reviewing our dividend policy as developments warrant; |

| | |

| --- | --- |

| • | Fully drawing on our $750.0 million Revolving Credit Agreement, which was subsequently repaid in May 2020; |

| | |

| --- | --- |

| • | Securing a $270.0 million term loan; |

[removed: FORM 10-K][added: FORM 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year ended May [removed: 31, 2020][added: 30, 2021]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

| Florida | | | | [added: | | | | | | | |] 59-3305930 | [added: | |]

| (State or other jurisdiction of incorporation or organization) | | | | [added: | | | | | | | |] (IRS Employer Identification No.) | [added: | |]

| 1000 Darden Center Drive, | [added: | |] Orlando, | [added: | |] Florida | | [added: | | | |] 32837 | [added: | |]

| (Address of principal executive offices) | | | | [added: | | | | | | | |] (Zip Code) | [added: | |]

Registrant’s telephone number, including area code: [removed: (407) 245-4000][added: (407) 245-4000]

| Title of each class | [added: | |] Trading Symbol | [added: | |] Name of each exchange on which registered | [added: | |]

| Common Stock, without par value | [added: | |] DRI | [added: | |] New York Stock Exchange | [added: | |]

| Large accelerated filer | [added: | |] ☒ | | | [added: | | | | | |] Accelerated filer | [added: | |] ☐ | [added: | |]

| Non-accelerated filer | [added: | |] ☐ | [added: | |] (Do not check if a smaller reporting company) | | [added: | | | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| | | | | [added: | | | | | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

The aggregate market value of Common Stock held by non-affiliates of the Registrant based on the closing price of [removed: $114.67] [added: $109.95] per share as reported on the New York Stock Exchange on November [removed: 22, 2019,] [added: 27, 2020,] was approximately: [removed: $13,915,679,000.][added: $14,279,051,000.]

Number of shares of Common Stock outstanding as of May [removed: 31, 2020: 129,893,801.][added: 30, 2021: 130,762,723.]

Portions of the Registrant’s Proxy Statement for its Annual Meeting of Shareholders on September [removed: 23, 2020,] [added: 22, 2021,] to be filed with the Securities and Exchange Commission no later than 120 days after May [removed: 31, 2020,] [added: 30, 2021,] are incorporated by reference into Part III of this Report.

FISCAL YEAR ENDED MAY [removed: 31, 2020][added: 30, 2021]

| PART I | | [added: | | | |] Page | [added: | |]

| Item 1. | [removed: [Business](#s7263EE1750FE5CCA837B860069285AEC)] | [removed: [1](#s7263EE1750FE5CCA837B860069285AEC)] | [added: [Business](#idf265839c4244cdbafcce701dde48fcd_13) | | | [1](#idf265839c4244cdbafcce701dde48fcd_13) | | |]

| Item 1A. | [added: | |] [Risk [removed: Factors](#sD295F4FAD7B157068F17DD498700339D)] [added: Factors](#idf265839c4244cdbafcce701dde48fcd_34)] | [removed: [16](#sD295F4FAD7B157068F17DD498700339D)] | [added: | [14](#idf265839c4244cdbafcce701dde48fcd_34) | | |]

| Item 1B. | [added: | |] [Unresolved Staff [removed: Comments](#s381110439C105476BBE5AA0992F8BFBA)] [added: Comments](#idf265839c4244cdbafcce701dde48fcd_37)] | [removed: [26](#s381110439C105476BBE5AA0992F8BFBA)] | [added: | [24](#idf265839c4244cdbafcce701dde48fcd_37) | | |]

| Item 2. | [removed: [Properties](#s3DA52585EE8D52C78D138A325BD911AD)] | [removed: [26](#s3DA52585EE8D52C78D138A325BD911AD)] | [added: [Properties](#idf265839c4244cdbafcce701dde48fcd_40) | | | [24](#idf265839c4244cdbafcce701dde48fcd_40) | | |]

| Item 3. | [added: | |] [Legal [removed: Proceedings](#s0D1CE8EC7D385741BD20305F3D3ACBE3)] [added: Proceedings](#idf265839c4244cdbafcce701dde48fcd_43)] | [removed: [26](#s0D1CE8EC7D385741BD20305F3D3ACBE3)] | [added: | [24](#idf265839c4244cdbafcce701dde48fcd_43) | | |]

| Item 4. | [added: | |] [Mine Safety [removed: Disclosures](#sAF6E1C15CFBF5E82940D2566CC459B0A)] [added: Disclosures](#idf265839c4244cdbafcce701dde48fcd_46)] | [removed: [26](#sAF6E1C15CFBF5E82940D2566CC459B0A)] | [added: | [24](#idf265839c4244cdbafcce701dde48fcd_46) | | |]

| PART II | | | [added: | | | | | |]

| Item 5. | [added: | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sDB23A220650E582280BE5AB18656F1F6)] [added: Securities](#idf265839c4244cdbafcce701dde48fcd_52)] | [removed: [27](#sDB23A220650E582280BE5AB18656F1F6)] | [added: | [25](#idf265839c4244cdbafcce701dde48fcd_52) | | |]

| Item 6. | [added: | |] [Selected Financial [removed: Data](#s5E71EA2E928C5B448B0E5DCD37C686E3)] [added: Data](#idf265839c4244cdbafcce701dde48fcd_55)] | [removed: [29](#s5E71EA2E928C5B448B0E5DCD37C686E3)] | [added: | [27](#idf265839c4244cdbafcce701dde48fcd_55) | | |]

| Item 7. | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s3C5A2273035E5C6283ACD44B34DAED8F)] [added: Operations](#idf265839c4244cdbafcce701dde48fcd_58)] | [removed: [31](#s3C5A2273035E5C6283ACD44B34DAED8F)] | [added: | [27](#idf265839c4244cdbafcce701dde48fcd_58) | | |]

| Item 7A. | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s6AF1666BE9935D138105C90AD6B1EB14)] [added: Risk](#idf265839c4244cdbafcce701dde48fcd_82)] | [removed: [43](#s6AF1666BE9935D138105C90AD6B1EB14)] | [added: | [37](#idf265839c4244cdbafcce701dde48fcd_82) | | |]

| Item 8. | [added: | |] [Financial Statements and Supplementary [removed: Data](#s6CE1697CF1935380BA45B152A82E55E1)] [added: Data](#idf265839c4244cdbafcce701dde48fcd_85)] | [removed: [45](#s6CE1697CF1935380BA45B152A82E55E1)] | [added: | [38](#idf265839c4244cdbafcce701dde48fcd_85) | | |]

| Item 9. | [added: | |] [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s0E569DAE0AF6571496CABD1837D7D135)] [added: Disclosure](#idf265839c4244cdbafcce701dde48fcd_196)] | [removed: [89](#s0E569DAE0AF6571496CABD1837D7D135)] | [added: | [80](#idf265839c4244cdbafcce701dde48fcd_196) | | |]

| Item 9A. | [added: | |] [Controls and [removed: Procedures](#sDEBABA28A7625332AA9A592A23F95D0D)] [added: Procedures](#idf265839c4244cdbafcce701dde48fcd_199)] | [removed: [89](#sDEBABA28A7625332AA9A592A23F95D0D)] | [added: | [80](#idf265839c4244cdbafcce701dde48fcd_199) | | |]

| Item 9B. | [added: | |] [Other [removed: Information](#s48451E6A28C05D7794C37B3EB64E4B29)] [added: Information](#idf265839c4244cdbafcce701dde48fcd_202)] | [removed: [89](#s48451E6A28C05D7794C37B3EB64E4B29)] | [added: | [80](#idf265839c4244cdbafcce701dde48fcd_202) | | |]

| PART III | | | [added: | | | | | |]

| Item 10. | [added: | |] [Directors, Executive Officers and Corporate [removed: Governance](#sBAE71E2DD303528F961B6B1CCFDBAA96)] [added: Governance](#idf265839c4244cdbafcce701dde48fcd_208)] | [removed: [89](#sBAE71E2DD303528F961B6B1CCFDBAA96)] | [added: | [80](#idf265839c4244cdbafcce701dde48fcd_208) | | |]

| Item 11. | [added: | |] [Executive [removed: Compensation](#s8B9CBF8863935440A9D02BA6897221B6)] [added: Compensation](#idf265839c4244cdbafcce701dde48fcd_211)] | [removed: [89](#s8B9CBF8863935440A9D02BA6897221B6)] | [added: | [80](#idf265839c4244cdbafcce701dde48fcd_211) | | |]

| Item 12. | [added: | |] [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s6DF85413D22951199336A2B6380BF97C)] [added: Matters](#idf265839c4244cdbafcce701dde48fcd_214)] | [removed: [90](#s6DF85413D22951199336A2B6380BF97C)] | [added: | [81](#idf265839c4244cdbafcce701dde48fcd_214) | | |]

| Item 13. | [added: | |] [Certain Relationships and Related Transactions, and Director [removed: Independence](#s47BD4C8E1E025BA9A66E6B123C74E893)] [added: Independence](#idf265839c4244cdbafcce701dde48fcd_217)] | [removed: [90](#s47BD4C8E1E025BA9A66E6B123C74E893)] | [added: | [81](#idf265839c4244cdbafcce701dde48fcd_217) | | |]

| Item 14. | [added: | |] [Principal Accountant Fees and [removed: Services](#sFF10C2CC82595F1C88AAF06F9B9EB5ED)] [added: Services](#idf265839c4244cdbafcce701dde48fcd_220)] | [removed: [90](#sFF10C2CC82595F1C88AAF06F9B9EB5ED)] | [added: | [81](#idf265839c4244cdbafcce701dde48fcd_220) | | |]

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| | | | [Signatures](#idf265839c4244cdbafcce701dde48fcd_229) | | | [82](#idf265839c4244cdbafcce701dde48fcd_229) | | |

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| | [Signatures](#s12A82B07E3625C8CBF600F6FAD7A2B47) | [91](#s12A82B07E3625C8CBF600F6FAD7A2B47) |

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Of these [removed: 1,804] [added: 1,834] company-owned restaurants, [removed: 74] [added: 73] were located on owned sites and [removed: 1,730] [added: 1,761] were located on leased sites.

| Land-Only Leases (we own buildings and equipment) | [removed: 864] | | [added: 893 | | |]

| Ground and Building Leases | [removed: 658] | | [added: 659 | | |]

| Space/In-Line/Other Leases | [removed: 208] | | [added: 209 | | |]

As of May 30, 2021, we operated 1,834 restaurants.

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| Total | | | 1,761 | | |

As of May 31, 2020, we operated 1,804 restaurants, consisting of 868 Olive Garden, 522 LongHorn Steakhouse, 165 Cheddar’s Scratch Kitchen, 81 Yard House, 60 The Capital Grille, 44 Seasons 52, 41 Bahama Breeze and 23 Eddie V’s locations.

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| Total | 1,730 | |

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As of June 30, [removed: 2020,] [added: 2021,] there were approximately [removed: 9,350] [added: 8,918] holders of record of our common shares.

Since commencing our common share repurchase program in December 1995, we have repurchased a total of [removed: 196.2] [added: 196.6] million shares through May [removed: 31, 2020] [added: 30, 2021] under authorizations from our Board of Directors.

The table below provides information concerning our repurchase of shares of our common stock during the quarter ended May [removed: 31, 2020:][added: 30, 2021:]

| (Dollars in millions, except per share data) | [added: | |] Total Number of Shares Purchased (1) (2) | [added: | |] Average Price Paid per Share | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | [added: | |] Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (3) | | |

[removed: | (1) | All of the shares purchased during the quarter ended May 31, 2020 were purchased as part of our repurchase program on or before March 20, 2020. On September 18, 2019, our Board of Directors authorized a share repurchase program under which the Company may repurchase up to $500.0 million of its outstanding common stock.] This repurchase program, which was announced publicly in a press release issued on [removed: September 19, 2019,] [added: March 25, 2021,] does not have an expiration and replaced the previously existing share repurchase authorization. [removed: |]

[removed: | (2) | The] [added: (2)The] number of shares purchased includes shares withheld for taxes on vesting of restricted stock, shares delivered or deemed to be delivered to us on tender of stock in payment for the exercise price of options, and shares reacquired pursuant to tax withholding on option exercises. [removed: These shares are included as part of our repurchase program and deplete the repurchase authority granted by our Board. The number of shares repurchased excludes shares we reacquired pursuant to forfeiture of restricted stock. |]

[removed: | (3) | Repurchases] [added: (3)Repurchases] are subject to prevailing market prices, may be made in open market or private transactions, and may occur or be discontinued at any time. [removed: There can be no assurance that we will repurchase any additional shares. |]

| | | [added: | | | |] Indexed Returns | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Company/Index | | [removed: May 2015] | | | | May 2016 | | | | [added: | |] May 2017 | | | | [added: | |] May 2018 | | | | [added: | |] May 2019 | | | | [added: | |] May 2020 | | | [added: | | | May 2021 | | |]

[removed: ][added: ]

The annual changes for the five-year period shown in the graph on this page are based on the assumption that $100 had been invested in Darden Restaurants, Inc. common stock, the S&P 500 Stock Index and the S&P Composite 1500 Restaurant Sub-Index on May [removed: 29, 2015,] [added: 27, 2016,] and that all dividends were reinvested.

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| March 1, 2021 through April 4, 2021 | | | 40,975 | | | $ | 142.17 | | 40,975 | | | $ | 495.8 | |

| April 5, 2021 through May 2, 2021 | | | 69,288 | | | $ | 144.32 | | 69,288 | | | $ | 485.8 | |

| May 3, 2021 through May 30, 2021 | | | 160,191 | | | $ | 139.19 | | 160,191 | | | $ | 463.5 | |

| Total | | | 270,454 | | | $ | 140.95 | | 270,454 | | | $ | 463.5 | |

(1)All of the shares purchased during the quarter ended May 30, 2021 were purchased as part of our repurchase program.

On March 23, 2021, our Board of Directors authorized a share repurchase program under which the Company may repurchase up to $500.0 million of its outstanding common stock.

These shares are included as part of our repurchase program and deplete the repurchase authority granted by our Board.

The number of shares repurchased excludes shares we reacquired pursuant to forfeiture of restricted stock.

There can be no assurance that we will repurchase any additional shares.

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| Darden Restaurants, Inc. | | | | | | $ | 100.00 | | | | | $ | 134.64 | | | | | $ | 138.42 | | | | | $ | 194.43 | | | | | $ | 127.24 | | | | | $ | 239.95 | |

| S&P 500 Stock Index | | | | | | $ | 100.00 | | | | | $ | 117.52 | | | | | $ | 134.98 | | | | | $ | 143.01 | | | | | $ | 157.20 | | | | | $ | 220.58 | |

| S&P Composite 1500 Restaurant Sub-Index | | | | | | $ | 100.00 | | | | | $ | 123.31 | | | | | $ | 128.75 | | | | | $ | 162.53 | | | | | $ | 162.35 | | | | | $ | 227.43 | |

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| February 24, 2020 through March 29, 2020 | 297,553 | $ | 100.89 | | 297,553 | $ | 290.6 | |

| March 30, 2020 through April 26, 2020 | — | $ | — | | — | $ | 290.6 | |

| April 27, 2020 through May 31, 2020 | — | $ | — | | — | $ | 290.6 | |

| Total | 297,553 | $ | 100.89 | | 297,553 | $ | 290.6 | |

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| Darden Restaurants, Inc. | | $ | 100.00 | | | $ | 118.68 | | | $ | 159.79 | | | $ | 164.27 | | | $ | 230.74 | | | $ | 151.00 | |

| S&P 500 Stock Index | | $ | 100.00 | | | $ | 101.81 | | | $ | 119.65 | | | $ | 137.42 | | | $ | 145.60 | | | $ | 160.05 | |

| S&P Composite 1500 Restaurant Sub-Index | | $ | 100.00 | | | $ | 110.10 | | | $ | 135.76 | | | $ | 141.75 | | | $ | 178.95 | | | $ | 178.74 | |

On November 9, 2015, we completed the spin-off of Four Corners Property Trust, Inc. (Four Corners) with the pro rata distribution of one share of Four Corners common stock for every three shares of Darden common stock to Darden shareholders.

We reflect the effect of the spin-off of Four Corners in the cumulative total return of our common stock as a reinvested dividend.

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Not applicable.

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| | Fiscal Year Ended | | | | | | | | | | | | | | | | | | |

| (Dollars in millions, except per share data) | May 31, 2020 (2) | | | | May 26, 2019 | | | | May 27, 2018 | | | | May 28, 2017 | | | | May 29, 2016 | | |

| Operating Results (1) Sales | $ | 7,806.9 | | | $ | 8,510.4 | | | $ | 8,080.1 | | | $ | 7,170.2 | | | $ | 6,933.5 | |

| Costs and expenses: | | | | | | | | | | | | | | | | | | | |

| Food and beverage | 2,240.8 | | | | 2,412.5 | | | | 2,303.1 | | | | 2,070.3 | | | | 2,039.7 | | |

| Restaurant labor | 2,682.6 | | | | 2,771.1 | | | | 2,614.5 | | | | 2,265.3 | | | | 2,189.2 | | |

| Restaurant expenses | 1,475.1 | | | | 1,477.8 | | | | 1,417.1 | | | | 1,265.2 | | | | 1,163.5 | | |

| Marketing expenses | 238.0 | | | | 255.3 | | | | 252.3 | | | | 239.7 | | | | 238.0 | | |

| General and administrative | 376.4 | | | | 405.5 | | | | 409.8 | | | | 387.7 | | | | 384.9 | | |

| Depreciation and amortization | 355.9 | | | | 336.7 | | | | 313.1 | | | | 272.9 | | | | 290.2 | | |

| Impairments and disposal of assets, net | 221.0 | | | | 19.0 | | | | 3.4 | | | | (8.4 | | ) | | 5.8 | | |

| Goodwill impairment | 169.2 | | | | — | | | | — | | | | — | | | | — | | |

| Total operating costs and expenses | $ | 7,759.0 | | | $ | 7,677.9 | | | $ | 7,313.3 | | | $ | 6,492.7 | | | $ | 6,311.3 | |

| Operating income | 47.9 | | | | 832.5 | | | | 766.8 | | | | 677.5 | | | | 622.2 | | |

| Interest, net | 57.3 | | | | 50.2 | | | | 161.1 | | | | 40.2 | | | | 172.5 | | |

| Other (income) expense, net | 151.6 | | | | — | | | | — | | | | — | | | | — | | |

| Earnings (loss) before income taxes | (161.0 | | ) | | 782.3 | | | | 605.7 | | | | 637.3 | | | | 449.7 | | |

| Income tax expense (benefit) | (111.8 | | ) | | 63.7 | | | | 1.9 | | | | 154.8 | | | | 90.0 | | |

| Earnings (loss) from continuing operations | $ | (49.2 | ) | | $ | 718.6 | | | $ | 603.8 | | | $ | 482.5 | | | $ | 359.7 | |

| Earnings (loss) from discontinued operations, net of tax expense (benefit) of $(0.9), $(1.8), $(4.8), $(4.2) and $3.4 | (3.2 | | ) | | (5.2 | | ) | | (7.8 | | ) | | (3.4 | | ) | | 15.3 | | |

| Net earnings (loss) | $ | (52.4 | ) | | $ | 713.4 | | | $ | 596.0 | | | $ | 479.1 | | | $ | 375.0 | |

| Basic net earnings per share: | | | | | | | | | | | | | | | | | | | |

| Earnings (loss) from continuing operations | $ | (0.40 | ) | | $ | 5.82 | | | $ | 4.87 | | | $ | 3.88 | | | $ | 2.82 | |

| Earnings (loss) from discontinued operations | $ | (0.03 | ) | | $ | (0.04 | ) | | $ | (0.06 | ) | | $ | (0.03 | ) | | $ | 0.12 | |

| Net earnings (loss) | $ | (0.43 | ) | | $ | 5.78 | | | $ | 4.81 | | | $ | 3.85 | | | $ | 2.94 | |

| Diluted net earnings per share: | | | | | | | | | | | | | | | | | | | |

| Earnings (loss) from continuing operations | $ | (0.40 | ) | | $ | 5.73 | | | $ | 4.79 | | | $ | 3.83 | | | $ | 2.78 | |

| Earnings (loss) from discontinued operations | $ | (0.03 | ) | | $ | (0.04 | ) | | $ | (0.06 | ) | | $ | (0.03 | ) | | $ | 0.12 | |

| Net earnings (loss) | $ | (0.43 | ) | | $ | 5.69 | | | $ | 4.73 | | | $ | 3.80 | | | $ | 2.90 | |

| Average number of common shares outstanding: | | | | | | | | | | | | | | | | | | | |

| Basic | 122.7 | | | | 123.5 | | | | 124.0 | | | | 124.3 | | | | 127.4 | | |

| Diluted | 122.7 | | | | 125.4 | | | | 126.0 | | | | 126.0 | | | | 129.3 | | |

| Financial Position | | | | | | | | | | | | | | | | | | | |

| Total assets | $ | 9,946.1 | | | $ | 5,892.8 | | | $ | 5,469.6 | | | $ | 5,292.3 | | | $ | 4,419.4 | |

| Land, buildings and equipment, net | $ | 2,756.9 | | | $ | 2,552.6 | | | $ | 2,429.8 | | | $ | 2,272.3 | | | $ | 2,041.6 | |

| Working capital (deficit) | $ | (691.4 | ) | | $ | (581.5 | ) | | $ | (830.9 | ) | | $ | (701.3 | ) | | $ | (530.0 | ) |

| Long-term debt, less current portion | $ | 928.8 | | | $ | 927.7 | | | $ | 926.5 | | | $ | 936.6 | | | $ | 440.0 | |

| | [added: | |] Page | [added: | |]

| [Report of Management [removed: Responsibilities](#s7580170D9FCF508EB07F0E2DE39CB49E)] [added: Responsibilities](#idf265839c4244cdbafcce701dde48fcd_88)] | [removed: [46](#s7580170D9FCF508EB07F0E2DE39CB49E)] | [added: | [39](#idf265839c4244cdbafcce701dde48fcd_88) | | |]

| [Management’s Report on Internal Control over Financial [removed: Reporting](#s323A0DED99245450ADF57E72C243AD1C)] [added: Reporting](#idf265839c4244cdbafcce701dde48fcd_91)] | [removed: [46](#s323A0DED99245450ADF57E72C243AD1C)] | [added: | [39](#idf265839c4244cdbafcce701dde48fcd_91) | | |]

| [Report of Independent Registered Public Accounting Firm on Internal Control over Financial [removed: Reporting](#s2C5B2CEA0DC2541D9BDF045BC1D63C5C)] [added: Reporting](#idf265839c4244cdbafcce701dde48fcd_94)] | [removed: [47](#s2C5B2CEA0DC2541D9BDF045BC1D63C5C)] | [added: | [40](#idf265839c4244cdbafcce701dde48fcd_94) | | |]

| [Report of Independent Registered Public Accounting [removed: Firm](#s0416D7ADAF665EF493700C1BA50E9125)] [added: Firm](#idf265839c4244cdbafcce701dde48fcd_97)] | [removed: [48](#s0416D7ADAF665EF493700C1BA50E9125)] | [added: | [41](#idf265839c4244cdbafcce701dde48fcd_97) | | |]

| [Consolidated Statements of Earnings for the fiscal years [removed: ended May] [added: ended](#idf265839c4244cdbafcce701dde48fcd_100) [May 30,](#idf265839c4244cdbafcce701dde48fcd_100) [2021,](#idf265839c4244cdbafcce701dde48fcd_100) [May] 31, [removed: 2020, May] [added: 2020](#idf265839c4244cdbafcce701dde48fcd_100) [and](#idf265839c4244cdbafcce701dde48fcd_100) [May] 26, [removed: 2019 and May 27, 2018](#s46D60C3C7BAE5E95BF6283481B3B0893)] [added: 2019](#idf265839c4244cdbafcce701dde48fcd_100)] | [removed: [51](#s46D60C3C7BAE5E95BF6283481B3B0893)] | [added: | [43](#idf265839c4244cdbafcce701dde48fcd_100) | | |]

| [Consolidated Statements of Comprehensive Income for the fiscal years [removed: ended May] [added: ended](#idf265839c4244cdbafcce701dde48fcd_106) [May 30, 2021,](#idf265839c4244cdbafcce701dde48fcd_106) [May] 31, [removed: 2020, May] [added: 2020](#idf265839c4244cdbafcce701dde48fcd_106) [and](#idf265839c4244cdbafcce701dde48fcd_106) [May] 26, [removed: 2019 and May 27, 2018](#s8D9E630D85075E5BA5F40D73F466EE8D)] [added: 2019](#idf265839c4244cdbafcce701dde48fcd_106)] | [removed: [52](#s8D9E630D85075E5BA5F40D73F466EE8D)] | [added: | [44](#idf265839c4244cdbafcce701dde48fcd_106) | | |]

| [Consolidated Balance Sheets [removed: at May] [added: at](#idf265839c4244cdbafcce701dde48fcd_112) [May 30, 2021 and](#idf265839c4244cdbafcce701dde48fcd_112) [May] 31, [removed: 2020 and May 26, 2019](#s66D5769FE99F5E8BACEA3D7A5B61D47F)] [added: 2020](#idf265839c4244cdbafcce701dde48fcd_112)] | [removed: [53](#s66D5769FE99F5E8BACEA3D7A5B61D47F)] | [added: | [45](#idf265839c4244cdbafcce701dde48fcd_112) | | |]

| [Consolidated Statements of Changes in Stockholders’ Equity for the fiscal years [removed: ended May] [added: ended](#idf265839c4244cdbafcce701dde48fcd_118) [May 30, 2021,](#idf265839c4244cdbafcce701dde48fcd_118) [](#idf265839c4244cdbafcce701dde48fcd_118)[May] 31, [removed: 2020, May] [added: 2020](#idf265839c4244cdbafcce701dde48fcd_118) [and](#idf265839c4244cdbafcce701dde48fcd_118) [May] 26, [removed: 2019 and May 27, 2018](#s2364DD0DEC5D5BD9B78A4BEFDE87EE7C)] [added: 2019](#idf265839c4244cdbafcce701dde48fcd_118)] | [removed: [54](#s2364DD0DEC5D5BD9B78A4BEFDE87EE7C)] | [added: | [46](#idf265839c4244cdbafcce701dde48fcd_118) | | |]

| [Consolidated Statements of Cash Flows for the fiscal years [removed: ended May] [added: ended](#idf265839c4244cdbafcce701dde48fcd_124) [May 30, 2021,](#idf265839c4244cdbafcce701dde48fcd_124) [May] 31, [removed: 2020, May] [added: 2020](#idf265839c4244cdbafcce701dde48fcd_124) [and](#idf265839c4244cdbafcce701dde48fcd_124) [May] 26, [removed: 2019 and May 27, 2018](#s0E77B48FCE8E51EB9B60326618155112)] [added: 2019](#idf265839c4244cdbafcce701dde48fcd_124)] | [removed: [55](#s0E77B48FCE8E51EB9B60326618155112)] | [added: | [47](#idf265839c4244cdbafcce701dde48fcd_124) | | |]

[removed: | [Notes to Consolidated Financial Statements](#s5A08C81F83335E1CB3BF7A611045F970) | [57](#s5A08C81F83335E1CB3BF7A611045F970) |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)]

Management assessed the effectiveness of the Company’s internal control over financial reporting as of May [removed: 31, 2020.][added: 30, 2021.]

Management has concluded that, as of May [removed: 31, 2020,] [added: 30, 2021,] the Company’s internal control over financial reporting was effective based on these criteria.

[removed: *President] [added: *Chairman] and Chief Executive Officer*

We have audited Darden Restaurants, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of May [removed: 31, 2020,] [added: 30, 2021,] based on criteria established in [removed: *Internal] [added: Internal] Control - Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May [removed: 31, 2020,] [added: 30, 2021,] based on criteria established in [removed: *Internal] [added: Internal] Control - Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of May [removed: 31, 2020] [added: 30, 2021] and May [removed: 26, 2019,] [added: 31, 2020,] the related consolidated statements of earnings, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended May [removed: 31, 2020,] [added: 30, 2021,] and the related notes (collectively, the consolidated financial statements), and our report dated July [removed: 24, 2020] [added: 23, 2021] expressed an unqualified opinion on those consolidated financial statements.

We have audited the accompanying consolidated balance sheets of Darden Restaurants, Inc. and subsidiaries (the Company) as of May [removed: 31, 2020] [added: 30, 2021] and May [removed: 26, 2019,] [added: 31, 2020,] the related consolidated statements of earnings, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended May [removed: 31, 2020] [added: 30, 2021] and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of May [removed: 31, 2020] [added: 30, 2021] and May [removed: 26, 2019,] [added: 31,2020,] and the results of its operations and its cash flows for each of the years in the three-year period ended May [removed: 31, 2020,] [added: 30, 2021,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of May [removed: 31, 2020,] [added: 30, 2021,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated July [removed: 24, 2020] [added: 23, 2021] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

*Critical Audit [removed: Matters*][added: Matter*]

The critical audit [removed: matters] [added: matter] communicated below [removed: are matters] [added: is a matter] arising from the current period audit of the consolidated financial statements that [removed: were] [added: was] communicated or required to be communicated to the audit committee and that: (1) [removed: relate] [added: relates] to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of [added: a] critical audit [removed: matters] [added: matter] does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matters] [added: matter] below, providing [added: a] separate [removed: opinions] [added: opinion] on the critical audit [removed: matters] [added: matter] or on the accounts or disclosures to which [removed: they relate.][added: it relates.]

As discussed in Notes 1, 4 and 10 to the consolidated financial statements, land, buildings and equipment, net and operating right-of-use assets were [removed: $6.7] [added: $6.6] billion as of May [removed: 31, 2020.][added: 30, 2021.]

We identified the evaluation of [added: indicators of potential] long-lived assets [removed: for] impairment as a critical audit matter.

The [added: following are the] primary procedures we performed to address this critical audit [removed: matter included the following.][added: matter.]

We [added: evaluated the design and] tested [added: the operating effectiveness of] certain internal controls over the Company’s long-lived [removed: assets] [added: asset] impairment process, including controls [removed: related to] [added: over] the [added: identification of indicators of impairment and the] assumptions listed above.

| | [added: | |] Fiscal Year Ended | | | | | | | | | | | [added: | | | |]

| | [added: | |] May [removed: 31, 2020] [added: 30, 2021] | | | | [added: | |] May [removed: 26, 2019] [added: 31, 2020] | | | | [added: | |] May [removed: 27, 2018] [added: 26, 2019] | | |

| Sales | [added: | |] $ | [removed: 7,806.9] [added: 7,196.1] | | | [added: | |] $ | [removed: 8,510.4] [added: 7,806.9] | | | [added: | |] $ | [removed: 8,080.1] [added: 8,510.4] | |

| Costs and expenses: | | | | | | | | | | | | [added: | | | | | |]

| Food and beverage | [removed: 2,240.8] | | [added: 2,072.1] | | [removed: 2,412.5] | | | | [removed: 2,303.1] [added: 2,240.8] | | | [added: | | | 2,412.5 | | |]

| Restaurant labor | [removed: 2,682.6] | | [added: 2,286.3] | | [removed: 2,771.1] | | | | [removed: 2,614.5] [added: 2,682.6] | | | [added: | | | 2,771.1 | | |]

| Restaurant expenses | [removed: 1,475.1] | | [added: 1,344.2] | | [removed: 1,477.8] | | | | [removed: 1,417.1] [added: 1,475.1] | | | [added: | | | 1,477.8 | | |]

| Marketing expenses | [removed: 238.0] | | [added: 91.1] | | [removed: 255.3] | | | | [removed: 252.3] [added: 238.0] | | | [added: | | | 255.3 | | |]

| General and administrative expenses | [removed: 376.4] | | [added: 396.2] | | [removed: 405.5] | | | | [removed: 409.8] [added: 376.4] | | | [added: | | | 405.5 | | |]

| Depreciation and amortization | [removed: 355.9] | | [added: 350.9] | | [removed: 336.7] | | | | [removed: 313.1] [added: 355.9] | | | [added: | | | 336.7 | | |]

| Impairments and disposal of assets, net | [removed: 221.0] | | [added: 6.6] | | [removed: 19.0] | | | | [removed: 3.4] [added: 221.0] | | | [added: | | | 19.0 | | |]

| Goodwill impairment | [removed: 169.2] | | [added: —] | | [removed: —] | | | | [added: 169.2 | | | | | |] — | | |

| Total operating costs and expenses | [added: | |] $ | [removed: 7,759.0] [added: 6,547.4] | | | [added: | |] $ | [removed: 7,677.9] [added: 7,759.0] | | | [added: | |] $ | [removed: 7,313.3] [added: 7,677.9] | |

| [Notes to Consolidated Financial Statements](#idf265839c4244cdbafcce701dde48fcd_127) | | | [49](#idf265839c4244cdbafcce701dde48fcd_127) | | |

July 23, 2021

Such indicators may include, among

others: a significant decline in future cash flows and changes in the expected useful life which relates to the Company’s intent and ability to hold its asset groups for a period that recovers their carrying value.

Subjective auditor judgment was required to evaluate certain assumptions in the Company’s analysis, including future cash flows and the expected useful life.

Adverse changes in these assumptions could have a significant impact on whether an indicator has been identified and could have a material impact on the Company’s consolidated financial statements.

For certain asset groups, we compared the future cash flows used by the Company in its evaluation of indicators of potential long-lived asset impairment to historical results.

We evaluated the expected useful life for certain asset groups by inspecting underlying documents, such as real estate meeting minutes and other documents to assess the Company’s plans to dispose or close asset groups.

We corroborated the Company’s plans with others in the organization who are responsible for, and have authority over, disposition and closure activities.

July 23, 2021

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| | | | Common Stock And Surplus | | | | | | | | | | | | | | | Treasury Stock | | | | | | | | | | | | | | | | | | | | | | | |

| Stock option exercises | | | 0.7 | | | 36.6 | | | | | | — | | | | | | — | | | — | | | | | | — | | | | | | — | | | | | | 36.6 | | |

| Repurchases of common stock | | | (0.4) | | | (6.3) | | | | | | (39.1) | | | | | | — | | | — | | | | | | — | | | | | | — | | | | | | (45.4) | | |

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| Other | | | — | | | 1.6 | | | | | | (7.5) | | | | | | — | | | — | | | | | | — | | | | | | — | | | | | | (5.9) | | |

| Balances at May 30, 2021 | | | 130.8 | | | $ | 2,286.6 | | | | | $ | 522.3 | | | | | — | | | $ | — | | | | | $ | 4.2 | | | | | $ | — | | | | | $ | 2,813.1 | |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

In late April 2020, state and local governments began to allow us to open dining rooms at limited capacities, along with other operating restrictions.

As a result, we began fiscal 2021 with significant limitations on our operations, which over the course of the fiscal year varied widely from time to time, state to state and city to city.

During November 2020, rising case rates resulted in certain jurisdictions implementing restrictions that again reduced dining room capacity or mandated the re-closure of dining rooms.

Once COVID-19 vaccines were approved and moved into wider distribution in the United States in early 2021, public health conditions improved and almost all of the COVID-19 restrictions on businesses have eased.

As of the date of this report, all of our restaurants were able to open their dining rooms to some extent and few capacity restrictions or other COVID-19 restrictions remained in place in the United States.

However, it is possible additional outbreaks could require us to again reduce our capacity or limit or suspend our in-restaurant dining operations.

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During fiscal 2021, we elected to perform a qualitative assessment for our annual review of goodwill and trademarks to determine whether or not indicators of impairment exist.

In considering the qualitative approach related to goodwill, we evaluated factors including, but not limited to, COVID-19, macro-economic conditions, market and industry conditions, commodity cost fluctuations, competitive environment, share price performance, results of prior impairment tests, operational stability, the overall financial performance of the reporting units and the impacts of discount rates.

| | |

| --- | --- |

| | |

July 24, 2020

If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount

of the asset group exceeds the fair value of the asset group.

Based upon the analyses performed primarily resulting from several coronavirus disease 2019 (COVID-19) pandemic factors, including significant reduction in guest traffic at the restaurants, state and local government mandated restrictions including suspension of dine-in operations, and resulting changes in consumer behavior, the Company recognized pre-tax impairment charges for long-lived assets of $51.2 million in fiscal 2020.

Subjective auditor judgment was required to evaluate the effects of expected useful lives of the long-lived assets and the forecasted cash flows to be generated by the asset groups, specifically forecasted sales and forecasted expenses, including the effects of the COVID-19 pandemic and resulting duration of the economic downturn.

Furthermore, in determining the fair value of certain long-lived assets, involvement of valuation professionals with specialized skills and knowledge was required to assess the market rental rates, rental growth rates and discount rates in certain right-of-use assets.

Involvement of valuation professionals with specialized skills and knowledge was also required to evaluate certain discount rates used in the impairment models.

To test the Company’s impairment assessment, we evaluated the Company’s ability to accurately forecast future sales and expenses by comparing actual results to the Company’s historical forecasts.

We performed sensitivity analyses over future sales and expense assumptions and expected useful lives to evaluate the change in the impairment analysis of each asset group resulting from changes in these specific assumptions.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

| | |

| --- | --- |

| – | assessing the methodology used to determine the fair value of right-of-use assets; |

| | |

| --- | --- |

| – | evaluating market rental rates in certain right-of-use assets by comparing them against rate ranges that were independently developed using publicly available market data for comparable entities; |

| | |

| --- | --- |

| – | evaluating rental growth rates and discount rates in certain right-of-use assets by comparing them to publicly available market data for comparable entities and assessing the resulting rates; |

| | |

| --- | --- |

| – | assessing the estimate of certain right-of-use assets’ fair value considering the application of the Company’s rental rates, rental growth rates, and discount rates; and |

| | |

| --- | --- |

| – | evaluating the discount rates by comparing them to publicly available market data for comparable entities and assessing the resulting discount rates. |

*Evaluation of goodwill and trademarks for impairment*

As discussed in Note 1 to the consolidated financial statements, the Company performs goodwill and trademarks impairment testing on an annual basis as of the first day of the fiscal fourth quarter or when a triggering event occurs.

The Company identified a triggering event requiring an interim impairment assessment of goodwill and trademarks at the end of the fourth quarter of 2020 upon consideration of the current overall economic conditions resulting from several COVID-19 pandemic factors.

Such factors include significant reduction in guest traffic at the restaurants, state and local government mandated restrictions including suspension of dine-in operations, and resulting changes in consumer behavior impacting the Company.

The evaluation of goodwill and trademarks impairment requires considerable judgment and is sensitive to changes in underlying assumptions and factors.

A combination of the income and market approach was used to determine the fair value of goodwill and the income approach was used to determine the fair value of trademarks.

The goodwill and trademarks balance as of May 31, 2020 was $ 1.0 billion and $805.9 million, respectively.

Based upon the analysis performed, the Company recognized pre-tax impairment charges for goodwill and trademarks of $314.2 million in fiscal 2020 for Cheddar’s Scratch Kitchen.

We identified the evaluation of goodwill and trademarks impairment analysis as a critical audit matter.

There was a high degree of auditor judgment required in evaluating certain assumptions used to estimate the fair value of goodwill and trademarks.

Specifically, the evaluation of projected sales, operating results, and future cash flows, including the effects of the COVID-19 pandemic and resulting duration of the economic downturn, market multiples, discount rates and royalty rates were subjective to test.

Additionally, we involved the use of valuation professionals with specialized skills and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act) as of May [removed: 31, 2020,] [added: 30, 2021,] the end of the period covered by this report.

Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of May [removed: 31, 2020.][added: 30, 2021.]

During the fiscal quarter ended May [removed: 31, 2020,] [added: 30, 2021,] there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During the first quarter of fiscal 2020, in conjunction with our adoption of the new lease accounting guidance, we implemented a new lease accounting system and modified our related internal controls.

| | |

| --- | --- |

The information contained in the sections entitled [added: “Executive Officers of the Registrant,”] “Proposal 1 – Election of Eight Directors From the Named Director Nominees,” “Meetings of the Board of Directors and Its Committees,” “Corporate Governance and Board Administration” and [removed: “Section] [added: “Delinquent Section] 16(a) [removed: Beneficial Ownership Reporting Compliance”] [added: Reports”] in our definitive Proxy Statement for our [removed: 2020] [added: 2021] Annual Meeting of Shareholders is incorporated herein by reference.

The Corporate Governance Guidelines and committee charters are available on our website at www.darden.com under the [removed: Investor Relations] [added: Investors] - [removed: Corporate] Governance tab and in print free of charge to any shareholder who requests them.

Information regarding executive officers is contained in Part I above under the heading “Executive Officers of the Registrant.”

| | |

| --- | --- |

The information contained in the sections entitled “Director Compensation,” “Executive Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Compensation Committee Interlocks and Insider Participation” [added: and “Corporate Governance and Board Administration” in our definitive Proxy Statement for our 2021 Annual Meeting of Shareholders is incorporated herein by reference.]

and “Corporate Governance and Board Administration” in our definitive Proxy Statement for our 2020 Annual Meeting of Shareholders is incorporated herein by reference.

| | |

| --- | --- |

The information contained in the sections entitled “Stock Ownership of Principal Shareholders,” “Stock Ownership of Management” and [removed: “Executive Compensation – Equity] [added: “Equity] Compensation Plan Information” in our definitive Proxy Statement for our [removed: 2020] [added: 2021] Annual Meeting of Shareholders is incorporated herein by reference.

| | |

| --- | --- |

The information contained in the sections entitled “Meetings of the Board of Directors and Its Committees” and “Corporate Governance and Board Administration” in our definitive Proxy Statement for our [removed: 2020] [added: 2021] Annual Meeting of Shareholders is incorporated herein by reference.

| | |

| --- | --- |

The information contained in the section entitled “Independent Registered Public Accounting Firm Fees and Services” in our definitive Proxy Statement for our [removed: 2020] [added: 2021] Annual Meeting of Shareholders is incorporated herein by reference.

| | |

| --- | --- |

| (a) | [added: | |] Documents filed as part of this report: | [added: | |]

| | [added: | |] 1. Financial Statements: | [added: | |]

| | [added: | |] All financial statements. See Index to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. | [added: | |]

| | [added: | |] 2. Financial Statement Schedules: | [added: | |]

| | [added: | |] Not applicable. | [added: | |]

| | [added: | |] 3. Exhibits: | [added: | |]

| Date: | [added: | |] July [removed: 24, 2020] [added: 23, 2021] | | [added: | | | |] DARDEN RESTAURANTS, INC. | | | [added: | | | | | |]

| | | | [added: | | | | | |] By: | | [added: | | | |] /s/ Eugene I. Lee, Jr. | [added: | |]

| | | | | | [added: | | | | | | | | | |] Eugene I. Lee, Jr., [removed: President] [added: Chairman] and Chief Executive Officer | [added: | |]

| [removed: |] Signature | | [added: | | | |] Title | | [added: | | | |] Date | [added: | |]

| [removed: |] /s/ Eugene I. Lee, Jr. | | [added: | | | |] Director, [removed: President] [added: Chairman] and Chief Executive Officer (Principal executive officer) | | [added: | | | |] July [removed: 24, 2020] [added: 23, 2021] | [added: | |]

| [removed: |] Eugene I. Lee, Jr. | | | | | [added: | | | | | | | | | |]

| [removed: |] /s/ [removed: Ricardo Cardenas] [added: Rajesh Vennam] | | [added: | | | |] Senior Vice President, Chief Financial Officer [added: and Treasurer] (Principal financial officer) | | [added: | | | |] July [removed: 24, 2020] [added: 23, 2021] | [added: | |]

| [removed: |] /s/ John W. Madonna | | [added: | | | |] Senior Vice President, Corporate Controller (Principal accounting officer) | | [added: | | | |] July [removed: 24, 2020] [added: 23, 2021] | [added: | |]

| [removed: |] John W. Madonna | | | | | [added: | | | | | | | | | |]

| [removed: |] /s/ Margaret Shan Atkins* | | [added: | | | |] Director | | | [added: | | | | | |]

| [removed: |] Margaret Shan Atkins | | | | | [added: | | | | | | | | | |]

| [removed: |] /s/ James P. Fogarty* | | [added: | | | |] Director | | | [added: | | | | | |]

| [removed: |] James P. Fogarty | | | | | [added: | | | | | | | | | |]

| [removed: |] /s/ Cynthia T. Jamison* | | [added: | | | |] Director | | | [added: | | | | | |]

| [removed: |] Cynthia T. Jamison | | | | | [added: | | | | | | | | | |]

| [removed: |] /s/ Nana Mensah* | | [added: | | | |] Director | | | [added: | | | | | |]

| [removed: |] Nana Mensah | | | | | [added: | | | | | | | | | |]

| [removed: |] /s/ William S. Simon* | | [added: | | | |] Director | | | [added: | | | | | |]

| [removed: |] William S. Simon | | | | | [added: | | | | | | | | | |]

| [removed: |] /s/ Timothy J. Wilmott* | | [added: | | | |] Director | | | [added: | | | | | |]

| [removed: |] Timothy J. Wilmott | | | | | [added: | | | | | | | | | |]

| [removed: |] /s/ Charles M. Sonsteby* | | [removed: Chairman of the Board and] [added: | | | |] Director | | | [added: | | | | | |]