filings.toolsItem 1. Financial Statements (Unaudited)
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Item 1. Financial Statements (Unaudited)
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share data)
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||
| August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||
| Sales | $ | 3,044.7 | $ | 2,757.0 | |||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Food and beverage | 929.1 | 846.7 | |||||||||||||||||||||
| Restaurant labor | 988.0 | 889.3 | |||||||||||||||||||||
| Restaurant expenses | 504.2 | 453.7 | |||||||||||||||||||||
| Pre-opening costs | 5.9 | 4.5 | |||||||||||||||||||||
| Marketing expenses | 49.1 | 44.7 | |||||||||||||||||||||
| General and administrative expenses | 136.1 | 126.4 | |||||||||||||||||||||
| Depreciation and amortization | 135.1 | 121.5 | |||||||||||||||||||||
| Impairments and (gain) loss on disposal of assets, net | (42.0) | 1.0 | |||||||||||||||||||||
| Total operating costs and expenses | $ | 2,705.5 | $ | 2,487.8 | |||||||||||||||||||
| Operating income | 339.2 | 269.2 | |||||||||||||||||||||
| Interest, net | 45.4 | 37.1 | |||||||||||||||||||||
| Earnings before income taxes | 293.8 | 232.1 | |||||||||||||||||||||
| Income tax expense | 35.9 | 24.5 | |||||||||||||||||||||
| Earnings from continuing operations | $ | 257.9 | $ | 207.6 | |||||||||||||||||||
| Losses from discontinued operations, net of tax benefit of $0.4 and $0.4, respectively | (0.1) | (0.4) | |||||||||||||||||||||
| Net earnings | $ | 257.8 | $ | 207.2 | |||||||||||||||||||
| Basic net earnings per share: | |||||||||||||||||||||||
| Earnings from continuing operations | $ | 2.21 | $ | 1.75 | |||||||||||||||||||
| Losses from discontinued operations | — | — | |||||||||||||||||||||
| Net earnings | $ | 2.21 | $ | 1.75 | |||||||||||||||||||
| Diluted net earnings per share: | |||||||||||||||||||||||
| Earnings from continuing operations | $ | 2.19 | $ | 1.74 | |||||||||||||||||||
| Losses from discontinued operations | — | — | |||||||||||||||||||||
| Net earnings | $ | 2.19 | $ | 1.74 | |||||||||||||||||||
| Average number of common shares outstanding: | |||||||||||||||||||||||
| Basic | 116.7 | 118.5 | |||||||||||||||||||||
| Diluted | 117.6 | 119.2 |
See accompanying notes to our unaudited consolidated financial statements.
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||
| August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||
| Net earnings | $ | 257.8 | $ | 207.2 | |||||||||||||||||||
| Foreign currency adjustment | (4.6) | — | |||||||||||||||||||||
| Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $0.0 and $0.5, respectively | (1.3) | 0.2 | |||||||||||||||||||||
| Net unamortized gain (loss) arising during the period, including amortization of unrecognized net actuarial gain (loss), net of taxes of $0.0 and $0.1, respectively, related to pension and other post-employment benefits | 0.1 | 0.1 | |||||||||||||||||||||
| Other comprehensive income | $ | (5.8) | $ | 0.3 | |||||||||||||||||||
| Total comprehensive income | $ | 252.0 | $ | 207.5 |
See accompanying notes to our unaudited consolidated financial statements.
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
| August 24, 2025 | May 25, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 211.0 | $ | 240.0 | |||||||
| Receivables, net | 94.1 | 93.8 | |||||||||
| Inventories | 309.6 | 311.6 | |||||||||
| Prepaid income taxes | 155.7 | 135.6 | |||||||||
| Prepaid expenses and other current assets | 162.4 | 156.7 | |||||||||
| Total current assets | $ | 932.8 | $ | 937.7 | |||||||
| Land, buildings and equipment, net of accumulated depreciation and amortization of $4,180.6 and $4,066.4, respectively | 4,826.6 | 4,716.0 | |||||||||
| Operating lease right-of-use assets | 3,608.0 | 3,555.9 | |||||||||
| Goodwill | 1,658.2 | 1,659.4 | |||||||||
| Trademarks | 1,346.4 | 1,346.4 | |||||||||
| Other assets | 387.6 | 371.6 | |||||||||
| Total assets | $ | 12,759.6 | $ | 12,587.0 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 468.7 | $ | 439.6 | |||||||
| Short-term debt | 142.0 | — | |||||||||
| Accrued payroll | 180.0 | 207.5 | |||||||||
| Accrued income taxes | 1.3 | 4.7 | |||||||||
| Other accrued taxes | 93.0 | 83.0 | |||||||||
| Unearned revenues | 562.7 | 599.4 | |||||||||
| Other current liabilities | 899.1 | 913.3 | |||||||||
| Total current liabilities | $ | 2,346.8 | $ | 2,247.5 | |||||||
| Long-term debt | 2,135.1 | 2,128.9 | |||||||||
| Deferred income taxes | 333.0 | 278.8 | |||||||||
| Operating lease liabilities - non-current | 3,878.3 | 3,816.9 | |||||||||
| Other liabilities | 1,840.8 | 1,803.6 | |||||||||
| Total liabilities | $ | 10,534.0 | $ | 10,275.7 | |||||||
| Stockholders’ equity: | |||||||||||
| Common stock and surplus | $ | 2,300.2 | $ | 2,295.6 | |||||||
| Retained earnings (deficit) | (100.6) | (16.1) | |||||||||
| Accumulated other comprehensive income | 26.0 | 31.8 | |||||||||
| Total stockholders’ equity | $ | 2,225.6 | $ | 2,311.3 | |||||||
| Total liabilities and stockholders’ equity | $ | 12,759.6 | $ | 12,587.0 |
See accompanying notes to our unaudited consolidated financial statements.
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Three Months Ended August 24, 2025 and August 25, 2024
(In millions)
(Unaudited)
| Common Stock And Surplus | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||
| Balance at May 25, 2025 | 117.0 | $ | 2,295.6 | $ | (16.1) | $ | 31.8 | $ | 2,311.3 | ||||||||||||||||||||||||||||||||
| Net earnings | — | — | 257.8 | — | 257.8 | ||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | (5.8) | (5.8) | ||||||||||||||||||||||||||||||||||||
| Dividends declared ($1.50 per share) | — | — | (176.6) | — | (176.6) | ||||||||||||||||||||||||||||||||||||
| Stock option exercises | 0.1 | 5.5 | — | — | 5.5 | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | 14.1 | — | — | 14.1 | ||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | (0.9) | (17.0) | (165.7) | — | (182.7) | ||||||||||||||||||||||||||||||||||||
| Issuance of stock under Employee Stock Purchase Plan and other plans | 0.2 | 3.3 | — | — | 3.3 | ||||||||||||||||||||||||||||||||||||
| Other | — | (1.3) | — | — | (1.3) | ||||||||||||||||||||||||||||||||||||
| Balance at August 24, 2025 | 116.4 | $ | 2,300.2 | $ | (100.6) | $ | 26.0 | $ | 2,225.6 |
| Balance at May 26, 2024 | 118.9 | $ | 2,252.4 | $ | (35.5) | $ | 25.6 | $ | 2,242.5 | ||||||||||||||||||||||||||||||||
| Net earnings | — | — | 207.2 | — | 207.2 | ||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | 0.3 | 0.3 | ||||||||||||||||||||||||||||||||||||
| Dividends declared ($1.40 per share) | — | — | (166.4) | — | (166.4) | ||||||||||||||||||||||||||||||||||||
| Stock option exercises | 0.1 | 6.6 | — | — | 6.6 | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | 24.1 | — | — | 24.1 | ||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | (1.2) | (22.6) | (149.8) | — | (172.4) | ||||||||||||||||||||||||||||||||||||
| Issuance of stock under Employee Stock Purchase Plan and other plans | 0.2 | 3.1 | — | — | 3.1 | ||||||||||||||||||||||||||||||||||||
| Other | — | (1.3) | — | — | (1.3) | ||||||||||||||||||||||||||||||||||||
| Balance at August 25, 2024 | 118.0 | $ | 2,262.3 | $ | (144.5) | $ | 25.9 | $ | 2,143.7 |
See accompanying notes to our unaudited consolidated financial statements.
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| Three Months Ended | |||||||||||
| August 24, 2025 | August 25, 2024 | ||||||||||
| Cash flows—operating activities | |||||||||||
| Net earnings | $ | 257.8 | $ | 207.2 | |||||||
| Losses from discontinued operations, net of tax | 0.1 | 0.4 | |||||||||
| Adjustments to reconcile net earnings from continuing operations to cash flows: | |||||||||||
| Depreciation and amortization | 135.1 | 121.5 | |||||||||
| Impairments and (gain) loss on disposal of assets, net | (42.0) | 1.0 | |||||||||
| Stock-based compensation expense | 25.0 | 34.7 | |||||||||
| Change in current assets and liabilities | (79.2) | (77.8) | |||||||||
| Contributions to pension and postretirement plans | (0.4) | (0.4) | |||||||||
| Deferred income taxes | 53.9 | 5.0 | |||||||||
| Change in other assets and liabilities | 5.4 | (11.0) | |||||||||
| Other, net | (13.2) | (7.4) | |||||||||
| Net cash provided by operating activities of continuing operations | $ | 342.5 | $ | 273.2 | |||||||
| Cash flows—investing activities | |||||||||||
| Purchases of land, buildings and equipment | (174.1) | (145.2) | |||||||||
| Proceeds from disposal of land, buildings and equipment | 20.3 | — | |||||||||
| Purchases of capitalized software and other assets | (5.5) | (6.3) | |||||||||
| Other, net | — | 1.8 | |||||||||
| Net cash used in investing activities of continuing operations | $ | (159.3) | $ | (149.7) | |||||||
| Cash flows—financing activities | |||||||||||
| Proceeds from issuance of common stock | 8.8 | 9.7 | |||||||||
| Dividends paid | (175.1) | (166.0) | |||||||||
| Repurchases of common stock | (182.7) | (172.4) | |||||||||
| Proceeds from the issuance of commercial paper, net | 142.0 | 207.1 | |||||||||
| Principal payments on finance leases, net | (5.2) | (5.1) | |||||||||
| Net cash used in financing activities of continuing operations | $ | (212.2) | $ | (126.7) | |||||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | (29.0) | (3.2) | |||||||||
| Cash, cash equivalents, and restricted cash - beginning of period | 254.5 | 220.1 | |||||||||
| Cash, cash equivalents, and restricted cash - end of period | $ | 225.5 | $ | 216.9 | |||||||
| Reconciliation of cash, cash equivalents, and restricted cash: | August 24, 2025 | August 25, 2024 | ||||||||||||
| Cash and cash equivalents | $ | 211.0 | $ | 192.5 | ||||||||||
| Restricted cash included in prepaid expenses and other current assets | 14.5 | 24.4 | ||||||||||||
| Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ | 225.5 | $ | 216.9 |
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)
| Three Months Ended | |||||||||||
| August 24, 2025 | August 25, 2024 | ||||||||||
| Cash flows from changes in current assets and liabilities | |||||||||||
| Receivables, net | 20.2 | 15.3 | |||||||||
| Inventories | 2.0 | (7.7) | |||||||||
| Prepaid expenses and other current assets | (9.4) | (26.2) | |||||||||
| Accounts payable | 20.1 | 8.0 | |||||||||
| Accrued payroll | (27.5) | (29.1) | |||||||||
| Prepaid/accrued income taxes | (22.5) | 13.7 | |||||||||
| Other accrued taxes | 10.0 | 10.5 | |||||||||
| Unearned revenues | (36.6) | (37.1) | |||||||||
| Other current liabilities | (35.5) | (25.2) | |||||||||
| Change in current assets and liabilities | $ | (79.2) | $ | (77.8) |
See accompanying notes to our unaudited consolidated financial statements.
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
**Note 1.**Basis of Presentation
Darden Restaurants, Inc. (we, our, Darden or the Company) owns and operates full-service dining restaurants in the United States under the trade names Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Chuy’s®, Yard House®, Ruth’s Chris Steak House® (Ruth’s Chris), The Capital Grille®, Seasons 52®, Eddie V’s Prime Seafood® (Eddie V’s), Bahama Breeze®, and The Capital Burger®. As of August 24, 2025, through subsidiaries, we own and operate all of our restaurants in the United States, except for 5 restaurants we manage through joint venture or other contractual agreements and 85 franchised restaurants. We also have 77 franchised restaurants in operation located in Canada, Latin America, the Caribbean, Asia, and the Middle East.
We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. We operate on a 52/53-week fiscal year which ends on the last Sunday in May. Our fiscal year ending May 31, 2026 will contain 53 weeks of operation. Operating results for interim periods presented are not necessarily indicative of results that may be expected for the full fiscal year.
These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 25, 2025. We prepare our consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and costs and expenses during the reporting period. Actual results could differ from those estimates.
We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation.
On July 14, 2025, we closed on the sale of eight Olive Garden locations in Canada to Recipe Unlimited Corporation (Recipe). All gains and losses on disposition have been aggregated in impairments and (gain) loss on disposal of assets, net on our consolidated statement of earnings. See Note 8 for additional information. At the closing, Darden and Recipe entered into an area development and franchise agreement, pursuant to which Recipe will operate under the Olive Garden tradename and will pay royalties for use of the tradename.
In our June 2025 earnings call, we announced the decision to explore strategic alternatives for the Bahama Breeze brand, which includes 28 locations owned and operated by Darden and one franchise location. We are exploring a sale of the brand or conversions of some or all of these locations to other Darden brands. The Bahama Breeze assets did not meet the criteria to be classified as held for sale as of the end of the first fiscal quarter of 2026.
Recently Issued Accounting Standards Adopted
As of May 25, 2025, we adopted Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The adoption of ASU 2023-07 did not impact the Company’s results of operations, cash flow, or financial condition. See Note 7 for the Company’s segment disclosures.
Recently Issued Accounting Standards Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which updates income tax disclosures related to the rate reconciliation and requires disclosure of income taxes paid by jurisdiction. The amendments also provide further disclosure comparability. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied prospectively; however, retrospective application is permitted. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. We plan to adopt in the fourth quarter of fiscal 2026.
In March 2024, the SEC adopted its final rules intended to enhance and standardize climate-related disclosures in registration statements and annual reports. The new rules would require disclosure of material climate-related risks, including disclosure of the Board of Directors’ oversight and risk management activities, the material impacts of these risks to the Company and the quantification of material impacts to the Company as a result of severe weather events and other natural
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
conditions. The rules also require disclosure of material greenhouse gas emissions and any material climate-related targets and goals. The new rules were scheduled to be effective for annual reporting periods beginning in fiscal year 2026, except for the greenhouse gas emissions disclosures which were scheduled to be effective for annual reporting periods beginning in fiscal year 2027. On April 4, 2024, the SEC issued a voluntary stay on its final rules until legal challenges to the rules are addressed, and on March 27, 2025, the SEC voted to end its defense of the rules and withdrew from the litigation. The Company continues to monitor the status of these rules.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires detailed disclosure amounts for purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion and amortization as part of oil and gas producing activities in each relevant expense caption on the income statement. The ASU requires companies to include amounts already required by GAAP in the same disclosure, provide a qualitative description of remaining amounts not separately disaggregated, and disclose the total selling expenses along with the definition of selling expenses in annual reports. The amendment is effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. The amendment should be applied prospectively; however, retrospective application is permitted. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. We plan to adopt the amendment in fiscal 2028.
**Note 2.**Acquisition of Chuy’s
On October 11, 2024, we acquired 100 percent of the equity interest of Chuy’s Holdings, Inc (Chuy’s) in an all-cash transaction of $649.1 million in total consideration, $613.7 million in net cash consideration, inclusive of the $35.4 million of cash on Chuy’s balance sheet at closing. The acquired operations of Chuy’s included 103 restaurants. The results of Chuy’s operations are included in our consolidated financial statements from the date of acquisition.
The assets and liabilities of Chuy’s were recorded at their respective fair values as of the date of acquisition. Through internal studies and third-party valuations, we have determined the fair value of these assets, including land, buildings and equipment, intangible assets, and income tax assets and liabilities. The fair values set forth below are based on the results of those valuations.
The final allocation of the purchase price is as follows:
| Balances at | Balances at | |||||||||||||||||||
| (in millions) | May 25, 2025 | Adjustments | August 24, 2025 | |||||||||||||||||
| Cash and cash equivalents | $ | 35.4 | $ | — | $ | 35.4 | ||||||||||||||
| Other current assets | 10.5 | — | 10.5 | |||||||||||||||||
| Land, buildings and equipment | 197.3 | — | 197.3 | |||||||||||||||||
| Operating lease right-of-use assets | 331.9 | — | 331.9 | |||||||||||||||||
| Trademark | 198.4 | — | 198.4 | |||||||||||||||||
| Other assets | 6.1 | — | 6.1 | |||||||||||||||||
| Goodwill | 268.4 | (1.2) | 267.2 | |||||||||||||||||
| Total assets acquired | $ | 1,048.0 | $ | (1.2) | $ | 1,046.8 | ||||||||||||||
| Current liabilities | 34.4 | (0.4) | 34.0 | |||||||||||||||||
| Deferred income taxes | 42.9 | (0.8) | 42.1 | |||||||||||||||||
| Operating lease liabilities - non-current | 321.6 | — | 321.6 | |||||||||||||||||
| Total liabilities assumed | $ | 398.9 | $ | (1.2) | $ | 397.7 | ||||||||||||||
| Net assets acquired | $ | 649.1 | $ | — | $ | 649.1 |
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill in the amount of $267.2 million. The portion of the purchase price attributable to goodwill represents benefits expected because of the acquisition, including sales and unit growth opportunities in addition to supply-chain and support-cost synergies. The trademark has an indefinite life based on the expected use of the asset and the regulatory and economic environment within which it is being used. The trademark represents a highly respected brand with positive connotations, and we intend to cultivate and protect the use of this brand. Goodwill and indefinite-lived trademarks are not amortized but are reviewed annually for impairment or more frequently if indicators of impairment exist. Buildings and equipment are depreciated over a period of 1-30 years.
As a result of the acquisition and related integration efforts, we incurred expenses of approximately $3.6 million ($2.7 million, net of tax) during the three months ended August 24, 2025, which are included in general and administrative expenses in our consolidated statements of earnings.
Note 3. Revenue Recognition
Deferred revenue liabilities from contracts with customers included on our accompanying consolidated balance sheets was comprised of the following:
| (in millions) | August 24, 2025 | May 25, 2025 | ||||||||||||
| Unearned revenues | ||||||||||||||
| Deferred gift card revenue | $ | 588.3 | $ | 628.8 | ||||||||||
| Deferred gift card discounts | (26.2) | (30.1) | ||||||||||||
| Other | 0.6 | 0.7 | ||||||||||||
| Total | $ | 562.7 | $ | 599.4 | ||||||||||
| Other liabilities | ||||||||||||||
| Deferred franchise fees - non-current | $ | 11.5 | $ | 5.3 |
The following table presents a rollforward of deferred gift card revenue:
| Three Months Ended | ||||||||||||||||||||||||||
| (in millions) | August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||||
| Beginning balance | $ | 628.8 | $ | 620.6 | ||||||||||||||||||||||
| Sale of Olive Garden Canada gift card balances | (0.4) | — | ||||||||||||||||||||||||
| Activations | 121.8 | 122.4 | ||||||||||||||||||||||||
| Redemptions and breakage | (161.9) | (163.5) | ||||||||||||||||||||||||
| Ending balance | $ | 588.3 | $ | 579.5 |
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4. Additional Financial Information
Supplemental Balance Sheet Information
The components of lease assets and liabilities on the consolidated balance sheet were as follows:
| (in millions) | Balance Sheet Classification | August 24, 2025 | May 25, 2025 | |||||||||||||||||
| Operating lease right-of-use assets | Operating lease right-of-use assets | $ | 3,608.0 | $ | 3,555.9 | |||||||||||||||
| Finance lease right-of-use assets | Land, buildings and equipment, net | 1,337.4 | 1,294.2 | |||||||||||||||||
| Total lease assets, net | $ | 4,945.4 | $ | 4,850.1 | ||||||||||||||||
| Operating lease liabilities - current | Other current liabilities | $ | 210.9 | $ | 220.1 | |||||||||||||||
| Finance lease liabilities - current | Other current liabilities | 13.1 | 23.8 | |||||||||||||||||
| Operating lease liabilities - non-current | Operating lease liabilities - non-current | 3,878.3 | 3,816.9 | |||||||||||||||||
| Finance lease liabilities - non-current | Other liabilities | 1,636.4 | 1,583.8 | |||||||||||||||||
| Total lease liabilities | $ | 5,738.7 | $ | 5,644.6 |
Supplemental Cash Flow Information
| Cash paid for interest and income taxes were as follows: | Three Months Ended | |||||||||||||
| (in millions) | August 24, 2025 | August 25, 2024 | ||||||||||||
| Interest, net of amounts capitalized | $ | 34.4 | $ | 36.3 | ||||||||||
| Income taxes, net of refunds | (2.7) | 4.6 |
| Non-cash investing and financing activities were as follows: | Three Months Ended | |||||||||||||
| (in millions) | August 24, 2025 | August 25, 2024 | ||||||||||||
| Increase in land, buildings and equipment through accrued purchases | $ | 55.9 | $ | 33.8 | ||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | 20.0 | 7.1 | ||||||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | 55.6 | 35.8 | ||||||||||||
| Net change in right-of-use assets mainly due to reclassification between categories upon modification | 89.3 | 19.9 |
We had restricted cash of $14.5 million as of August 24, 2025 and May 25, 2025, which represents cash held as security for a standby letter of credit. Restricted cash is included in Prepaid Expenses and Other Current Assets on our consolidated balance sheet. See Note 13, Commitments and Contingencies, for further details around standby letters of credit.
Note 5. Income Taxes
The effective income tax rate for continuing operations for the three months ended August 24, 2025 was 12.2 percent compared to an effective income tax rate for the three months ended August 25, 2024 of 10.6 percent. The increase in the tax rate is primarily driven by higher net earnings from continuing operations, offset by the mark to market impacts on hedges related to our deferred compensation programs.
Included in our remaining balance of unrecognized tax benefits is $1.3 million related to tax positions for which it is reasonably possible that the total amounts could change within the next 12 months based on the outcome of examinations or as a result of the expiration of the statute of limitations for specific jurisdictions.
H.R. 1., also known as the One Big Beautiful Bill Act (OBBBA), was enacted on July 4, 2025. The legislation included several provisions that impact the timing and magnitude of certain tax deductions, including restoring 100% bonus depreciation for qualifying property and the immediate expensing of domestic research and development costs. We have applied the provisions impacting our financial position for the three months ended August 24, 2025, and will continue to assess the
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
potential impacts on our financial position, results of operations and cash flows as additional guidance from the OBBBA is issued.
Note 6. Net Earnings per Share
Outstanding stock options, restricted stock and equity-settled performance stock units granted by us represent the only dilutive effect reflected in diluted weighted average shares outstanding, none of which impact the numerator of the diluted net earnings per share computation. Stock options, restricted stock and equity-settled performance stock units excluded from the calculation of diluted net earnings per share because the effect would have been anti-dilutive, were as follows:
| Three Months Ended | ||||||||||||||||||||||||||
| (in millions) | August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||||
| Anti-dilutive stock-based compensation awards | — | 0.3 |
Note 7. Segment Information
We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Chuy’s, Yard House, Ruth’s Chris, The Capital Grille, Seasons 52, Eddie V’s, Bahama Breeze, and The Capital Burger in North America as operating segments. The brands operate principally in the U.S. within full-service dining. We aggregate our operating segments into reportable segments based on a combination of the size, economic characteristics and sub-segment of full-service dining within which each brand operates. We have four reportable segments: (1) Olive Garden, (2) LongHorn Steakhouse, (3) Fine Dining and (4) Other Business.
The Olive Garden segment includes the results of our company-owned Olive Garden restaurants in the U.S and Canada. The LongHorn Steakhouse segment includes the results of our company-owned LongHorn Steakhouse restaurants in the U.S. The Fine Dining segment aggregates our premium brands that operate within the fine-dining sub-segment of full-service dining and includes the results of our company-owned Ruth’s Chris, The Capital Grille and Eddie V’s restaurants in the U.S. The Other Business segment aggregates our remaining brands and includes the results of our company-owned Cheddar’s Scratch Kitchen, Yard House, Chuy’s, Seasons 52, Bahama Breeze, and The Capital Burger restaurants in the U.S. and results from our franchise operations.
External sales are derived principally from food and beverage sales. We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our reportable segments are predominantly in the U.S. There were no material transactions among reportable segments.
Resources are allocated and performance is assessed by the Company’s President and Chief Executive Officer, whom the Company has determined to be its Chief Operating Decision Maker (CODM). Our CODM uses segment profit as the measure for assessing performance of our segments. Segment profit includes revenues and expenses directly attributable to restaurant-level results of operations (sometimes referred to as restaurant-level earnings). Non-cash lease-related expenses from our operating segments are recorded to the corporate level as restaurant expenses (which is a component of segment profit) and depreciation and amortization. Additionally, our lease-related right-of-use assets are not managed or evaluated at the operating segment level, but rather at the corporate level.
During the fourth quarter of 2025, we changed our reporting of segment profit to exclude pre-opening costs in order to better align with our internal reporting and provide a better representation of restaurant-level operating costs. Fiscal 2025 figures were recast for comparability.
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP.
| (in millions) | Olive Garden1 | LongHorn Steakhouse | Fine Dining | Other Business | Corporate | Consolidated | ||||||||||||||||||||||||||||||||
| For the three months ended August 24, 2025 | ||||||||||||||||||||||||||||||||||||||
| Sales | $ | 1,301.1 | $ | 776.4 | $ | 286.5 | $ | 680.7 | $ | — | $ | 3,044.7 | ||||||||||||||||||||||||||
| Food and beverage | 309.9 | 328.6 | 92.5 | 198.1 | — | $ | 929.1 | |||||||||||||||||||||||||||||||
| Restaurant labor | 464.1 | 204.3 | 88.5 | 231.1 | — | $ | 988.0 | |||||||||||||||||||||||||||||||
| Restaurant expenses | 222.7 | 105.3 | 64.6 | 135.4 | (23.8) | $ | 504.2 | |||||||||||||||||||||||||||||||
| Marketing | 36.8 | 3.3 | 2.2 | 6.8 | — | 49.1 | ||||||||||||||||||||||||||||||||
| Segment profit | $ | 267.6 | $ | 134.9 | $ | 38.7 | $ | 109.3 | $ | 23.8 | $ | 574.3 | ||||||||||||||||||||||||||
| Depreciation and amortization | $ | 48.3 | $ | 22.7 | $ | 17.3 | $ | 31.3 | $ | 15.5 | $ | 135.1 | ||||||||||||||||||||||||||
| Impairments and (gain) loss on disposal of assets, net | (42.0) | — | — | — | — | (42.0) | ||||||||||||||||||||||||||||||||
| Pre-opening costs | 1.5 | 1.1 | 1.3 | 1.0 | 1.0 | 5.9 | ||||||||||||||||||||||||||||||||
| Purchases of land, buildings and equipment | 63.2 | 48.9 | 22.0 | 39.5 | 0.5 | 174.1 | ||||||||||||||||||||||||||||||||
| (in millions) | Olive Garden1 | LongHorn Steakhouse | Fine Dining | Other Business | Corporate | Consolidated | ||||||||||||||||||||||||||||||||
| For the three months ended August 25, 2024 | ||||||||||||||||||||||||||||||||||||||
| Sales | $ | 1,209.1 | $ | 713.5 | $ | 278.9 | $ | 555.5 | $ | — | $ | 2,757.0 | ||||||||||||||||||||||||||
| Food and beverage | 291.5 | 298.2 | 90.5 | 166.5 | — | 846.7 | ||||||||||||||||||||||||||||||||
| Restaurant labor | 429.6 | 185.6 | 84.2 | 189.9 | — | 889.3 | ||||||||||||||||||||||||||||||||
| Restaurant expenses | 203.4 | 97.9 | 63.2 | 110.1 | (20.9) | 453.7 | ||||||||||||||||||||||||||||||||
| Marketing | 34.5 | 3.4 | 2.1 | 4.7 | — | 44.7 | ||||||||||||||||||||||||||||||||
| Segment profit | $ | 250.1 | $ | 128.4 | $ | 38.9 | $ | 84.3 | $ | 20.9 | $ | 522.6 | ||||||||||||||||||||||||||
| Depreciation and amortization | $ | 45.3 | $ | 20.3 | $ | 16.8 | $ | 25.7 | $ | 13.4 | $ | 121.5 | ||||||||||||||||||||||||||
| Impairments and (gain) loss on disposal of assets, net | — | — | — | — | 1.0 | 1.0 | ||||||||||||||||||||||||||||||||
| Pre-opening costs | 1.1 | 0.8 | 1.3 | 0.6 | 0.7 | 4.5 | ||||||||||||||||||||||||||||||||
| Purchases of land, buildings and equipment | 55.7 | 36.0 | 26.6 | 27.0 | (0.1) | 145.2 | ||||||||||||||||||||||||||||||||
1 Segment results include sales from the eight Olive Garden Canada locations sold on July 14, 2025.
| (in millions) | August 24, 2025 | May 25, 2025 | ||||||||||||
| Segment Assets | ||||||||||||||
| Olive Garden | $ | 2,930.3 | $ | 2,880.5 | ||||||||||
| LongHorn Steakhouse | 2,145.9 | 2,077.1 | ||||||||||||
| Fine Dining | 2,645.1 | 2,623.5 | ||||||||||||
| Other Business | 3,819.6 | 3,821.0 | ||||||||||||
| Corporate | 1,218.7 | 1,184.9 | ||||||||||||
| Consolidated | $ | 12,759.6 | $ | 12,587.0 |
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A reconciliation of segment profit to earnings from continuing operations before income taxes is below.
| Three Months Ended | ||||||||||||||||||||||||||
| (in millions) | August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||||
| Segment profit | $ | 574.3 | $ | 522.6 | ||||||||||||||||||||||
| Less general and administrative expenses | (136.1) | (126.4) | ||||||||||||||||||||||||
| Less depreciation and amortization | (135.1) | (121.5) | ||||||||||||||||||||||||
| Less impairments and gain (loss) on disposal of assets, net | 42.0 | (1.0) | ||||||||||||||||||||||||
| Less pre-opening costs | (5.9) | (4.5) | ||||||||||||||||||||||||
| Less interest, net | (45.4) | (37.1) | ||||||||||||||||||||||||
| Earnings before income taxes | $ | 293.8 | $ | 232.1 |
Note 8. Impairments and Disposal of Assets
Impairments and (gain) loss on disposal of assets, net, in our accompanying consolidated statements of earnings were comprised of the following:
| Three Months Ended | ||||||||||||||||||||||||||
| (in millions) | August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||||
| Restaurant impairments | $ | — | $ | — | ||||||||||||||||||||||
| Disposal (gains) losses | (42.0) | 0.1 | ||||||||||||||||||||||||
| Other | — | 0.9 | ||||||||||||||||||||||||
| Impairments and (gain) loss on disposal of assets, net | $ | (42.0) | $ | 1.0 |
Disposal (gains) losses for the three months ended August 24, 2025 were related to the sale of the assets of all eight Olive Garden restaurants in Canada and certain liabilities related thereto. Disposal (gains) losses and other impacts for the three months ended August 25, 2024 were primarily related to previously impaired locations and right-of-use asset adjustments on early lease terminations, respectively.
Note 9. Stockholders’ Equity
Accumulated Other Comprehensive Income (AOCI)
The components of AOCI, net of tax, for the three months ended August 24, 2025 were as follows:
| (in millions) | Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Derivatives | Benefit Plan Funding Position | Accumulated Other Comprehensive Income | ||||||||||||||||||||||
| Balance at May 25, 2025 | $ | 4.6 | $ | 30.4 | $ | (3.2) | $ | 31.8 | ||||||||||||||||||
| Gain (loss) | 0.4 | (0.6) | — | (0.2) | ||||||||||||||||||||||
| Reclassification realized in net earnings | (5.0) | (0.7) | 0.1 | (5.6) | ||||||||||||||||||||||
| Balance at August 24, 2025 | $ | — | $ | 29.1 | $ | (3.1) | $ | 26.0 |
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The components of AOCI, net of tax, for the three months ended August 25, 2024 were as follows:
| (in millions) | Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Derivatives | Benefit Plan Funding Position | Accumulated Other Comprehensive Income | ||||||||||||||||||||||
| Balances at May 26, 2024 | $ | 4.6 | $ | 24.5 | $ | (3.5) | $ | 25.6 | ||||||||||||||||||
| Gain (loss) | — | 0.4 | — | 0.4 | ||||||||||||||||||||||
| Reclassification realized in net earnings | — | (0.2) | 0.1 | (0.1) | ||||||||||||||||||||||
| Balance at August 25, 2024 | $ | 4.6 | $ | 24.7 | $ | (3.4) | $ | 25.9 |
The following table presents the amounts and line items in our consolidated statements of earnings where adjustments reclassified from AOCI into net earnings were recorded.
| Amount Reclassified from AOCI into Net Earnings | |||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| (in millions) AOCI Components | Location of Gain (Loss) Recognized in Earnings | August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||||||
| Derivatives | |||||||||||||||||||||||||||||
| Commodity contracts | (1) | $ | (0.3) | $ | (0.4) | ||||||||||||||||||||||||
| Equity contracts | (2) | 0.5 | (0.1) | ||||||||||||||||||||||||||
| Interest rate contracts | (3) | 0.8 | 0.9 | ||||||||||||||||||||||||||
| Foreign exchange forwards | (4) | (0.2) | — | ||||||||||||||||||||||||||
| Total before tax | $ | 0.8 | $ | 0.4 | |||||||||||||||||||||||||
| Tax (expense) benefit | (0.1) | (0.2) | |||||||||||||||||||||||||||
| Net of tax | $ | 0.7 | $ | 0.2 | |||||||||||||||||||||||||
| Benefit plan funding position | |||||||||||||||||||||||||||||
| Recognized net actuarial gain (loss) - pension/postretirement plans | (5) | $ | 0.1 | $ | — | ||||||||||||||||||||||||
| Recognized net actuarial gain (loss) - other plans | (5) | (0.2) | (0.2) | ||||||||||||||||||||||||||
| Total before tax | $ | (0.1) | $ | (0.2) | |||||||||||||||||||||||||
| Tax (expense) benefit | — | 0.1 | |||||||||||||||||||||||||||
| Net of tax | $ | (0.1) | $ | (0.1) | |||||||||||||||||||||||||
| Cumulative translation adjustment | (6) | $ | 5.0 | $ | — | ||||||||||||||||||||||||
| Tax (expense) benefit | — | — | |||||||||||||||||||||||||||
| Net of tax | $ | 5.0 | $ | — |
(1)Primarily included in food and beverage costs and restaurant expenses. See Note 11 for additional details.
(2)Included in general and administrative expenses. See Note 11 for additional details.
(3)Included in interest, net on our consolidated statement of earnings.
(4)Included in impairments and (gain) loss on disposal of assets, net on our consolidated statement of earnings.
(5)Included in the computation of net periodic benefit costs, which is a component of general and administrative expenses.
(6)Included in impairments and (gain) loss on disposal of assets, net on our consolidated statement of earnings.
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 10. Stock-Based Compensation
We grant stock options for a fixed number of shares to certain employees with an exercise price equal to the fair value of the shares at the date of grant. We also grant restricted stock, restricted stock units and performance stock units with a fair value generally determined based on our closing stock price on the date of grant. In addition, we grant cash-settled stock units (Darden stock units) which are classified as liabilities and are marked to market as of the end of each period.
The weighted-average fair value of non-qualified stock options and the related assumptions used in the Black-Scholes option pricing model for options granted during the periods presented, were as follows:
| Three Months Ended | |||||||||||
| August 24, 2025 | August 25, 2024 | ||||||||||
| Weighted-average fair value | $ | 72.10 | $ | 44.79 | |||||||
| Dividend yield | 2.9 | % | 3.6 | % | |||||||
| Expected volatility of stock | 41.3 | % | 40.8 | % | |||||||
| Risk-free interest rate | 4.0 | % | 4.1 | % | |||||||
| Expected option life (in years) | 6.3 | 6.3 | |||||||||
| Weighted-average exercise price per share | $ | 208.51 | $ | 139.43 |
The weighted-average grant date fair value of market-based performance stock units and the related assumptions used in the Monte Carlo simulation to record stock-based compensation for units granted during the periods presented, were as follows:
| Three Months Ended | |||||||||||
| August 24, 2025 | August 25, 2024 | ||||||||||
| Dividend yield (1) | 0.0 | % | 0.0 | % | |||||||
| Expected volatility of stock | 23.7 | % | 26.5 | % | |||||||
| Risk-free interest rate | 3.8 | % | 4.2 | % | |||||||
| Expected life (in years) | 2.9 | 2.9 | |||||||||
| Weighted-average grant date fair value per unit | $ | 274.20 | $ | 181.65 |
(1)Assumes a reinvestment of dividends.
The following table presents a summary of our stock-based compensation activity for the three months ended August 24, 2025.
| (in millions) | Stock Options | Restricted Stock/ Restricted Stock Units | Equity-Settled Performance Stock Units | Cash-Settled Darden Stock Units | ||||||||||||||||||||||
| Outstanding beginning of period | 1.03 | 0.26 | 0.33 | 0.64 | ||||||||||||||||||||||
| Awards granted | 0.11 | 0.04 | 0.08 | 0.12 | ||||||||||||||||||||||
| Awards granted performance impact | — | — | 0.10 | — | ||||||||||||||||||||||
| Awards exercised/vested | (0.06) | (0.05) | (0.15) | (0.19) | ||||||||||||||||||||||
| Awards forfeited | — | — | — | (0.01) | ||||||||||||||||||||||
| Outstanding end of period | 1.08 | 0.25 | 0.36 | 0.56 |
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We recognized expense from stock-based compensation as follows:
| Three Months Ended | ||||||||||||||||||||||||||
| (in millions) | August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||||
| Stock options | $ | 2.7 | $ | 4.8 | ||||||||||||||||||||||
| Restricted stock/restricted stock units | 3.2 | 5.5 | ||||||||||||||||||||||||
| Equity-settled performance stock units | 6.9 | 12.5 | ||||||||||||||||||||||||
| Cash-settled Darden stock units | 10.9 | 10.6 | ||||||||||||||||||||||||
| Employee stock purchase plan | 0.8 | 0.8 | ||||||||||||||||||||||||
| Director compensation program/other | 0.5 | 0.5 | ||||||||||||||||||||||||
| Total stock-based compensation expense | $ | 25.0 | $ | 34.7 |
Note 11. Derivative Instruments and Hedging Activities
We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments as provided by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. We use financial derivatives to manage interest rate, commodity and compensation risks inherent in our business operations. Cash flows related to derivatives are included in operating activities.
By using these instruments, we expose ourselves, from time to time, to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. We minimize this credit risk by entering into transactions with high quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices, or the market price of our common stock. We minimize this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.
We designate commodity contracts and equity forward contracts as cash flow hedging instruments. We have one interest rate swap agreement, which is designated as a fair value hedge of the related debt. Further, we entered into equity forward contracts to hedge the risk of changes in future cash flows associated with recognized, employee-directed investments in our common stock within the non-qualified deferred compensation plan. We did not elect hedge accounting with the expectation that changes in the fair value of the equity forward contracts would offset changes in the fair value of our common stock investments in the non-qualified deferred compensation plan.
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The notional and fair values of our derivative contracts were as follows:
| Fair Values | |||||||||||||||||||||||||||||||||||||||||
| (in millions, except per share data) | Number of Shares Outstanding | Weighted-Average Per Share Forward Rates | Notional Values | Derivative Assets (1) | Derivative Liabilities (1) | ||||||||||||||||||||||||||||||||||||
| August 24, 2025 | August 24, 2025 | May 25, 2025 | August 24, 2025 | May 25, 2025 | |||||||||||||||||||||||||||||||||||||
| Equity forwards: | |||||||||||||||||||||||||||||||||||||||||
| Designated | 0.2 | $168.84 | $ | 35.1 | $ | 0.3 | $ | — | $ | — | $ | 0.8 | |||||||||||||||||||||||||||||
| Not designated | 0.3 | 144.93 | 45.3 | 0.4 | — | — | 2.2 | ||||||||||||||||||||||||||||||||||
| Total equity forwards (2) | $ | 0.7 | $ | — | $ | — | $ | 3.0 | |||||||||||||||||||||||||||||||||
| Commodity contracts: | |||||||||||||||||||||||||||||||||||||||||
| Designated | N/A | N/A | $ | 10.5 | $ | 0.1 | $ | — | $ | 0.4 | $ | 0.9 | |||||||||||||||||||||||||||||
| Not designated | N/A | N/A | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Total commodity contracts (3) | $ | 0.1 | $ | — | $ | 0.4 | $ | 0.9 | |||||||||||||||||||||||||||||||||
| Interest rate related | |||||||||||||||||||||||||||||||||||||||||
| Designated - Fair value hedge | N/A | N/A | $ | 300.0 | $ | — | $ | — | $ | 34.8 | $ | 40.0 | |||||||||||||||||||||||||||||
| Not designated | N/A | N/A | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Total interest rate related | $ | — | $ | — | $ | 34.8 | $ | 40.0 | |||||||||||||||||||||||||||||||||
| Foreign exchange forwards | |||||||||||||||||||||||||||||||||||||||||
| Designated | N/A | N/A | $ | — | $ | — | $ | — | $ | 0.2 | |||||||||||||||||||||||||||||||
| Not designated | N/A | N/A | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Total foreign exchange forwards | $ | — | $ | — | $ | — | $ | 0.2 | |||||||||||||||||||||||||||||||||
| Total derivative contracts | $ | 0.8 | $ | — | $ | 35.2 | $ | 44.1 |
(1)Derivative assets and liabilities are included in receivables, net and other current liabilities, as applicable, on our consolidated balance sheets.
(2)Designated and undesignated equity forwards extend through July 2029.
(3)Commodity contracts extend through June 2026.
The effects of derivative instruments accounted for as cash flow hedging instruments in the consolidated statements of earnings were as follows:
| Amount of Gain (Loss) Recognized in AOCI | Amount of Gain (Loss) Reclassified from AOCI to Earnings | |||||||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||
| (in millions) | August 24, 2025 | August 25, 2024 | August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||||||||||||||
| Equity (1) | $ | (0.8) | $ | 1.7 | $ | 0.5 | $ | (0.1) | ||||||||||||||||||||||||||||||
| Commodity (2) | 0.3 | (1.4) | (0.3) | (0.4) | ||||||||||||||||||||||||||||||||||
| Interest rate (3) | — | (0.3) | 0.8 | 0.9 | ||||||||||||||||||||||||||||||||||
| Foreign exchange forwards (4) | — | — | (0.2) | — | ||||||||||||||||||||||||||||||||||
| Total | $ | (0.5) | $ | — | $ | 0.8 | $ | 0.4 |
(1)Location of the gain (loss) reclassified from AOCI to earnings is general and administrative expenses.
(2)Location of the gain (loss) reclassified from AOCI to earnings is food and beverage costs and restaurant expenses.
(3)Location of the gain (loss) reclassified from AOCI to earnings is interest, net.
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(4)Location of the gain (loss) reclassified from AOCI to earnings is impairments and (gain) loss on disposal of assets, net.
The effects of derivative instruments in fair value hedging relationships in the consolidated statement of earnings were as follows:
| Amount of Gain (Loss) Recognized in Earnings on Derivatives | Amount of Gain (Loss) Recognized in Earnings on Related Hedged Item | |||||||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||
| (in millions) | August 24, 2025 | August 25, 2024 | August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||||||||||||||
| Interest rate (1)(2) | $ | 5.2 | $ | 14.6 | $ | (5.2) | $ | (14.6) | ||||||||||||||||||||||||||||||
(1) Location of the gain (loss) recognized in earnings on derivatives and related hedged item is interest, net.
(2) Hedged item in fair value hedge relationship is debt.
The effects of derivatives not designated as hedging instruments in the consolidated statements of earnings were as follows:
| Amount of Gain (Loss) Recognized in Earnings | ||||||||||||||||||||||||||
| (in millions) | Three Months Ended | |||||||||||||||||||||||||
| Location of Gain (Loss) Recognized in Earnings on Derivatives | August 24, 2025 | August 25, 2024 | ||||||||||||||||||||||||
| General and administrative expenses | 3.1 | 2.5 | ||||||||||||||||||||||||
Based on the fair value of our derivative instruments designated as cash flow hedges as of August 24, 2025, we expect to reclassify $5.3 million of net gains on derivative instruments from AOCI to earnings during the next 12 months based on the maturity of our contracts. However, the amounts ultimately realized in earnings may change and will be dependent on the fair value of the contracts on the respective settlement dates.
Note 12. Fair Value Measurements
The fair values of cash equivalents, receivables, net, accounts payable and short-term debt approximate their carrying amounts due to their short duration or market based interest rates.
The following tables summarize the fair values of financial instruments measured at fair value on a recurring basis as of August 24, 2025 and May 25, 2025.
| Items Measured at Fair Value at August 24, 2025 | |||||||||||||||||||||||||||||
| (in millions) | Fair value of assets (liabilities) | Quoted prices in active market for identical assets (liabilities) (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||||||||||
| Derivatives: | |||||||||||||||||||||||||||||
| Commodities futures, swaps & options | (1) | $ | (0.3) | $ | — | $ | (0.3) | $ | — | ||||||||||||||||||||
| Equity forwards | (2) | 0.7 | — | 0.7 | $ | — | |||||||||||||||||||||||
| Interest rate swaps - fair value hedge | (3) | (34.8) | — | (34.8) | — | ||||||||||||||||||||||||
| Total | $ | (34.4) | $ | — | $ | (34.4) | $ | — |
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| Items Measured at Fair Value at May 25, 2025 | |||||||||||||||||||||||||||||
| (in millions) | Fair value of assets (liabilities) | Quoted prices in active market for identical assets (liabilities) (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||||||||||
| Derivatives: | |||||||||||||||||||||||||||||
| Commodities futures, swaps & options | (1) | $ | (0.9) | $ | — | $ | (0.9) | $ | — | ||||||||||||||||||||
| Equity forwards | (2) | (3.0) | — | (3.0) | — | ||||||||||||||||||||||||
| Interest rate swaps - fair value hedge | (3) | (40.0) | — | (40.0) | — | ||||||||||||||||||||||||
| Foreign exchange forwards | (4) | $ | (0.2) | $ | — | $ | (0.2) | $ | — | ||||||||||||||||||||
| Total | $ | (44.1) | $ | — | $ | (44.1) | $ | — |
(1)The fair value of our commodities futures, swaps and options is based on closing market prices of the contracts, inclusive of the risk of nonperformance.
(2)The fair value of equity forwards is based on the closing market value of Darden stock, inclusive of the risk of nonperformance.
(3)The fair value of our interest rate swap agreements is based on current and expected market interest rates, inclusive of the risk of nonperformance.
(4)The fair value of our foreign exchange forwards is based on closing forward exchange market prices, inclusive of the risk of nonperformance.
The carrying value and fair value of long-term debt as of August 24, 2025, was $2.14 billion and $2.18 billion, respectively. The carrying value and fair value of long-term debt as of May 25, 2025, was $2.13 billion. The fair value of long-term debt, classified as Level 2 in the fair value hierarchy, is determined based on market prices or, if market prices are not available, the present value of the underlying cash flows discounted at our incremental borrowing rates.
The fair value of non-financial assets measured at fair value on a non-recurring basis, classified as Level 2 in the fair value hierarchy, is determined based on third-party market appraisals. As of August 24, 2025 and May 25, 2025, adjustments to the fair values of non-financial assets measured at fair value on a non-recurring basis, classified as Level 2, were not material.
The fair value of non-financial assets measured at fair value on a non-recurring basis, classified as Level 3 in the fair value hierarchy, is determined based on appraisals, sales prices of comparable assets, or estimates of discounted future cash flows. As of August 24, 2025, adjustments to the fair values of non-financial assets, classified as Level 3, were not material. As of May 25, 2025, adjustments to the fair values of non-financial assets, specifically right-of-use assets, classified as Level 3, were determined to have a fair value of $8.0 million.
Note 13. Commitments and Contingencies
As collateral for performance on contracts and as credit guarantees to banks and insurers, we are contingently liable for guarantees of subsidiary obligations under standby letters of credit. As of August 24, 2025 and May 25, 2025, we had $80.0 million of standby letters of credit related to workers’ compensation and general liabilities accrued in our consolidated financial statements. As of August 24, 2025 and May 25, 2025, we had $16.7 million of surety bonds related to other payments. Most surety bonds are renewable annually.
As of August 24, 2025 and May 25, 2025, we had $90.9 million and $76.5 million, respectively, of guarantees associated with leased properties that have been assigned to third parties, primarily related to our disposition of Red Lobster in fiscal 2015 and the sale of the eight Olive Garden Canada locations during the first quarter of fiscal 2026. These amounts represent the maximum potential amount of future payments under the guarantees. The fair value of the maximum potential future payments discounted at our weighted-average cost of capital as of August 24, 2025 and May 25, 2025, amounted to $71.0 million and $61.2 million, respectively. In the event of default by a third party, the indemnity and default clauses in our assignment agreements govern our ability to recover from and pursue the third party for damages incurred as a result of its default. We do not hold any third-party assets as collateral related to these assignment agreements, except to the extent that the assignment allows us to repossess the building and personal property. The liability recorded for our expected credit losses under these leases as of August 24, 2025 was $10.6 million. These guarantees expire over their respective lease terms, which range from fiscal 2026 through fiscal 2035.
DARDEN RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employees and others related to operational issues common to the restaurant industry, and can also involve infringement of, or challenges to, our trademarks. While the resolution of a lawsuit, proceeding or claim may have an impact on our financial results for the period in which it is resolved, we believe that the final disposition of the lawsuits, proceedings and claims in which we are currently involved, either individually or in the aggregate, will not have a material adverse effect on our financial position, results of operations or liquidity.
Note 14. Subsequent Events
On September 17, 2025, the Board of Directors declared a cash dividend of $1.50 per share payable on November 3, 2025 to all shareholders of record as of the close of business on October 10, 2025.
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