Darden Restaurants · 10-Q · Item 2 MD&A

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The discussion and analysis below for the Company, which contains forward-looking statements, should be read in conjunction with the unaudited consolidated financial statements and the notes to such financial statements included elsewhere in this quarterly report on Form 10-Q (Form 10-Q) and the audited consolidated financial statements and the notes thereto included in our Form 10-K for the fiscal year ended May 25, 2025 (Form 10-K). In addition to historical consolidated financial information, this discussion contains forward-looking statements that reflect our plans, estimates, and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Item 1A. Risk Factors” section of the Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Forward-Looking Statements” included below in this Form 10-Q.

To facilitate the review of our discussion and analysis, the following table sets forth our financial results for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the three and nine months ended February 22, 2026 and February 23, 2025, respectively.

Three Months Ended

Nine Months Ended

(in millions)

% Chg

% Chg

Sales

$

$

$

$

Costs and expenses:

Food and beverage

Restaurant labor

Restaurant expenses

Marketing expenses

Pre-opening costs

General and administrative expenses

Depreciation and amortization

Impairments and (gain) loss on disposal of assets, net

NM

NM

Total costs and expenses

$

$

$

$

Operating income

Interest, net

Earnings before income taxes

$

$

Income tax expense (1)

Earnings from continuing operations

$

$

$

$

Losses from discontinued operations, net of tax

NM

NM

Net earnings

$

$

$

$

Diluted net earnings per share:

Earnings from continuing operations

$

$

$

$

Losses from discontinued operations

—

NM

NM

Net earnings

$

$

$

$

(1) Effective tax rate

%

%

%

%

NM- Percentage not considered meaningful.

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The following table details the number of company-owned restaurants currently reported in continuing operations that were open at the end of the third quarter of fiscal 2026, compared with the number of company-owned restaurants open at the end of fiscal 2025 and at the end of the third quarter of fiscal 2025.

Olive Garden1

LongHorn Steakhouse

Cheddar’s Scratch Kitchen

Chuy’s2

Yard House

Ruth’s Chris

The Capital Grille

Eddie V’s

Bahama Breeze

The Capital Burger

3

3

4

Total

1 During the first quarter of fiscal 2026, we sold all of the Olive Garden Canada Restaurants.

2 Includes 103 Chuy’s restaurants acquired during the second quarter of fiscal 2025.

OVERVIEW OF OPERATIONS

Our business operates in the full-service dining segment of the restaurant industry. At February 22, 2026, through subsidiaries, we owned and operated 2,196 restaurants in the United States under the 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® trademarks. We own and operate all of our restaurants in the United States, except for five restaurants we manage through joint venture or other contractual agreements and 87 franchised restaurants. We also have 77 international franchised restaurants in operation located in Canada, Latin America, the Caribbean, Asia, Europe and the Middle East.

On our June 2025 earnings call, we announced the decision to explore strategic alternatives for the Bahama Breeze brand, which includes 28 company‑owned restaurants and one franchised restaurant. As part of this review, we evaluated a potential sale of the brand as well as the conversion of certain restaurants to other Darden concepts. On February 3, 2026, we announced the completion of this process and our expectation that T1we will permanently close approximately 14 Bahama Breeze restaurants on or about April 5, 2026, and convert the remaining approximately 14 restaurants to other Darden brands over the next 12–18 months. As a result of the expected closures, we impaired some of the assets related to the 14 Bahama Breeze restaurants to be closed. See Note 7 to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional information.

On July 14, 2025, we closed on the sale of the Olive Garden Canada Restaurants to 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 7 to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional information. At closing, Darden and Recipe entered into an area development agreement and franchise agreements, pursuant to which Recipe will operate current and any new restaurants contemplated thereunder under the Olive Garden trade name and will pay royalties for use of the trade name.

Financial Highlights - Consolidated

•T2Total sales increased 5.9 percent and 7.8 percent to $3.35 billion and $9.49 billion for the third quarter and first nine months of fiscal 2026, respectively, compared to $3.16 billion and $8.81 billion for the third quarter and first nine months of fiscal 2025, respectively, driven by sales from the acquisition of 103 Chuy’s restaurants during the second quarter of fiscal 2025 and 31 net new restaurants and a blended same-restaurant sales increase of 4.2 percent1 and 4.4 percent.1

•Our T3net earnings from continuing operations were $310.6 million and $805.9 million for the third quarter and first nine months of fiscal 2026, respectively, compared to $323.7 million and $747.0 million for the third quarter and first nine months of fiscal 2025, respectively.

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•Reported diluted net earnings per share from continuing operations were $2.68 and $6.91 for the third quarter and first nine months of fiscal 2026, respectively, compared to $2.74 and $6.30 for the third quarter and first nine months of fiscal 2025, respectively.

Outlook

We expect sales growth for fiscal 2026 to be approximately 9.5 percent, driven by growth of approximately 2.0 percent related to the fifty-third week in fiscal 2026; same-restaurant sales growth to be approximately 4.5 percent2; and new restaurant openings to be approximately 70. Additionally, T4we expect capital expenditures incurred to build new restaurants, remodel and maintain existing restaurants and for technology initiatives to be between $750 and $775 million. These amounts all include the addition of Chuy’s and our expectations for Chuy’s results from the date of acquisition forward.

1 Will not include Chuy’s until they have been owned and operated by Darden for a 16-month period (the fourth quarter of fiscal 2026), and does not include Bahama Breeze as all restaurants are expected to be closed or converted to other brands (between the third quarter of fiscal 2026 and the fourth quarter of fiscal 2027).

2 Annual same-restaurant sales is a 52-week metric and excludes the impact of Chuy’s, which will not have been owned and operated by Darden for a 16-month period prior to the beginning of fiscal 2026, as well as Bahama Breeze as all restaurants are expected to be closed or converted to other brands (between the third quarter of fiscal 2026 and the fourth quarter of fiscal 2027).

SALES

The following table presents our sales by segment for the periods indicated.

Three Months Ended

Nine Months Ended

(in millions)

% Chg

SRS (1)

% Chg

SRS (1)

Olive Garden

$

$

%

%

$

$

%

%

LongHorn Steakhouse

$

$

%

%

$

$

%

%

Fine Dining

$

$

%

%

$

$

%

%

Other Business

$

$

%

%

$

$

%

%

(1)Same-restaurant sales is a year-over-year comparison of each period’s sales volumes for a 52-week year and is limited to restaurants that have been open, and operated by Darden, for at least 16 months. Accordingly, Chuy’s results will not be included in this calculation until the fourth quarter of fiscal 2026. Additionally, results from Bahama Breeze are excluded as all restaurants are expected to be closed or converted to other brands (between the third quarter of fiscal 2026 and the fourth quarter of fiscal 2027).

Olive Garden’s sales increase for the third quarter of fiscal 2026 was primarily driven by same-restaurant sales increases, as well as revenue from new restaurants. The increase in U.S. same-restaurant sales for the third quarter of fiscal 2026 resulted from a 3.6 percent increase in average check, which includes a 1.3 percent increase in off-premise catering sales, offset by a 0.4 percent decrease in same-restaurant guest counts. Olive Garden’s sales increase for the nine months of fiscal 2026 was primarily driven by same-restaurant sales increases, as well as revenue from new restaurants, partially offset by the sale of the Olive Garden Canada Restaurants. The increase in U.S. same-restaurant sales for the first nine months of fiscal 2026 resulted from a 1.3 percent increase in same-restaurant guest counts, combined with a 3.2 percent increase in average check, which includes a 1.1 percent increase in off-premise catering sales.

LongHorn Steakhouse’s sales increase for the third quarter of fiscal 2026 was primarily driven by same-restaurant sales increases, as well as revenue from new restaurants. The increase in same-restaurant sales for the third quarter of fiscal 2026 resulted from a 3.9 percent increase in average check combined with a 3.3 percent increase in same-restaurant guest counts. LongHorn Steakhouse’s sales increase for the nine months of fiscal 2026 was primarily driven by same-restaurant sales increases combined with revenue from new restaurants. The increase in same-restaurant sales for the first nine months of fiscal 2026 resulted from a 2.7 percent increase in average check combined with a 3.5 percent increase in same-restaurant guest counts.

Fine Dining’s sales increase for the third quarter of fiscal 2026 was primarily driven by revenue from new restaurants, as well as same-restaurant sales increases. The increase in same-restaurant sales for the third quarter of fiscal 2026 resulted from a 2.2 percent increase in average check, offset by a 0.1 percent decrease in same-restaurant guest counts. Fine Dining’s sales

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increase for the nine months of fiscal 2026 was primarily driven by revenue from new restaurants, as well as same-restaurant sales increases. The increase in same-restaurant sales for the nine months of fiscal 2026 resulted from a 1.1 percent increase in average check, offset by a 0.1 percent decrease in same-restaurant guest counts.

Other Business’ sales increase for the third quarter of fiscal 2026 was primarily driven by same-restaurant sales increases, partially offset by a decrease in total restaurants due primarily to the closing of 15 Bahama Breeze locations in May 2025. The increase in same-restaurant sales for the third quarter of fiscal 2026 resulted from a 3.6 percent increase in average check combined with a 0.3 percent increase in same-restaurant guest counts. Other Business’ sales increase for the nine months of fiscal 2026 was primarily driven by the addition of Chuy’s for the entire period as well as an increase in same-restaurant sales. The increase in same-restaurant sales for the nine months of fiscal 2026 resulted from a 3.0 percent increase in average check combined with a 0.4 percent increase in same-restaurant guest counts.

COSTS AND EXPENSES

The following table sets forth selected operating data as a percent of sales for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the three and nine months ended February 22, 2026 and February 23, 2025.

Three Months Ended

Nine Months Ended

Sales

%

%

%

%

Costs and expenses:

Food and beverage

Restaurant labor

Restaurant expenses

Marketing expenses

Pre-opening costs

General and administrative expenses

Depreciation and amortization

Impairments and (gain) loss on disposal of assets, net

—

—

Total operating costs and expenses

%

%

%

%

Operating income

Interest, net

Earnings before income taxes

Income tax expense

Earnings from continuing operations

%

%

%

%

Three Months Ended February 22, 2026 Compared to Three Months Ended February 23, 2025

•T5Food and beverage costs increased as a percent of sales primarily due to a 1.5% impact from inflation and a 0.2% impact from menu mix, partially offset by a 1.0% impact from pricing leverage and a 0.2% impact from cost saving initiatives.

•Restaurant labor costs decreased as a percent of sales primarily due to a 1.2% impact from pricing and sales leverage and a 0.1% impact from productivity, partially offset by a 1.0% impact from inflation and a 0.1% impact from higher performance-based compensation expense.

•Restaurant expenses decreased as a percent of sales primarily due to a 0.7% impact from sales and pricing leverage, partially offset by a 0.5% impact from inflation and a 0.2% impact from delivery fees.

•Marketing expenses increased as a percent of sales due to increased marketing and media activity.

•Pre-opening costs increased primarily due to new restaurant openings.

•General and administrative expenses decreased as a percent of sales primarily due to a 0.3% impact from Chuy’s transaction and integration costs incurred in the third quarter of fiscal 2025, a 0.2% impact from sales leverage including synergies realized from the Chuy’s transaction and a 0.1% impact from compensation, offset by a 0.2%

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impact from mark to market adjustments, a 0.2% impact from one-time transaction costs incurred in the third quarter of fiscal 2026 and a 0.1% impact from inflation.

•Depreciation and amortization expenses remained flat as a percent of sales.

•Impairment and (gain) loss on disposal of assets, net increased as a percent of sales primarily due to the decision to close approximately 14 Bahama Breeze restaurants.

Nine Months Ended February 22, 2026 Compared to Nine Months Ended February 23, 2025

•Food and beverage costs increased as a percent of sales primarily due to a 1.2% impact from inflation and a 0.2% impact from menu mix, partially offset by a 0.8% impact from pricing leverage and 0.2% cost savings.

•Restaurant labor costs increased as a percent of sales primarily due to a 1.0% impact from inflation and a 0.1% impact from higher performance-based compensation expense, partially offset by a 1.0% impact from pricing and sales leverage and a 0.1% impact from productivity.

•Restaurant expenses remained flat as a percent of sales.

•Marketing expenses decreased as a percent of sales due to cost savings, partially offset by an increase in marketing and media activity.

•Pre-opening costs remained flat as a percent of sales.

•General and administrative expenses decreased as a percent of sales primarily due to a 0.4% impact from Chuy’s transaction and integration costs incurred in fiscal 2025, 0.3% impact from sales and pricing leverage including synergies realized from the Chuy’s transaction and a 0.1% impact from lower performance-based compensation expense, partially offset by a 0.2% impact from one-time transaction costs incurred in fiscal 2026 and a 0.1% impact from inflation.

•Depreciation and amortization expense increased as a percent of sales due to acquisition of Chuy’s as well as incremental depreciation on new restaurants and other capital expenditures.

•Impairment and (gain) loss on disposal of assets, net increased as a percent of sales primarily due to the gain on sale of the Olive Garden Canada Restaurants, partially offset by the decision to close approximately 14 Bahama Breeze restaurants.

INTEREST EXPENSE

Net interest expense increased as a percent of sales for the third quarter of fiscal 2026 driven primarily by increased short term borrowings. Net interest expense remained flat as percent of sales for the first nine months of fiscal 2026.

INCOME TAXES

The effective income tax rate for continuing operations for the three months ended February 22, 2026 was 12.9 percent compared to an effective income tax rate for the three months ended February 23, 2025 of 13.1 percent. The decrease in the tax rate is primarily driven by mark to market impacts on hedges related to our deferred compensation programs. The effective income tax rate for continuing operations for the nine months ended February 22, 2026 was 12.7 percent compared to an effective income tax rate for the nine months ended February 23, 2025 of 12.2 percent. The increase in the effective tax rate is primarily attributable to a reduction in an expected IRS refund, partially offset by the adjustment of our expected tax liability related to the disposition of the Olive Garden Canada Restaurants.

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 applicable provisions impacting our financial position for the nine months ended February 22, 2026, and will continue to assess the potential impacts on our financial position, results of operations and cash flows as additional guidance from the OBBBA is issued.

LOSSES FROM DISCONTINUED OPERATIONS

On an after-tax basis, losses from discontinued operations for the third quarter and first nine months of fiscal 2026 were $3.8 million ($0.03 per diluted share) and $4.1 million ($0.04 per diluted share), respectively, compared with losses from discontinued operations for the third quarter and first nine months of fiscal 2025 of $0.3 million ($0.00 per diluted share) and $1.2 million ($0.01 per diluted share), respectively.

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SEGMENT RESULTS

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. 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. Our four reportable segments are: (1) Olive Garden, (2) LongHorn Steakhouse, (3) Fine Dining and (4) Other Business (see Note 6 to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q).

Our management uses segment profit as the measure for assessing performance of our segments. The following table presents segment profit margin1 for the periods indicated.

Three Months Ended

Nine Months Ended

Segment

Change

Change

Olive Garden

—

BPS

LongHorn Steakhouse

BPS

Fine Dining

BPS

Other Business

— BPS

BPS

1 Segment profit margin is calculated as (sales less costs of food & beverage, restaurant labor, restaurant expenses and marketing expenses) / sales. 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.

The decrease in Olive Garden’s segment profit margin for the third quarter of fiscal 2026 was driven primarily by higher restaurant expenses and marketing costs, partially offset by lower restaurant labor costs. Olive Garden’s segment profit margin for the first nine months of fiscal 2026 remained flat compared to fiscal 2025. The decrease in Longhorn Steakhouse’s segment profit margin for the third quarter of fiscal 2026 was driven by higher food and beverage costs and restaurant expenses, partially offset by lower restaurant labor costs. The decrease in Longhorn Steakhouse’s segment profit margin for the first nine months of fiscal 2026 was driven by higher food and beverage costs, partially offset by lower restaurant expenses.

The decrease in Fine Dining’s segment profit margin for the third quarter and first nine months of fiscal 2026 was driven primarily by higher food and beverage costs and restaurant labor. Other Business’ segment profit margin for the third quarter of fiscal 2026 remained flat compared to fiscal 2025. The increase in Other Business’ segment profit margin for the first nine months of fiscal 2026 was driven primarily by the addition of Chuy’s operating results and lower food and beverage costs and restaurant expenses.

SEASONALITY

Our sales volumes have historically fluctuated seasonally. Our average sales per restaurant are highest in the winter and spring, followed by the fall and summer. Holidays, changes in the economy, severe weather, and the effects of other conditions may impact sales volumes seasonally in some operating regions. Because of the historical seasonality of our business and these other factors, results for any fiscal quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

Typically, cash flows generated from operating activities are our principal source of liquidity, which we use to finance capital expenditures for new restaurants and to remodel and maintain existing restaurants, to pay dividends to our shareholders and to repurchase shares of our common stock. Since substantially all of our sales are for cash and cash equivalents, and accounts payable are generally paid in 5 to 90 days, we are typically able to carry current liabilities in excess of current assets.

T6We currently manage our business and financial ratios to target an investment-grade bond rating, which has historically allowed flexible access to financing at reasonable costs. Our publicly issued long-term debt currently carries the following ratings:

•Moody’s Investors Service “Baa2”;

•Standard & Poor’s “BBB”; and

•Fitch “BBB”.

Our commercial paper has ratings of:

•Moody’s Investors Service “P-2”;

•Standard & Poor’s “A-2”; and

•Fitch “F-2”.

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These ratings are as of the date of the filing of this Form 10-Q and have been obtained with the understanding that Moody’s Investors Service, Standard & Poor’s and Fitch will continue to monitor our credit and make future adjustments to these ratings to the extent warranted. The ratings are not a recommendation to buy, sell or hold our securities, may be changed, superseded or withdrawn at any time and should be evaluated independently of any other rating.

On October 23, 2023, we entered into a $1.25 billion Revolving Credit Agreement (as amended, Revolving Credit Agreement) with Bank of America, N.A. (BOA), as administrative agent, and the lenders and other agents party thereto. The Revolving Credit Agreement is a senior unsecured credit commitment to the Company and contains customary representations and affirmative and negative covenants (including limitations on liens and subsidiary debt and, prior to the Amendment (as defined below), a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of default usual for credit facilities of this type. As of February 22, 2026, we had no outstanding balances and were in compliance with all covenants under the Revolving Credit Agreement.

As of February 22, 2026, $290.0 million of commercial paper was outstanding and backed by this facility. After consideration of commercial paper and letters of credit backed by the Revolving Credit Agreement, as of February 22, 2026, we had $960 million of credit available under the Revolving Credit Agreement.

Loans under the Revolving Credit Agreement bear interest at a rate of (a) Term SOFR (which is defined, for the applicable interest period, as the Term SOFR Screen Rate two U.S. Government Securities Business Days prior to the commencement of such interest period with a term equivalent to such interest period) plus a Term SOFR adjustment of 0.10 percent plus the relevant margin determined by reference to a ratings-based pricing grid (Applicable Margin), or (b) the base rate (which is defined as the highest of the BOA prime rate, the Federal Funds rate plus 0.500 percent, and the Term SOFR plus 1.00 percent) plus the relevant Applicable Margin. Assuming a “BBB” equivalent credit rating level, the Applicable Margin under the Revolving Credit Agreement is 1.000 percent for Term SOFR loans and 0.000 percent for base rate loans.

On September 16, 2024, we entered into Amendment No. 1 (Amendment) to the Revolving Credit Agreement, which replaced the prior financial covenant (which provided for a maximum consolidated total debt to total capitalization ratio) with a new financial covenant requiring us to maintain, measured as of the end of each fiscal quarter, a maximum consolidated leverage ratio of 3.50 to 1.00 (which may be temporarily increased to 4.00 to 1.00 upon our election as a result of a covered acquisition, subject to customary limitations set forth in the Revolving Credit Agreement). All other material terms and conditions of the Revolving Credit Agreement were unchanged.

The Revolving Credit Agreement matures on October 23, 2028, and the proceeds may be used for working capital and capital expenditures, the refinancing of certain indebtedness, certain acquisitions and general corporate purposes.

As of February 22, 2026, our outstanding long-term debt consisted principally of:

•$96.3 million of unsecured 6.000 percent senior notes due in August 2035;

•$42.8 million of unsecured 6.800 percent senior notes due in October 2037; and

The interest rate on our $42.8 million senior notes due in October 2037 is subject to adjustment from time to time if the debt rating assigned to such series of notes is downgraded below a certain rating level (or subsequently upgraded). The maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial interest rate. As of February 22, 2026, no such adjustments were made to this rate.

Through our shelf registration statement on file with the SEC, depending on conditions prevailing in the public capital markets, we may from time to time issue equity securities or unsecured debt securities in one or more series, which may consist of notes, debentures or other evidences of indebtedness in one or more offerings.

From time to time, we or our affiliates, may repurchase our outstanding debt in privately negotiated transactions, open-market transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

From time to time, we enter into interest rate derivative instruments. See Note 10 to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q, which is incorporated by reference.

Net cash flows provided by operating activities from continuing operations increased to $1.28 billion for the first nine months of fiscal 2026, from $1.25 billion for the first nine months of fiscal 2025. Net cash flows provided by operating

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activities include net earnings from continuing operations of $805.9 million and $747.0 million in the first nine months of fiscal 2026 and 2025, respectively. Net cash flows provided by operating activities increased in fiscal 2026 primarily due to higher net earnings in fiscal 2026 and the timing of federal income tax payments, offset by changes in working capital.

Net cash flows used in investing activities from continuing operations were $523.1 million for the first nine months of fiscal 2026, compared to $1.10 billion for the first nine months of fiscal 2025. Net cash used in the acquisition of Chuy’s was $613.7 million for the first nine months of fiscal 2025. Capital expenditures increased to $540.9 million for the first nine months of fiscal 2026 from $472.6 million for the first nine months of fiscal 2025, reflecting an increase in new restaurant construction and remodel spend during fiscal 2026. Additionally, the first nine months of fiscal 2026 include a portion of the proceeds from the sale of the Olive Garden Canada Restaurants.

Net cash flows used in financing activities from continuing operations were $761.5 million for the first nine months of fiscal 2026, compared to net cash used in financing activities of $123.9 million for the first nine months of fiscal 2025. Net cash flows used in financing activities for the first nine months of fiscal 2026 included borrowings of commercial paper of $290.0 million, net, offset by dividends paid of $521.5 million and share repurchases of $534.4 million. Net cash flows used in financing activities for the first nine months of fiscal 2025 included repayment of commercial paper of $28.6 million, net proceeds from the issuance of long-term debt of $750.0 million, dividends paid of $494.6 million and share repurchases of $367.2 million. Dividends declared by our Board of Directors totaled $4.50 and $4.20 per share for the first nine months of fiscal 2026 and 2025, respectively.

We are not aware of any trends or events that would materially affect our capital requirements or liquidity. We believe that our internal cash-generating capabilities, the potential issuance of equity or unsecured debt securities under our shelf registration statement and short-term commercial paper or drawings under our Revolving Credit Agreement should be sufficient to finance our capital expenditures, debt maturities and other operating activities through fiscal 2026.

On June 18, 2025, T7our Board of Directors authorized a new share repurchase program under which we may repurchase up to $1 billion of our outstanding common stock. This repurchase program does not have an expiration and replaced the prior share repurchase authorization. During the quarter and nine months ended February 22, 2026, we repurchased 0.7 million and 2.7 million shares of our common stock, respectively, compared to 0.3 million and 2.4 million shares of our common stock, respectively, during the quarter and nine months ended February 23, 2025.

We are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, sales, costs or expenses, results of operations, liquidity, capital expenditures or capital resources.

FINANCIAL CONDITION

Our current assets totaled $1.01 billion as of February 22, 2026, compared to $937.7 million as of May 25, 2025. The increase was primarily due to an increase in prepaid income taxes and inventories.

Our current liabilities totaled $2.61 billion as of February 22, 2026, compared to $2.25 billion as of May 25, 2025. The increase was primarily driven by an increase in short term debt and unearned revenues associated with activations in excess of gift card redemptions.

CRITICAL ACCOUNTING ESTIMATES

We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles. 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, costs and expenses during the reporting period. Actual results could differ from those estimates. We have discussed the development, selection and disclosure of those estimates with the Audit Committee. Our critical accounting estimates have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year ended May 25, 2025.

APPLICATION OF NEW ACCOUNTING STANDARDS

Information regarding application of new accounting standards is incorporated by reference from Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q.

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FORWARD-LOOKING STATEMENTS

Statements set forth in or incorporated into this report regarding the expected increase in the number of our restaurants and capital expenditures in fiscal 2026, projections for sales and all other statements that are not historical facts, including without limitation statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of Darden Restaurants, Inc. and its subsidiaries that are preceded by, followed by or that include words such as “may,” “will,” “expect,” “intend,” “anticipate,” “continue,” “could,” “estimate,” “project,” “believe,” “plan,” “outlook” or similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are included, along with this statement, for purposes of complying with the safe harbor provisions of that Act.

Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements for any reason to reflect events or circumstances arising after such date. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. In addition to the risks and uncertainties of ordinary business obligations, and those described in information incorporated into this report, the forward-looking statements contained in this report are subject to the risks and uncertainties described in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended May 25, 2025 and in our Forms 10-Q (including this report), which are summarized as follows:

•A failure to address cost pressures, including rising costs for commodities, labor, health care and utilities used by our restaurants, and a failure to effectively deliver cost management activities and achieve economies of scale in purchasing;

•Certain economic and business factors and their impacts on the restaurant industry and general macroeconomic factors including unemployment, energy prices, tariffs and interest rates;

•The inability to hire, train, reward and retain restaurant team members and determine and maintain adequate staffing;

•A failure to recruit, develop and retain effective leaders or the loss or shortage of personnel with key capacities and skills;

•Increases in labor and insurance costs;

•Health concerns arising from food-related pandemics, outbreaks of flu, viruses or other diseases;

•Failure to maintain food safety throughout the supply chain and food-borne illness concerns;

•Insufficient guest or employee facing technology or a failure to maintain a continuous or secure cyber network;

•Increased costs related to compliance with privacy and data protection laws and government enforcement, litigation or adverse publicity relating to potential failures thereof;

•A failure to successfully complete our integration of Chuy’s operations into our business;

•Insufficient or ineffective response to legislation or government regulation may adversely impact our cost structure, operational efficiencies and talent availability;

•Intense competition, or an insufficient strategy or focus, on competition and the consumer landscape;

•Changes in consumer preferences that may adversely affect demand for food at our restaurants;

•An inability or failure to recognize, respond to and effectively manage the accelerated impact of social media;

•A failure to identify and execute innovative marketing and guest relationship tactics, ineffective or improper use of other marketing initiatives and increased advertising and marketing costs;

•Impacts of climate change, adverse weather conditions and natural disasters;

•The inability to cancel long-term, non-cancelable leases that we may want to cancel or the inability to renew the leases that we may want to extend at the end of their terms;

•Our inability or failure to execute a comprehensive business continuity plan following a major natural disaster, such as a hurricane or manmade disaster;

•The impact of shortages, delay or interruptions in the delivery of food and other products from third-party vendors and suppliers;

•Our failure to drive both short-term and long-term profitable sales growth through brand relevance, operating excellence, opening new restaurants of existing brands and developing or acquiring new dining brands;

•A lack of suitable new restaurant locations or a decline in the quality of the locations of our current restaurants;

•Higher-than-anticipated costs or delays to open, close, relocate or remodel restaurants;

•Risks associated with doing business with franchisees and licensees;

•Risks associated with doing business with business partners and vendors in foreign markets;

•Volatility in the market value of derivatives we may use to hedge exposures to fluctuations in commodity and broader market prices;

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•Volatility in the United States equity markets that may affect our ability to efficiently hedge exposures to our market risk related to equity-based compensation awards;

•Failure to protect our service marks or other intellectual property;

•Environmental, social and governance risk, including disclosure expectations and the impact of third party ratings,

•Litigation, including allegations of illegal, unfair or inconsistent employment practices;

•Unfavorable publicity, or a failure to respond effectively to adverse publicity;

•Disruptions in the financial markets that may impact consumer spending patterns, affect the availability and cost of credit;

•Impairment of the carrying value of our goodwill or other intangible assets;

•Changes in tax laws or treaties and unanticipated tax liabilities; and

•A failure of our internal controls over financial reporting and future changes in accounting standards.

Any of the risks described above or elsewhere in this report or our other filings with the SEC could have a material impact on our business, financial condition or results of operations. It is not possible to predict or identify all risk factors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. Therefore, the above is not intended to be a complete discussion of all potential risks or uncertainties.