Q & A Highlights

Q : Why is Olive Garden's sales gap to the industry not better despite high customer satisfaction? Is it related to advertising spend? A : Ricardo Cardenas, President and CEO, explained that while the sales gap is narrower, Olive Garden has maintained a strong gap over the past five years. The brand has not pursued significant discounting promotions, focusing instead on profitable sales growth. Marketing spend is less than pre-COVID levels but not by half, and they are considering increasing advertising in the future depending on promotions.

Q : Will there be an uptick in advertising for Olive Garden in the next quarter with the introduction of fan favorites? A : Ricardo Cardenas noted that the third quarter is typically strong for Olive Garden. While advertising will look different with the introduction of fan favorites, he did not specify if spending will increase, citing competitive reasons.

Q : What is driving LongHorn's continued strength despite low marketing spend? A : Ricardo Cardenas highlighted LongHorn's focus on quality and experience, with investments in food quality and execution. The brand has seen record guest satisfaction with steak preparation, contributing to a 7.5% comp growth for the quarter.

Q : How is the Uber Eats partnership impacting Olive Garden's sales and guidance? A : Rajesh Vennam, CFO, stated that the impact is currently minimal, with delivery fees included in sales but contributing only single basis points. The pilot is in 100 restaurants, and while it may contribute 5-10 basis points in the future, it is not expected to significantly impact guidance.

Q : What are the expectations for Olive Garden and LongHorn within the fiscal '25 comp guidance? A : Rajesh Vennam indicated that Olive Garden is expected to accelerate, and LongHorn has been performing well above the guidance range. The tightened guidance reflects increased confidence in sales trends.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

This article first appeared on GuruFocus .