DRI 10-K & 10-Q changes, risk factors and insider trading

A failure to address cost pressures, including rising costs for commodities, labor, health carecare, and utilities used by our restaurants, and a failure to effectively deliver cost management activities and achieve economies of scale in purchasing could compress our margins and adversely affect our sales and results of operations.

Our results of operations dependdepend, significantlyin part, on our ability to anticipate and react to changes in the price and availability of food, ingredients, labor, health care, utilities, fuelfuel, and other related costs over which we may have little control. While inflationary conditions have somewhat abated in recent periods, weWe have experienced and may continue to experience higher than normal inflationary conditions with respect to most or all of these costs during fiscal 2025.2026. Operating margins for our restaurants are subject to changes in the price and availability of food commodities, including beef, pork, chicken, seafood, cheese, butterbutter, and produce. The introduction ofof, or changes toto, tariffs or adverse impacts resulting from restrictive trade policies or trade disputes on imported food products, such as produce and seafood, could increase our costs and possibly impact the supply of those products. We cannot predict whether we will continue to be able to anticipate and react to changing food costs by adjusting our purchasing practices, menu offerings, and menu prices, and a failure to do so could adversely affect our operating results. We seek to leverage our size to achieve economies of scale in purchasing, but there can be no assurances that we can always do so effectively. We are also subject to the general risks of inflation and its impact on the macroeconomic environment.

Increases in minimum wage, health carecare, and other benefit costs may have a material adverse effect on our labor costs. We operate in many states and localities where the minimum wage is significantly higher than the federal minimum wage. The market for labor in the United States is competitive and has resulted in pressure on wages and may continue to do so in the future. Increases in minimum wage and market pressure may also result in increases in the wage rates paid for non-minimum wage positions. Many states and localities are also passing laws regulating employment practices and working conditions, which could have a material adverse effect on our labor costs in those areas.

Our restaurants’ operating margins are also affected by fluctuations in the price of utilities such as electricity and natural gas, whether as a result of inflation or otherwise, on which the restaurants depend for their energy supply. In addition, interruptions to the availability of gas, electric, waterwater, or other utilities, whether due to aging infrastructure, weather conditions, fire, animal damage, trees, digging accidents, geopolitical impactsimpacts, or other reasons largely out of our control, may adversely affect our operations. Our inability to anticipate and respond effectively to an adverse change in any of these factors could have a significant adverse effect on our sales and results of operations.

Certain economic and business factorsfactors, and their impacts on the restaurant industryindustry, and other general macroeconomic factors, including unemployment, energy pricesprices, and interest rates that are largely beyond our control may adversely affect consumer behavior and our sales and results of operations.

Our business results dependdepend, in part, on a number of industry-specific and general economic factors, many of which are beyond our control, and may adversely affect consumer behavior andbehavior, our salessales, and our results of operations. The full-service dining sector of the restaurant industry is affected by changes in international, national, regionalregional, and local economic conditions, seasonal fluctuation of sales volumes, consumer spending patternspatterns, and consumer preferences, including changes in consumer tastes and dietary habits, and the level of consumer acceptance of our restaurant brands. The performance of individual restaurants may also be adversely affected by factors such as demographic trends, severe weather including hurricanes, traffic patternspatterns, and the type, numbernumber, and location of competing restaurants.

General economic conditions, including slow global recovery from economic downturns, geopolitical conditionsconditions, and uncertainty about the strength or pace of economic recovery, have also adversely affected our results of operations and may continue to do so. Economic recession, a protracted economic slowdown, a worsening economy, political instability, increased unemployment, increased inflation, increased energy prices, rising interest rates, a downgrade of the U.S. government’s long-term credit rating, imposition of retaliatory tariffs on important U.S. imports and exports or other industry-wide cost pressures have affected and can continue to affect consumer behavior and spending for restaurant dining occasions and may lead to a decline in sales and earnings. Economic uncertainty has caused and may continue to cause guests to make fewer discretionary purchases, and any significant decrease in our guest traffic or average profit per transaction will negatively impact our financial performance. In addition, if gasoline, natural gas, electricityelectricity, and other energy costs remain at the current elevated levels or increase further, and credit card, home mortgagemortgage, and other borrowing costs increase with rising interest rates, our guests may have lower disposable income and reduce the frequency of their dining occasions, may spend less on each dining occasion or may choose more inexpensive food options.

Unfavorable changes in the above factors or in other business and economic conditions affecting our guests could increase our costs, reduce traffic in some or all of our restaurants or impose practical limits on pricing, any of which could lower our profit margins and have a material adverse effect on our sales, financial conditioncondition, and results of operations.

The inability to hire, train, rewardreward, and retain restaurant team members and determine and maintain adequate staffing may impact our ability to achieve our operating, growthgrowth, and financial objectives.

Our long-term growth depends substantially on our ability to recruit and retain high-quality team members to work in and manage our restaurants. Adequate staffing and retention of qualified restaurant team members is a critical factor impacting our guests’ experience in our restaurants. Maintaining adequate staffing in our existing restaurants and hiring and training staff for our new restaurants require precise workforce planning which has been complicated by the competitive labor market in the United States. The market for the most qualified talent continues to be competitive, and we must provide competitive wages, benefitsbenefits, and workplace conditions to maintain our most qualified team members. A shortage of qualified candidates who meet all legal citizenship or work authorization requirements, failure to recruit and retain new team members in a timely mannermanner, or higher than expected turnover levels all could affect our ability to open new restaurants, grow sales at existing restaurantsrestaurants, or meet our labor cost objectives. AnticipatedChanges and further anticipated changes in immigration lawslaws, regulations, and regulationsenforcement could decrease the pool of candidates with legal work authorizations, cause disruption in the workforce for all companies that rely on hourly workersworkers, and increase the costs, timetime, and requirements to hire new employees. An inability to adequately monitor and proactively respond to team member dissatisfaction could lead to poor guest satisfaction, higher turnover, litigationlitigation, and unionization, which could jeopardize our ability to meet our growth targets or impact our results of operations.

A failure to recruit, developdevelop, and retain effective leaders or the loss or shortage of personnel with key capacities and skills could impact our strategic direction and jeopardize our ability to meet our business performance expectations and growth targets.

Our future growth depends substantially on the contributions and abilities of key executives and other leadership team members. We must continue to recruit, retainretain, and motivate management team members in order to achieve our current business objectives and support our projected growth. Unplanned changes in senior management could expose us to significant changes in strategic direction and initiatives. A failure to maintain appropriatethe organizational capacity and capabilitynecessary to support leadership excellence (adequate resources, innovative skill sets and expectations) and builddevelop adequate bench strength with the key skill sets required for growth or a loss of key skill sets could jeopardize our ability to meet our business performance expectations and growth targets.

Our restaurant operations are subject to United States and Canadian federal, statestate, and local laws governing such matters as minimum wages, working conditions, overtimeovertime, and tip credits. AsLabor inflation, including increases in federal, statestate, and local minimum wage rates increase, werates, may needrequire us to increase not only the wages of our minimum wage employees, but also the wages paid to employees at wage rates that are above minimum wage. Labor shortages, increased employee turnoverturnover, and health care and other benefit or working condition regulations also have increased and may continue to increase our labor costs. These increased costs could, in turn, lead us to increase our menu prices, which could negatively impact our sales. Conversely, if competitive pressures or other factors prevent us from offsetting increased labor costs by increases in menu prices, our profitability may decline. In addition, the current premiums that we pay for our insuranceinsurance, (including workers’ compensation, general liability, property, health, and directors’ and officers’ liability)liability, may increase at any time, thereby further increasing our costs. The dollar amount of claims that we experience under our workers’ compensation and general liability insurance, for which we carry high per-claim deductibles, may also increase at any time, thereby further increasing our costs. Further,In theaddition, decreased availability ofif property and liability insurance hasbecomes theless potentialavailable or more difficult to negativelyobtain, impactwe themay costincur ofhigher premiumspremium costs and theface magnitudeincreased ofexposure to uninsured losses.

Health concerns arising from food-related pandemics, outbreaks of flu, virusesviruses, or other diseases may have an adverse effect on our business.

The United States and other countries have experienced, or may experience in the future, outbreaks of viruses, such as the novel coronavirus that caused COVID-19, norovirus, avian flu orflu, “SARS,” “MERS,” H1N1 orH1N1, “swine flu,” or other diseases. To the extent that a virus or disease is food-borne, or perceived to be food-borne, future outbreaks may adversely affect the price and availability of certain food products and cause our guests to eat less of a product, or could reduce public confidence in food handling and/or public assembly. For example, public concern over avian flu may cause fear about the consumption of chicken, eggs and other products derived from poultry, and the inability to serve poultry-based products would restrict our ability to provide a variety of menu items to our guests. If we change a restaurant menu in response to such concerns, we may lose guests who do not prefer the new menu, and we may not be able to attract a sufficient new guest base to produce the sales needed to make the restaurant profitable. We also may have different or additional competitors for our intended guests as a result of such a change and may not be able to successfully compete against such competitors. If a virus or other disease is transmitted by human contact or respiratory transmission, our employees or guests could become infected, or could choose,choose or be advised, to avoid gathering in public places, any of which could adversely affect our restaurant guest traffic and our ability to adequately staff our restaurants, receive deliveries on a timely basisbasis, or perform functions at the corporate level. We also could be adversely affected if the World Health Organization and/or The United States Centers for Disease Control were to restrict travel to affected geographic areas where we source our products, thus possibly impacting the continuity of supply. Additionally, jurisdictions in which we have restaurants may impose mandatory closures, seek voluntary closuresclosures, or impose restrictions on operations. Even if such measures are not implemented and a virus or other disease does not spread significantly, the perceived risk of infection or significant health risk may cause guests to choose other alternatives to dining out in our restaurants which may adversely affect our business.

Food safety is a top priority for us, and we dedicate substantial resources to ensuring that our guests enjoy safe, quality food products. Even with strong preventative interventions and controls, food safety issues could be caused at the source or by food suppliers or distributors and, as a result, may be out of our control and require prompt action to mitigate impact. In addition, regardless of the source or cause, any report of food-borne illnesses caused by pathogens such as E. coli, hepatitis A, norovirus, listeria orlisteria, salmonella, or other food safety issues including food tampering or contamination at one of our restaurantsrestaurants, whether true or not, could adversely affect the reputation of our brands and have a negative impact on our sales. Even instances of food-borne illness, food tamperingtampering, or food contamination occurring solely at our competitors’ restaurants, supplierssuppliers, or distributorsdistributors, (even if we do not work with them)them, could result in negative publicity about the food service industry generally and adversely impact our sales. Social media has dramatically increased the speed with which negative publicity, including actual or perceived food safety incidents, is disseminated before there is any meaningful opportunity to investigate, validate, respond toto, and addressmitigate an issue. The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, resulting in higher costs and lower margins.

We rely heavily on information technology in our operations, and insufficient guest or employee facing technology or a failure to maintain a continuous and secure cyber network, free from material failure, interruptioninterruption, or security breach, could harm our ability to effectively operate our business and/or result in the loss of respected relationships with our guests or employees.

We rely heavily on information systems across our operations, including for e-commerce, marketing programs, employee engagement, management of our supply chain, the point-of-sale processing system in our restaurants, and various other processes and transactions. Our ability to effectively manage our business and coordinate the production, distributiondistribution, and sale of our products depends significantly on the reliability, securitysecurity, and capacity of these systems. In addition, we must effectively respond to changing guest expectations and new technological developments, and if we fail to implement emerging technologies as quickly and efficiently as our competitors, we may lose guests or employees. As technology continues to play an increasing role in our guests’ experiences, disruptions, failuresfailures, or other performance issues with guest-facing technology systems could impair the benefits that theytechnology provideprovides to our business and negatively affect our relationship with our guests. The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, or any other failure to maintain a continuous and secure cyber network could result in substantial harm or inconvenience to the Company, our team membersmembers, or guests. This could include the theft of our intellectual property, trade secretssecrets, or sensitivesensitive, personalpersonal, or financial information. Some of these essential business processes that are dependent on technology are outsourced to third parties. While we make efforts to ensure that our providers are observing proper standards and controls, we cannot guarantee that breaches or failures caused by these outsourced providers will not occur.

From time to time, we and our third party service providers and suppliers experience unauthorized attempts to infiltrate and interrupt information systems. To date, interruptions of these information systemssystems, as a result of unauthorized infiltration attemptsattempts, have not had a material impact on our operations. However, because technology is increasingly complex and cyber-attacks are increasingly sophisticated and more frequent, there can be no assurance that such incidents will not have a material adverse effect on us in the future. In addition, the rapid evolution and increased adoption of artificial intelligence technologies may intensifyincrease our andour, our service providers’providers’, and key suppliers’ cybersecurity risks. Unauthorized access, theft, use, destruction or other compromises are becoming increasingly sophisticated, more difficult to detect, contain and mitigate, and may occur through a variety of methods, including attacks using malicious code, vulnerabilities in software, hardware or other infrastructure (including systems used by our supply chain), system misconfigurations, phishing or social engineering. Failure of our or our service providers’ information systems to function as intended, or cyber-attacks or security breaches, could result in loss of revenue, assets, personal data, intellectual property, trade secrets or other sensitive and confidential data, violation of applicable privacy and data security laws, reputational harm to the companies and their brands, operational disruptions, legal challenges and significant remediation and other costs, all of which could have a material adverse effect on our business.

Any such failures or disruptions, whether caused by system failures or threat actors attempting to infiltrate our systems, may cause delays in guest service, reduce efficiency in our operations, require significant capital investments to remediate the problem, result in customer, employeeemployee, or advertiser dissatisfaction or otherwise result in negative publicity that could harm our reputation. We could also be subjected to litigation, regulatory investigationsinvestigations, or the imposition of penalties. Such security breaches also could result in a violation of applicable U.S. and international privacy, cybercyber, and other laws or trigger data breach notification laws, including new disclosure rules promulgated by the SEC, and subject us to private third party or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liability. As information security laws and regulations change and cyber risks evolve, we may be required to make significant capital investments and other expenditures to comply with new legal requirements, investigate security incidents, remedy cybersecurity issues, recuperate lost data, prevent future compromisescompromises, and adapt systems and practices to react to the changing threat environment.

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

We receive and maintain certain personal, financialfinancial, and other information about our customers, employees, vendorsvendors, and suppliers. In addition, certain of our vendors receive and maintain certain personal, financialfinancial, and other information about our employees and customers. The use and handling, including security, of this information is regulated by evolving and increasingly demanding data privacy laws and regulations in various jurisdictions, as well as by certain third-party contracts and industry standards. Complying with existing and newly developed laws and regulations, which are subject to change and uncertain interpretations and may be inconsistent from jurisdiction to jurisdiction, may lead to a decline in guest engagement or cause us to incur substantial costs or modifications to our operations or business practices to comply. The increasingly complex and evolving regulatory environment related to data privacy and data protection laws may result in significant costs arising from compliance and from any non-compliance, whether or not due to our negligence, and could affect our brand reputation and our results of operations. We have and expect to continue to have significant expenses arising from compliance with these regulatory regimes due to changes in the techniques and sophistication used to conduct cyber-attacks and breaches. In addition, if our security and information systems are compromised as a result of data corruption or loss, cyber-attackcyber-attack, or a network security incident, or if our employees or vendors fail to comply with these laws and regulationsregulations, or fail to meet industry standards and this information is obtained by unauthorized persons or used inappropriately, it could result in liabilities and penalties and could damage our reputation, cause interruption of normal business performance, cause us to incur substantial costs and result in a loss of customer confidence, which could adversely affect our results of operations and financial condition. Additionally, we could be subject to litigation and government enforcement actions as a result of any such failure.

We are subject to a number of risks relating to public policy changes and federal, statestate, and local regulation of our business, including in the areas of environmental matters, minimum wage, employee benefit regulations, unionization, menu labeling, immigration requirementsrequirements, and taxes, and an insufficient or ineffective response to legislation or government regulation may adversely impact our cost structure, operational efficienciesefficiencies, and talent availability.

The restaurant industry is subject to extensive federal, state, locallocal, and international laws and regulations. The development and operation of restaurants depends on the selection and acquisition of suitable sites to a significant extent, which are subject to building, zoning, land use, environmental, traffictraffic, and other regulations and requirements. We are subject to licensing and regulation by state and local authorities relating to health, sanitation, environmental impact, safety and fire standardsstandards, and the sale of alcoholic beverages. We are subject to laws and regulations relating to the preparation and sale of food, including regulations regarding product safety, nutritional contentcontent, and menu labeling. We are also subject to federal, state, and local laws governing employment practices and working conditions. These laws cover minimum wage rates, wage and hour practices, labor relations, paid and family leave, workplace safety, and immigration, among others. The myriad of laws and regulations being passed at the state and local level creates unique challenges for a multi-state employer as different standards apply to different locations, sometimes with conflicting requirements. We must continue to monitor and adapt our employment practices to comply with these various laws and regulations.

We are subject to a variety of federal, statestate, and local laws and regulations relating to the use, storage, discharge, emissionemission, and disposal of hazardous materials. There also has been increasing focus by United States and overseas governmental authorities on other environmental matters, such as climate change, the reduction of greenhouse gas emissionsemissions, and water consumption. This increased focus may lead to new initiatives directed at regulating a yet to be specified array of environmental matters. Legislative, regulatoryregulatory, or other efforts to combat climate change or other environmental concerns could result in future increases in the cost of raw materials, taxes, compliance, risk management, transportation and utilities, which could decrease our operating profits and necessitate future investments in facilities and equipment.

We are subject to laws relating to information security, cashless payments and consumer credit, protectionprotection, and fraud. Compliance with these laws and regulations can be costly,costly and time consuming, and any failure or perceived failure to comply with these laws or any breach of our systems could harm our reputation or lead to litigation, which could adversely affect our financial condition or results of operations.

The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements andrequirements, the consequences of litigation relating to current or future laws and regulations, or an insufficient or ineffective response to significant regulatory or public policy issues,issues could negatively impact our cost structure, operational efficienciesefficiencies, and talent availability, and therefore have an adverse effect on our results of operations. Failure to comply with the laws and regulatory requirements of federal, statestate, and local authorities could result in, among other things, revocation of required licenses, administrative enforcement actions, finesfines, and civil and criminal liability. Compliance with these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings.

We face intense competition, and if we have an insufficient strategy or focus on competition and the consumer landscape, our business, financial conditioncondition, and results of operations could be adversely affected.

The full-service dining sector of the restaurant industry is intensely competitive with respect to pricing, service, location, personnel, take-out and delivery optionsoptions, and type and quality of food, and there are many well-established competitors. We compete within each market with national and regional restaurant chains and locally-owned restaurants. We also face growing competition as a result of the trend toward convergence in grocery, delideli, and restaurant services, particularly in the supermarket industry which offers “convenient meals” in the form of improved entrées, side dishesdishes, or meal preparation kits from the deli or prepared foods sections. Furthermore, delivery aggregators and food delivery services provide consumers with convenient access to a broad range of competing restaurant chains and food retailers, particularly in urbanized areas, and may form a closer relationship with our customers and increase costs to us. We compete primarily on the quality, varietyvariety, and value perception of menu items. The number and location of restaurants, type of brand, quality and efficiency of service, attractiveness of facilitiesfacilities, and effectiveness of advertising and marketing programs are also important factors. We anticipate that intense competition will continue with respect to all of these factors. We may be unable to successfully respond to changing consumer preferences, including with respect to new technologies and alternative methods of engaging with our brands, like delivery. In addition, online platforms and aggregators may direct potential customers to other options based on paid placements, online reviewsreviews, or other factors. If we are unable to continue to compete effectively, our business, financial conditioncondition, and results of operations could be adversely affected.

Consumers are continually changing health and dietary preferences. As a result, our diverse portfolio of restaurant brands areis continually challenged to evolve our menu offerings to appeal to these changing customer preferences, while maintaining our brand character and retaining popular menu items. During periods of high public health risk such as during the COVID-19 pandemic, many consumers choose to order food To Go or for delivery rather than dining in at full-service restaurants. If other future public health issues cause these preferences to increase, we may need to further adapt our offerings to respond to these additional changes. New information or changes in dietary, nutritional, allergenallergen, or health guidelines or environmental or sustainability concerns, whether issued by government agencies, academic studies, advocacy organizationsorganizations, or similar groups, may cause some groups of consumers to select foods other than those that are offered by our restaurants. If we fail to anticipate changing trends or other consumer preferences, our business, financial conditioncondition, and results of operations could be adversely affected.

Our inability or failure to recognize, respond toto, and effectively manage the accelerated impact of social media could have a material adverse impact on our business.

The proliferation and utilization of existing and innovative social media platforms allows individuals and businesses access to a broad audience of consumers and other interested persons. Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted. Information posted on such platforms at any time may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects, or business. The harm may be immediate without affording us an opportunity for effective redress or correction. The dissemination of information online could harm our business, prospects, financial condition, and results of operations, regardless of the information’s accuracy.

Our competitors are constantly expanding their use of social media and new social media platforms are rapidly being developed, potentially making more traditional social media platforms obsolete. As a result, we need to continuously innovate and develop our social media strategies in order to maintain broad appeal with guests and brand relevance. As part of our marketing efforts, we rely on social media platforms and search engine marketing to attract and retain guests. We also continue to invest in other digital marketing initiatives that allow us to reach our guests across multiple digital channels and build their awareness of, engagement with, and loyalty to our brands. These initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenues, increased employee engagementengagement, or brand recognition. In addition, a variety of risks are associated with the use of social media,media for business purposes presents various risks, including the improper disclosure of proprietary information, negative comments about us, exposure of personally identifiable information, fraud, orand out-of-datethe dissemination of inaccurate information. TheNegative comments about our Company and/or our brands, as well as the inappropriate use of social media vehicles by our guests or employeesemployees, could increase our costs, lead to litigationlitigation, or result in negative publicity that could damage our reputation.

If our competitors increase their spending on advertising and promotions, if our advertising, mediamedia, or marketing expenses increase, if our advertising and promotions become less effective than those of our competitors, or if we do not adequately leverage technology and data analytic capabilities needed to generate concise competitive insight, we could experience a material adverse effect on our sales and our results of operations. A failure to sufficiently innovate, develop guest relationship initiatives, cultivate and sustain brand loyalty, or maintain adequate and effective advertising could inhibit our ability to maintain brand relevance and drive increased sales.

As part of our marketing efforts, we rely on social media platforms and search engine marketing to attract and retain guests. These initiatives may not be successful, and pose a variety of other risks, as discussed above under the heading: “Our inability or failure to recognize, respond toto, and effectively manage the accelerated impact of social media could have a material adverse impact on our business.”

Climate change, adverse weather conditionsconditions, and natural disasters could adversely affect our sales or results of operations.

The long-term effects of climate change and global warming willmay result in more severe, volatile weather or extended droughts, which could increase the frequency and duration of weather impacts on our operations. Adverse weather conditions have in the past and may continue to impact guest traffic at our restaurants, cause the temporary underutilization of outdoor patio seating and, in more severe cases such as hurricanes, tornadoes, wildfireswildfires, or other natural disasters, cause property damage and temporary closures, sometimes for prolonged periods, which could negatively impact our sales or costs. Climate change and government regulation relating to climate change, including regulation of greenhouse gas emissions, could result in construction delays and increased costs, interruptions to the availability or increases in the cost of utilities, and shortages or interruptions in the supply or increases to the costs of food items and other supplies.

As of May 25,31, 2025,2026, 2,0652,104 of our 2,1592,202 restaurants operating in the United States and Canada operate in leased locations, and the leases are generally non-cancellable for some period of time. If we close a restaurant in a leased location, we may remain committed to perform our obligations under the applicable lease, which would include, among other things, payment of the base rent for the balance of the lease term. Additionally, the potential losses associated with our inability to cancel leases may result in our keeping open restaurant locations that are performing significantly below targeted levels. As a result, ongoing lease obligations at closed or underperforming restaurant locations could impair our results of operations. In addition, at the end of thea lease term and expiration of all renewal periods, we may be unable to renew thea lease without substantial additional cost, if at all. As a result, we may be required to close or relocate a restaurant, which could subject us to construction and other costs and risks that may have an adverse effect on our operating performance.

Many of our corporate systems and processes and corporate support for our restaurant operations are centralized at one Florida location. We have disaster recovery procedures and business continuity plans in place to address most events of a crisis nature, including hurricanes and other natural or manmade disasters, and back up and off-site locations for recovery of electronic and other forms of data and information. However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support field operationsoperations, and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operationsoperations, and exposure to administrative and other legal claims.

We may lose sales or incur increased costs if our restaurants experience shortages, delaysdelays, or interruptions in the delivery of food and other products from our third party vendors and suppliers.

We have a limited number of suppliers and distributors for certain of our products and services. Shortages, delaysdelays, or interruptions in the supply of food items and other supplies to our restaurants may be caused by animal disease outbreaks affecting livestock and/or poultry; severe weather; natural disasters such as hurricanes, tornadoes, floods, droughts, wildfireswildfires, and earthquakes; macroeconomic conditionsconditions, (such as tariffs and trade disputes)disputes, resulting in disruptions to the shipping and transportation industries; labor issuesissues, such as increased costs or worker shortages or other operational disruptions at our suppliers, vendorsvendors, or other service providers; the inability of our vendors or service providers to manage adverse business conditions, obtain creditcredit, or remain solvent; or other conditions beyond our control. Such shortages, delaysdelays, or interruptions could adversely affect the availability, qualityquality, and cost of the items we buy and the operations of our restaurants. Supply chain disruptions have increased some of our costs and limited the availability of certain products for our restaurants in the past and may continue to do so. Consumers at our restaurants may be sensitive to price increases, and if we increase menu prices as a result of increased food costs or remove menu items due to shortages, such responses may negatively impact our sales. If we temporarily close a restaurant or remove popular items from a restaurant’s menu, that restaurant may experience a significant reduction in sales during the time affected by the shortage or thereafter as a result of our guests changing their dining habits.

At our existing brands, we may not be able to maintain brand relevance and restaurant operating excellence to achieve sustainable same-restaurant sales growth and warrant new unit growth. Failure to maintain such brand and operating excellence may also result in restaurant closures. Existing brand short-term sales growth could be impacted if we are unable to drive near-term guest count and sales growth, and long-term sales growth could be impacted if we fail to extend our existing brands in ways that are relevant to our guests. A failure to innovate and extend our existing brands in ways that are relevant to guests and occasions in order to generate sustainable same-restaurant traffic growth and produce non-traditional sales and earnings growth opportunities, insufficient focus on our competition, or failure to adequately address declines in the casual dining industry, could have an adverse effect on our results of operations. In addition, we may not be able to support sustained new unit growth or open all of our planned new restaurants, and the new restaurants that we open may not be profitable or as profitable as our existing restaurants. New restaurants typically experience an adjustment period before sales levels and operating margins normalize, and even sales at successful newly-openednewly opened restaurants generally do not make a significant contribution to profitability in their initial months of operation. The opening of new restaurants can also have an adverse effect on guest counts and sales levels at existing restaurants.

The ability to open and profitably operate restaurants is subject to various risks, such as the identification and availability of suitable and economically viable locations; the negotiation of acceptable lease or purchase terms for new locations; the need to obtain all required governmental permitspermits, (including zoning approvals and liquor licenses)licenses, on a timely basis; the need to comply with other regulatory requirements; the availability of necessary contractors and subcontractors; the ability to meet construction schedules and budgets; the ability to manage union activitiesactivities, such as picketing or hand billing which could delay construction; increases in labor and building material costs; supply chain disruptions; the availability of financing at acceptable rates and terms; changes in patterns or severity of weather or other acts of God that could result in construction delays and adversely affect the results of one or more restaurants for an indeterminate amount of time; and our ability to hire and train qualified management personnel and general economic and business conditions. At each potential location, we compete with other restaurants and retail businesses for desirable development sites, construction contractors, management personnel, hourly employeesemployees, and other resources. If we are unable to successfully manage these risks, we could face increased costs and lower than anticipated sales and earnings in future periods.

Our sales and expenses can be impacted significantly by the number and timing of the opening of new restaurants and the closing, relocating and remodeling of existing restaurants. We incur substantial pre-opening expenses each time we open a new restaurant and other expenses when we close, relocaterelocate, or remodel existing restaurants and we have experienced higher than usual costs and expenses in recent years. The expenses of opening, closing, relocating or remodeling any of our restaurants may be higher than anticipated. Increases in the time to procure or shortages of construction labor and materials and capital equipment, or permitting delays, may impact the time it takes to open new restaurants. An increase in such expenses or delays in the timeline to complete construction could have an adverse effect on our results of operations.

Certain of our domestic and all of our international locations other than in Canada are operated by franchisees or licensees. We believe that we have selected high-caliber operating partners and franchisees with significant experience in restaurant operations, and we areprovide providingour themoperating partners with training and support. However, the probability of opening, ultimate successsuccess, and quality of any franchise or licensed restaurant rests principally with the franchisee or licensee. If the franchisee or licensee does not successfully open and operate its restaurants in a manner consistent with our standards, or guests have negative experiences due to issues with food quality or operational execution, our brand values and reputations could suffer, which could have an adverse effect on our business.

We are making efforts to expand our brands overseas through licensing and franchising relationships. There is no assurance that international operations will be profitable or that international growth will continue. Our international operations are subject to all of the same risks associated with our domestic operations, as well as a number of additional risks. These include, among other things, international economic and political conditions, foreign currency fluctuations, trade disputes, potential increases in tariffs andtariffs, differing culturescultures, and consumer preferences. In addition, expansion into international markets could create risks to our brands and reputation.

We use or may use derivatives to hedge price risk for some of our principal ingredient, laborlabor, and energy costs, includingincluding, but not limited to coffee, butter, wheat, soybean oil, pork, beef, diesel fuel, gasolinegasoline, and natural gas. Changes in the values of these derivatives may be recorded in earnings currently, resulting in volatility in both gross margin and net earnings. These gains and losses are reported as a component of cost of sales in our Consolidated Statements of Earnings included in our consolidated financial statements.

The equity markets in the United States have experienced recent periods of volatility due to the impacts of macroeconomic conditions, geopolitical concernsconcerns, and the unpredictability of the impact on the United States economy as a result of these factors. Market volatility has contributed to and may continue to contribute to fluctuations in the Company’s stock price. We have equity hedges in place to protect the Company from exposure to market risk related to future payout of equity-based compensation awards. However, because these hedges also net settle on a cash basis quarterly, we have been and may in the future be required to make cash payments at those quarterly settlement dates and the amounts of those payments are difficult to predict during periods of extreme volatility in the equity markets. These cash payments may ultimately be offset by payments to us from the hedge counterparties or reductions in expected payouts to employees when those equity hedges finally fully settle and the related equity awards pay out.

We regard our Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Chuy’s®, Yard House®, Ruth’s Chris Steak House®, Cheddar’s Scratch Kitchen®, The Capital Grille®, Chuy’s®, Seasons 52®, Eddie V’s Prime Seafood®, Bahama Breeze®, The Capital Burger ®, Darden®, and Darden Restaurants® service marks, and other service marks and trademarks related to our restaurant businesses, as having significant value and being important to our marketing efforts. We rely on a combination of protections provided by contracts, copyrights, patents, trademarks, service marksmarks, and other common law rights, such as trade secret and unfair competition laws, to protect our restaurants and services from infringement. We have registered certain trademarks and service marks in the United States and foreign jurisdictions. However, we are aware of names and marks identical or similar to our service marks being used from time to time by other persons. Although our policy is to oppose any such infringement, further or unknown unauthorized uses or other misappropriation of our trademarks or service marks could diminish the value of our brands and adversely affect our business. In addition, effective intellectual property protection may not be available in every country in which we have or intend to open or franchise a restaurant. Although we believe we have taken appropriate measures to protect our intellectual property, there can be no assurance that these protections will be adequate, and defending or enforcing our service marks and other intellectual property could result in the expenditure of significant resources.

Environmental, Social, and Governance (“ESG”) matters, our reporting of such matters, or sustainability ratings could negatively impact our business, results of operations and financial condition.

ESG relatedESG-related matters have received increased focus recently from investors, employees, ratings agencies, governmental agenciesagencies, and other stakeholders.stakeholders, often with differing and competing expectations and standards. From time to time, we may publish statements relating to our commitment to responsible business, including commitments relating to greenhouse gas emissions. Such statements reflect the Company’s current plans and aspirations at the time they are made, and should not be construed as guarantees or that we will be able to achieve them. Our failure to adequately update, accomplishaccomplish, or accurately track and report on these commitments on a timely basis, or at all, could adversely affect our reputation, financial performanceperformance, and growth, and expose us to increased scrutiny from the investment community, special interest groupsgroups, and enforcement authorities. In addition, as an “anti-ESG” sentiment exists among some individuals and government institutions, we may also face scrutiny, reputational risk, lawsuits or market access restrictions from these parties regarding our ESG initiatives. Additionally, we may face increased scrutiny related to any third party sustainability ratings we receive, which could adversely affect our reputation, business, and results of operations.

Litigation, including allegations of illegal, unfairunfair, or inconsistent employment practices, may adversely affect our business, financial conditioncondition, and results of operations.

ThisThe discussionfollowing Management’s Discussion and analysis below for Darden Restaurants, Inc. (Darden, the Company, we, us or our)Analysis should be read in conjunction with our consolidated financial statements and related financial statement notes included in Part II of this report under the caption “Item 8 - Financial Statements and Supplementary Data.” We operate on a 52/53-week fiscal year, which ends on the last Sunday in May. Fiscal 2026, which ended May 31, 2026, consisted of 53 weeks; fiscal 2025, which ended May 25, 2025, and fiscal 2024, which ended May 26, 2024, each consisted of 52 weeks.weeks; Fiscaland 2026,fiscal 2027, which ends on May 31,30, 2026,2027, will consist of 5352 weeks.

Our business operates in the full-service dining segment of the restaurant industry. At May 25,31, 2025,2026, we owned and operated 2,1592,202 restaurants through subsidiaries in the United States and Canada under the Olive Garden®, LongHorn Steakhouse®, Cheddar’s Scratch Kitchen®, Chuy’s®, Yard House®, Ruth’s Chris Steak House®, (Ruth’sCheddar’s Chris)Scratch Kitchen®, The Capital Grille®, Chuy’s®, 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 and Canada,States, except for 5four restaurants weoperating manage through joint venture or otherunder contractual agreementsagreements, one restaurant that we jointly own with a third party and 85operate independently, and 87 franchised restaurants. We also have 6980 franchised restaurants in operation located in Canada, Latin America, the Caribbean, Asia andAsia, the Middle East.East, and Europe. All intercompany balances and transactions have been eliminated in consolidation.

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 $35.4 million of cash on Chuy’s balance sheet at closing. As a result of the acquisition and related integration efforts, we incurred expenses of $9.5 million ($7.1 million, net of tax) during fiscal 2026 and $44.6 million ($36.7 million, net of tax) during fiscal 2025, which are primarily included in general and administrative expenses in our consolidated statements of earnings. We finalized the twelvepurchase monthsprice endedallocation related to the Chuy’s acquisition in the first quarter of fiscal 2026, which resulted in $267.2 million of goodwill, representing sales and unit growth opportunities, in addition to supply chain and support cost synergies. As of May 25,31, 2025.2026, all Chuy’s operations have been fully integrated into Darden’s operations.

•Total sales increased 6.09.4 percent to $13.21 billion in fiscal 2026 from $12.08 billion in fiscal 20252025, driven by a 2.1 percent increase in sales from $11.39an billionextra week of operations in fiscal 2024 driven by2026, a blended same-restaurant sales increase of 2.04.5 percentpercent, and sales from the addition of 103 net company-owned Chuy’s restaurants and 25 other43 net new restaurants.

•Diluted net earnings per share from continuing operations increased to $10.44 in fiscal 2026 from $8.88 in fiscal 20252025, froma $8.5317.6 percent increase. The extra week of operations in fiscal 2024,2026 acontributed 4.1$0.25 percentto increase.diluted net earnings per share from continuing operations.

•Net loss from discontinued operations decreasedincreased to $7.0 million ($0.06 per diluted share) in fiscal 2026, from $1.4 million ($0.02 per diluted share) in fiscal 2025, from $2.9 million ($0.02 per diluted share) in fiscal 2024.2025. When combined with results from continuing operations, our diluted net earnings per share was $10.38 for fiscal 2026 and $8.86 for fiscal 2025 and $8.51 for fiscal 2024.2025.

We expect fiscal 20262027 sales from continuing operations to increasebe between$13.60 7.0billion to 8.0$13.75 percent,billion, driven by growth of 2.0 percent related to the fifty-third week in fiscal 2026, same-restaurant sales growth (1) of 2.02.5 percent to 3.5 percent,percent and sales from 6075 to 6580 new restaurant openings. In fiscal 2026,2027, we expect our annual effective tax rate to be 13approximately 13.5 percent, and we expect capital expenditures incurred to build new restaurants, remodelremodel, and maintain existing restaurants and technology initiatives to be betweenapproximately $700 million and $750$875 million.

(1) Annual same-restaurant sales is a 52-week metric and excludes the impact of Chuy’s,Bahama which will not have been owned and operated by Darden for a 16-month period prior to the beginning of fiscal 2026,Breeze as well as any additionalall locations notare expected to be operatedclosed byor converted to other Darden forbrands the(between entirety of theQ3 fiscal year.2026 and Q4 fiscal 2027).

The following table details the number of company-owned restaurants reported in continuing operations at the end of fiscal 2025,2026, compared withto the number open at the end of fiscal 20242025:

The following table presents our company-owned restaurant sales, U.S. same-restaurant sales (“SRS”), and average annual sales per restaurant by segment for the periods indicated:

(1)Same-restaurant sales is a year-over-year comparison of each period’s sales volumes for a 52-week yearyear, and is limited to restaurants that have been open,open and operated by Darden,Darden for at least 16 months.months, and excludes the impact of Chuy’s, as they were not owned and operated by Darden for a 16-month period prior to the beginning of fiscal 2026, as well as Bahama Breeze as all locations are expected to be closed or converted to other brands (between Q3 fiscal 2026 and Q4 fiscal 2027).

Olive Garden’s sales increase for fiscal 20252026 was primarily driven by additional sales from an extra week of operations, a U.S. same-restaurant sales increaseincrease, combined withand revenue from new restaurants. The increase in U.S. same-restaurant sales in fiscal 20252026 resulted from a 4.12.9 percent increase in average check, which includesincluded a 0.70.9 percent increase in off-premise catering sales, partially offset byand a 2.31.0 percent decreaseincrease in same-restaurant guest counts.

LongHorn Steakhouse’s sales increase for fiscal 20252026 was primarily driven by additional sales from an extra week of operations, a same-restaurant sales increaseincrease, combined withand revenue from new restaurants. The increase in same-restaurant sales in fiscal 20252026 resulted from a 3.13.4 percent increase in average check and a 1.93.7 percent increase in same-restaurant guest counts.

OtherFine Business’sDining’s sales increase for fiscal 20252026 was driven by a U.S. same-restaurantadditional sales increasefrom combinedan withextra week of operations, revenue from new restaurantsrestaurants, includingand thesame-restaurant acquisitionsales of Chuy’s.increases. The increase in same-restaurant sales in fiscal 20252026 resulted from a 2.61.4 percent increase in average checkcheck, offset by a 2.40.2 percent decrease in same-restaurant guest counts.

Costs and Expenses in Fiscal 20252026 Compared to Fiscal 20242025:

•RestaurantFood expensesand beverage costs increased as a percentpercentage of salessales, primarily due to a 0.51.2 percent impact from inflation, a 0.2 percent impact from brand mix, including Chuy’s and a 0.1 percent impact from Uber Direct fees, partially offset by a 0.40.9 percent impact from salespricing leverage and a 0.2 percent impact from other expenses.leverage.

•General and administrativeRestaurant expenses increasedremained flat as a percentpercentage of salessales, primarily due to a 0.40.5 percent impact from Chuy’s acquisitioninflation and integrationa costs, 0.10.2 percent impact from inflation,Uber Direct fees, partially offset by a 0.10.6 percent impact from marksales to market adjustmentsleverage and a 0.1 percent impact from restaurantother closures, partially offset by a 0.4 percent impact from reduced Ruth’s Chris acquisition and integration costs and by a 0.2 percent impact from sales leverage.expenses.

•ImpairmentsPre-opening and disposal of assets, netcosts increased as a percentpercentage of salessales, primarily duedriven toby thean decisionincrease toin closenew twenty-tworestaurants underperformingas restaurantcompared locations during the fourth quarter ofwith fiscal 2025.

The effective income tax rates for fiscal 20252026 and 20242025 for continuing operations were 11.512.6 percent and 12.311.5 percent, respectively. During fiscal 2025,2026, we had income tax expense of $174.9 million on earnings before income tax of $1.39 billion compared to income tax expense of $136.2 million on earnings before income taxtaxes of $1.19 billion compared to income tax expense of $145.0 million on earnings before income taxes of $1.18 billion in fiscal 2024.2025. This change was primarily driven by federalincreased taxearnings credits.before taxes.

H.R. 1., also known as the OneOne, BigBig, Beautiful Bill Act (“OBBBA”), was enacted on July 4, 2025. The legislation includes several provisions that may impact the timing and magnitude of certain tax deductions.deductions, Keyincluding provisionsrestoring include100% bonus depreciation for qualifying property and the permanentimmediate extensionexpensing of severaldomestic businessresearch taxand benefitsdevelopment originallycosts. introducedThe underCompany has evaluated the 2017 Tax Cuts and Jobs Act. We are currently evaluating the provisionsimpacts of the OBBBAOBBBA, toand assessthe theireffects potentialof impactthese onprovisions ourhave been incorporated into the accompanying financial position, results of operations and cash flows.statements.

Net earnings from continuing operations for fiscal 20252026 increased 2.015.5 percent and diluted net earnings per share from continuing operations increased 4.117.6 percent compared withto fiscal 2024.2025.

On an after-tax basis, results from discontinued operations for fiscal 20252026 were a net loss of $7.0 million ($0.06 per diluted share) compared to a net loss for fiscal 2025 of $1.4 million ($0.02 per diluted share) compared with a net loss for fiscal 2024 of $2.9 million ($0.02 per diluted share).

We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Chuy’s, Yard House, Ruth’s Chris, Cheddar’s Scratch Kitchen, The Capital Grille, Chuy’s, Seasons 52, Eddie V’s, Bahama BreezeBreeze, and The Capital BurgerBurger, in the U.S. and Canada as operating segments. We aggregate our operating segments into reportable segments based on a combination of the size, economic characteristicscharacteristics, 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 DiningDining, and (4) Other Business. See Note 6 of the Notes to Consolidated Financial Statements (Part II, Item 8 of this report) for further details.

The increasesincrease in the Olive Garden and LongHorn Steakhouse segment profit marginsmargin for fiscal 20252026 were bothwas driven primarily by positive same-restaurant sales and lower food and beveragebeverage, restaurant labor and marketing costs, partially offset by higher restaurant expenses. The decrease in the LongHorn Steakhouse segment profit margin for fiscal 2026 was driven primarily by higher food and beverage costs and marketing costs, partially offset by lower restaurant expenses and marketingrestaurant labor costs. The decrease in the Fine Dining segment profit margin for fiscal 20252026 was driven primarily by negative same-restaurant sales and higher restaurant labor and restaurant expenses, partially offset by lower food and beverage costs. The increase in the Other Business segment profit margin for fiscal 20252026 was driven primarily by positive same-restaurant sales and lower food and beverage costs, partially offset by increased restaurant expenses and marketinglabor costs.

Our sales volumes have historically fluctuated seasonally. Our average sales per restaurant arewere highest in the winterspring and spring,winter, followed by the fallsummer and summer.fall. Holidays, changes in the economy, severe weatherweather, and similar conditions may impact sales volumes seasonally in some operating regions. BecauseDue ofto 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.

We attempt to minimize the annual effects of inflation through appropriate planning, operating practicespractices, and menu price increases. WeIn recentlyrecent operatedyears, inwe ahave period ofexperienced higher than usual inflation, led by food and beverage cost and labor inflation. Food and beverage inflation is principally due to increased costs incurred by our vendors related to higher labor, transportation, tariffs, packaging, and raw materials costs. Some of the impacts of inflation have been offset by menu price increases and other adjustments made during the year. Whether we are able and/or choose to continue to offset the effects of inflation will determine to what extent, if any, inflation affects our restaurant profitability in future periods.

We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles.principles (“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 expenses during the reporting period. Actual results could differ from those estimates.

Land, buildings and equipment, operating lease right-of-use assetsassets, and certain other assets, including definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in our expected future cash flows; changes in expected useful life; unanticipated competition; slower growth rates,rates; ongoing maintenance and improvements of the assets,assets; or changes in the usage or operating performance. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements. Based on a review of operating results for each of our restaurants, given the current operating environment, the amount of net book value associated with lower performing restaurants that would be deemed at risk for impairment is not material to our consolidated financial statements.

We have eleven11 reporting units, eight of which have goodwill and nine of which have trademarks. Goodwill and trademarks are not subject to amortization and have been assigned to reporting units for purposes of impairment testing. The reporting units are our restaurant brands. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in our expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements. We review our goodwill and trademarks for impairment annually, as of the first day of our fourth fiscal quarter, or more frequently if indicators of impairment exist. In fiscal 2026, we performed a quantitative assessment as a part of our annual impairment review.

We evaluate the useful lives of our other intangible assets to determine if they are definite or indefinite-lived. A determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environmentenvironment, and expected changes in distribution channels), the level of required maintenance expendituresexpenditures, and the expected lives of other related groups of assets.

We estimate certain components of our provision for income taxes. These estimates include, among other items, depreciation and amortization expense allowable for tax purposes, allowable tax credits for items such as taxes paid on reported employee tip income, effective rates for state and local income taxestaxes, and the tax deductibility of certain other items. We adjust our annual effective income tax rate as additional information on outcomes or events becomes available.

Typically, cash flows generated from operating activities are our principal source of liquidity, which we use to finance capital expendituresexpenditures, forincluding opening new restaurantsrestaurants, remodeling and to remodel and maintainmaintaining existing restaurants, to paypaying dividends to our shareholdersshareholders, and to repurchaserepurchasing 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.

These ratings are as of the date of the filing of this report and have been obtained with the understanding that Moody’s Investors Service, Standard & Poor’sPoor’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, sellsell, or hold our securities, may be changed, supersededsuperseded, 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 (the “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 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 May 25,31, 2025,2026, we had no outstanding balances and were in compliance with all covenants under the Revolving Credit Agreement. As of May 25,31, 2025,2026, $0.2$194.0 million of letterscommercial ofpaper credit werewas outstanding, which was backed by this facility. After consideration of letters of credit backedsupported by the Revolving Credit Agreement,Agreement. After giving effect to the outstanding commercial paper, as of May 25,31, 2025,2026, we had $1.25$1.06 billion of creditavailable availableborrowing capacity 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 (the “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.

The discussionfollowing Management’s Discussion and analysis below for the Company,Analysis, 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 25,31, 20252026 (“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 FebruaryAugust 22,30, 2026 and FebruaryAugust 23,24, 2025, respectively.

The following table details the number of company-ownedCompany-owned restaurants currently reported in continuing operations that were open at the end of the thirdfirst quarter of fiscal 2026,2027, compared with the number of company-ownedCompany-owned restaurants open at the end of fiscal 20252026 and at the end of the thirdfirst quarter of fiscal 2025.2026.

Our business operates in the full-service dining segment of the restaurant industry. At FebruaryAugust 22,30, 2026, through subsidiaries, we owned and operated 2,1962,218 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’sCheddar’s Chris)Scratch Kitchen®, The Capital Grille®, Chuy’s®, 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 fivefour restaurants weoperating manage through joint venture or otherunder contractual agreementsagreements, one restaurant that we jointly own with a third party and 87operate independently, and 88 franchised restaurants. We also have 7786 international franchised restaurants in operation located in Canada, Latin America, the Caribbean, Asia, EuropeEurope, and the Middle East.

On our June 2025 earnings call, we announced the decision to explore strategic alternatives for the Bahama Breeze brand, whichwhich, includesat that time, included 28 company‑ownedcompany-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.brands. On February 3, 2026, we announced the completion of this process and our expectationdecision that we willto permanently close approximately 14half of the Bahama Breeze restaurantsrestaurants, which we completed on or about April 5, 2026, and our expectation to convert the remaining approximatelyBahama 14Breeze restaurants to other Darden brands over the next 12–18 months. As a result of the expectedend closures,of Q1 fiscal 2027, we impairedhave somecompleted two conversions of the assets related to the 14 Bahama Breeze restaurants to beother closed. See Note 7 to our unaudited consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional information.brands.

•Total sales increased 5.9 percent and 7.85.1 percent to $3.35 billion and $9.49$3.20 billion for the thirdfirst quarterthree andmonths of fiscal 2027 compared to $3.04 billion for the first ninethree 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 3153 net new restaurants and a blended same-restaurant sales increase of 4.23.1 percent1 and 4.4 percent.1percent1.

•Our net earnings from continuing operations were $310.6 million and $805.9$234.3 million for the third quarter and first ninethree months of fiscal 2026, respectively,2027 compared to $323.7 million and $747.0$257.9 million for the third quarter and first ninethree months of fiscal 2025, respectively.2026.

•Reported diluted net earnings per share from continuing operations were $2.68 and $6.91$2.05 for the third quarter and first ninethree months of fiscal 2026, respectively,2027, compared to $2.74 and $6.30$2.19 for the third quarter and first ninethree months of fiscal 2025, respectively.2026.

We expect fiscal 2027 sales growthfrom forcontinuing operations to be $13.60 billion to $13.75 billion, driven by same-restaurant sales growth1 of 2.5 percent to 3.5 percent and sales from 75 to 80 new restaurant openings. In fiscal 20262027, we expect our annual effective tax rate to be approximately 9.513.5 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, we expect capital expenditures incurred to build new restaurants, remodelremodel, and maintain existing restaurants and for technology initiatives to be betweenapproximately $750 and $775$875 million. These amounts all include the addition of Chuy’s and our expectations for Chuy’s results from the date of acquisition forward.

21 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 restaurantslocations are expected to be closed or converted to other brands (between the third quarter of fiscal 2026 andby the fourth quarter of fiscal 2027).2027.

(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 andby the fourth quarter of fiscal 2027).

Olive Garden’s sales increase for the thirdfirst quarter of fiscal 20262027 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 thirdfirst quarter of fiscal 20262027 resulted from a 3.63.4 percent increase in average check, which includes a 1.30.5 percent increase in off-premise catering sales, offset by a 0.42.2 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 thirdfirst quarter of fiscal 20262027 was primarily driven by same-restaurant sales increases, as well as revenue from new restaurants. The increase in same-restaurant sales for the thirdfirst quarter of fiscal 20262027 resulted from a 3.94.5 percent increase in average check combined with a 3.31.6 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 thirdfirst quarter of fiscal 20262027 was primarily driven by revenue from new restaurants, as well as same-restaurant sales increases. The increase in same-restaurant sales for the thirdfirst quarter of fiscal 20262027 resulted from a 2.23.7 percent increase in average check, offset by a 0.12.0 percent decrease in same-restaurant guest counts. Fine Dining’s sales 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 thirdfirst quarter of fiscal 20262027 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.increases. The increase in same-restaurant sales for the thirdfirst quarter of fiscal 20262027 resulted from a 3.65.7 percent increase in average check combinedoffset withby a 0.31.8 percent increasedecrease 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.

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 FebruaryAugust 22,30, 2026 and FebruaryAugust 23,24, 2025.

Three Months Ended FebruaryAugust 22,30, 2026 Compared to Three Months Ended FebruaryAugust 23,24, 2025

•Food and beverage costs increased as a percent of sales primarily due to a 1.5%1.0% impact from inflation and a 0.2%0.4% impact from menubrand mix, partially offset by a 1.0%1.1% impact from pricing leverage and a 0.2% impact from cost saving initiatives.leverage.

•Restaurant labor costs decreased as a percent of sales primarily due to a 1.2% impact from pricingsales leverage and salesbrand leveragemix 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.inflation.

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

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

•Depreciation and amortization expenses remained flatincreased as a percent of sales.sales due to new restaurant openings.

•ImpairmentImpairments and (gain) loss on disposal of assets, net increaseddecreased as a percent of sales primarily due to the gain on the sale of the assets of the Olive Garden Canada Restaurants,Restaurants partiallyand offsetcertain byliabilities therelated decisionthereto toin closefiscal approximately 14 Bahama Breeze restaurants.2026.

Net interest expense increased as a percent of sales for the thirdfirst quarterthree months of fiscal 20262027, driven primarily by increased short termshort-term borrowings. Net interest expense remained flat as percent of sales for the first nine months of fiscal 2026.

The effective income tax rate for continuing operations for the three months ended FebruaryAugust 22,30, 2026 was 12.9 percent compared to an effective income tax rate for the three months ended FebruaryAugust 23,24, 2025 of 13.112.2 percent. The decreaseincrease 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.

On an after-tax basis, losses from discontinued operations for the third quarter and first ninethree months of fiscal 20262027 were $3.8$0.9 million ($0.03$0.01 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 ninethree months of fiscal 20252026 of $0.3$0.1 million ($0.00 per diluted share) and $1.2 million ($0.01 per diluted share), respectively..

We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Chuy’s, Yard House, Ruth’s Chris, Cheddar’s Scratch Kitchen, The Capital Grille, Chuy’s, Seasons 52, Eddie V’s, Bahama Breeze and The Capital Burger, in Norththe AmericaU.S. 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 margin1margin for the periods indicated.

The decrease in Olive Garden’s segment profit margin for the thirdfirst quarter of fiscal 20262027 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.labor. The decreaseincrease in LonghornLongHorn Steakhouse’s segment profit margin for the first nine monthsquarter of fiscal 20262027 was driven by higherlower food and beverage costs, partiallyrestaurant offsetlabor, by lowerand restaurant expenses. The decrease in Fine Dining’s segment profit margin for the thirdfirst quarter and first nine months of fiscal 20262027 was driven primarily by higher restaurant expenses and restaurant labor, partially offset by lower food and beverage costs. The decrease in Other Business’ segment profit margin for the first quarter of fiscal 2027 was driven primarily by higher food and beverage costs and restaurant labor.labor, Otherpartially 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 primarilyoffset by the addition of Chuy’s operating results and lower food and beverage costs and restaurant expenses.

Our sales volumes have historically fluctuated seasonally. Our average sales per restaurant are highest in the winterspring and spring,winter, 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. BecauseDue ofto 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.

Typically, cash flows generated from operating activities are our principal source of liquidity, which we use to finance capital expendituresexpenditures, forincluding opening new restaurantsrestaurants, remodeling and to remodel and maintainmaintaining existing restaurants, to paypaying dividends to our shareholdersshareholders, and to repurchaserepurchasing 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.

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’sPoor’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, sellsell, or hold our securities, may be changed, supersededsuperseded, 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, the “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 FebruaryAugust 22,30, 2026, we had no outstanding balances and were in compliance with all covenants under the Revolving Credit Agreement. As of FebruaryAugust 22,30, 2026, $290.0$480.0 million of commercial paper was outstandingoutstanding, andwhich backedwas supported by thisthe facility.Revolving Credit Agreement. After consideration of commercial paper and letters of credit backed by the Revolving Credit Agreement, as of FebruaryAugust 22,30, 2026, we had $960$770 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 (the “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.

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 acquisitionsacquisitions, and general corporate purposes.

As of FebruaryAugust 22,30, 2026, our outstanding long-term debt consisted principally of:

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 FebruaryAugust 22,30, 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, debenturesdebentures, or other evidences of indebtedness in one or more offerings.

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

Net cash flows provided by operating activities from continuing operations increaseddecreased to $1.28$279.0 billionmillion for the first ninethree months of fiscal 2026,2027, from $1.25$342.5 billionmillion for the first ninethree months of fiscal 2025.2026. Net cash flows provided by operating activities include net earnings from continuing operations of $805.9$234.3 million and $747.0$257.9 million in the first ninethree months of fiscal 20262027 and 2025,2026, respectively. Net cash flows provided by operating activities increaseddecreased in fiscal 20262027 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$171.3 million for the first ninethree months of fiscal 2026,2027, 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$159.3 million for the first ninethree months of fiscal 2025.2026. Capital expenditures increased to $540.9$175.3 million for the first ninethree months of fiscal 20262027 from $472.6$174.1 million for the first ninethree months of fiscal 2025,2026, reflecting an increase in new restaurant construction and remodel spend during fiscal 2026.2027. Additionally, the first ninethree 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$104.4 million for the first ninethree months of fiscal 2026,2027, compared to net cash used in financing activities of $123.9$212.2 million for the first ninethree months of fiscal 2025.2026. Net cash flows used in financing activities for the first ninethree months of fiscal 20262027 included borrowings of commercial paper of $290.0$285.9 million, net, offset by dividends paid of $521.5$184.2 million and share repurchases of $534.4$220.8 million. Net cash flows used in financing activities for the first ninethree months of fiscal 20252026 included repaymentborrowings of commercial paper of $28.6 million, net proceeds from the issuance of long-term debt of $750.0$142.0 million, dividends paid of $494.6$175.1 million and share repurchases of $367.2$182.7 million. Dividends declared by our Board of Directors totaled $4.50$1.62 and $4.20$1.50 per share for the first ninethree months of fiscal 20262027 and 2025,2026, respectively.