People aren’t going to Olive Garden as much — but the stock is jumping on a new Uber deal

Dining out can be a cherished experience, but today’s consumers are increasingly opting to stay home and save.

Darden Restaurants Inc., (DRI), the parent company of Olive Garden, is witnessing the trend firsthand, and to combat the slowdown, it has struck a deal with Uber to launch a new delivery service. Shares of Darden jumped by 7% following the announcement during premarket trading.

The initiative will begin as a pilot program at select Olive Garden locations across the U.S. in late 2024, with plans to roll out the service to all 900 restaurants nationwide by May 2025, if the pilot is “successful.”

“Guests have been asking us for home delivery options and they continue to show they are willing to pay for the convenience,” said Rick Cardenas, Darden CEO, in a statement.

The announcement comes on the heels of the company’s lower-than-expected first-quarter sales and profit expectations, largely due to a decline in customer traffic from diners facing persistent inflationary pressures.

Florida-based Darden, which also owns LongHorn Steakhouse, reported a 1.1% decrease in same-store sales across all its brands, compared to a 5% increase the previous year, as diners cut back on dining out.

“The significant step down in traffic during July, led to our first-quarter earnings being lower than expected,” CEO Cardenas said, noting that following “softness in July,” sales have improved. The company reaffirmed its annual guidance.

Darden reported revenue of $2.76 billion, about $1.75 earnings per share for the first quarter. The Street had forecasted it would report revenue of $2.8 billion, about $1.83 earnings per share, according to FactSet.

Sales at Olive Garden fell 2.9%, while the parent company’s fine-dining chains, including Ruth’s Chris and Capital Grille, saw a 6.0% decline. LongHorn Steakhouse, on the other hand, experienced a 3.7% increase in same-restaurant sales.

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