Darden Restaurants’ Q3 FY25 Performance: A Commercial Real Estate Catalyst in the Casual Dining Sector
Darden Restaurants continues to serve up more than just meals—it’s cooking up serious momentum in the commercial real estate (CRE) space. With strong financials in Q3 FY25, an aggressive expansion plan, and valuable demographic insights from recent foot traffic trends, Darden’s performance is a leading indicator for the retail CRE market, particularly in the casual dining segment.
Q3 FY25: Strong Darden Fundamentals Driving CRE Demand
Darden posted a 6.2% year-over-year (YoY) increase in total sales for Q3 FY25, reaching $3.2 billion. With 40 net new restaurants opened and a full-year target of 50 to 55, the company is laying out a reliable pipeline of retail space demand. Adjusted EPS of $2.80 (+6.9% YoY) underscores its profitability, providing ample fuel for continued expansion.
Brand-level performance was mixed, with LongHorn Steakhouse leading the charge (+2.6% same-restaurant sales), Olive Garden showing modest growth (+0.6%), and fine dining seeing a small decline. The acquisition of Chuy’s added over 100 restaurants and is expected to reshape Darden’s demographic reach, adding a younger, more affluent audience to its customer base.
Foot Traffic: LongHorn Steakhouse Outpaces the Sector
Data from Placer.ai confirms LongHorn’s operational strength. In Q3 2024, LongHorn saw a 4.0% YoY visit increase, twice the growth rate of the broader full-service restaurant (FSR) segment, which declined by 2.0%. In August alone, foot traffic to LongHorn surged 9.3% YoY, bolstered by weekday specials and suburban appeal.
The chain’s success is driven not only by expansion but by increased average visits per location, up 2.6% YoY in Q3 2024. In a tight retail real estate environment, this makes LongHorn an attractive tenant for landlords and developers looking for stable, foot traffic–generating anchors.
Olive Garden and Cheddar’s: Steady Drivers of Demand
Olive Garden and Cheddar’s Scratch Kitchen also posted positive August 2024 visit growth at 6.9% and 3.1% YoY, respectively. While these chains cater to middle-income diners (in trade areas near the national median household income of $76.1K), they continue to deliver reliable demand due to scale, consistency, and strong suburban pull.
Chuy’s: Expanding Darden’s Demographic Reach
Darden’s acquisition of Chuy’s represents more than just a portfolio play, it’s a strategic pivot toward higher-income, younger diners. Trade areas for Chuy’s locations show a median HHI of $86.2K, and the brand outperforms nearly all Darden brands in attracting “Young Professionals,” a demographic segment crucial for long-term growth.
This positions Chuy’s to become a growth engine not just in the South, but potentially in the West, Midwest, and Northeast, as Darden explores national expansion. Developers should watch for opportunities to serve this brand in mixed-use or lifestyle centers that appeal to younger, affluent audiences.
Adapting Prototypes, Expanding Reach
Darden is testing smaller, more efficient prototypes, 20% smaller and 15% cheaper to build, for Yard House and Cheddar’s. These formats allow the company to enter markets that might otherwise be cost-prohibitive, opening in infill, second-generation, or high-barrier locations to consideration. This evolution could make Darden an even more versatile tenant in a range of retail formats.
| Brand | Avg. Size | Target Markets | Foot Traffic Trend |
| Olive Garden | 6,261 – 8,500 sq ft | Regional, high-traffic suburban areas | +6.9% YoY (Aug 2024) |
| LongHorn Steakhouse | 5,000 – 5,800 sq ft | Suburban markets across East, Midwest, South | +9.3% YoY (Aug), +4.0% Q3 YoY |
| Cheddar’s | ~7,000 sq ft | Broad appeal in middle-income suburbs | +3.1% YoY (Aug 2024) |
| Chuy’s | 5,400 – 8,500 sq ft | Expanding from Texas/Southeast to new markets | Key demo: Young Professionals |
Regional Dynamics: Room to Grow
LongHorn Steakhouse sees its strongest performance in Georgia (13.3% of visits), followed by Florida. Texas Roadhouse remains a major competitor, especially in the Southwest, but data suggests there’s plenty of room for both brands in states like Florida, Ohio, and Pennsylvania.
Darden’s brands excel in suburban markets with diverse consumer profiles—from “Wealthy Suburban Families” to “Blue Collar Suburbs.” This wide appeal enhances their viability in a variety of retail settings, including power centers, freestanding pads, and redeveloped mall outparcels.
Financial Strength Enables CRE Execution
Darden’s financial health is a core advantage. With $650 million earmarked for capital expenditures in FY25, including new development and upgrades, the company has both the cash flow and operational discipline to execute site selection efficiently. Share repurchases and dividends signal a balanced capital allocation strategy, reinforcing confidence in sustained growth.
Outlook: A CRE-Friendly Expansion Pipeline
The broader restaurant market remains supportive. Industry projections point to $1.5 trillion in 2025 sales and a net gain of 200,000 jobs. While labor and input costs remain headwinds, Darden’s focus on value, experience, and strategic segmentation positions it to thrive.
For CRE investors and developers, Darden is more than a tenant—it’s a bellwether. With diverse brands, robust traffic trends, and a clear commitment to physical expansion, Darden is poised to remain a key driver of retail real estate demand across suburban America.
