During his game plan for the week, Jim Cramer said he prefers Brinker International, Inc. (NYSE:EAT) over Darden Restaurants, Inc. (NYSE:DRI) during the September 18 episode of Mad Money, while praising Darden’s Olive Garden business. He said:
Thursday, we get results from Darden. Okay, what’s that about?… Darden’s the parent of Olive Garden, and Olive Garden is a gold mine. That said, call me a Brinker guy because (of) its 3 for Me. I like them. They have a stronger game plan. By the way, that $11 special is very good.
Darden Has Scale, But Olive Garden Has Slowed
Darden Restaurants, Inc. generated $13.21 billion in fiscal 2026 sales, up 9.4%, while consolidated same-restaurant sales increased 4.5%. Olive Garden’s comparable sales rose 4% for the year but slowed to 2.4% in the fourth quarter, compared with 9.5% growth at LongHorn Steakhouse. The company expects fiscal 2027 sales of $13.60 billion to $13.75 billion and diluted EPS from continuing operations of $11.10 to $11.35. Its September 24 report will provide the first quarterly update against that outlook.
Brinker International, Inc.’s latest results showed faster comparable-sales growth. Fiscal 2026 company comparable sales increased 8.1%, with Chili’s up 9.2%, while fourth-quarter Chili’s comparable sales rose 5.6%. Brinker expects fiscal 2027 revenue of $6.15 billion to $6.27 billion and adjusted EPS of $12.60 to $13.40.
Chili’s Has Maintained Its Momentum
Cramer’s reference to the “$11 special” is Chili’s 3 for Me platform, which starts at $10.99. Brinker International, Inc. said fourth-quarter Chili’s comparable-sales growth was driven by menu pricing and higher traffic, while Chili’s restaurant operating margin increased to 18.6% from 18.2% a year earlier.
CEO Kevin Hochman said Chili’s had completed five consecutive years of same-store sales growth, with a cumulative increase of 71%. The company also said Chili’s momentum accelerated in July. That contrasts with Darden Restaurants, Inc.’s latest brand-level results, where LongHorn’s 9.5% fourth-quarter comparable-sales growth significantly exceeded Olive Garden’s 2.4%.
Bear Case Rests on Growth Concentration
Darden Restaurants, Inc.’s 2.5% to 3.5% comparable-sales guidance is close to Olive Garden’s 2.4% increase in the latest quarter, making performance at its largest brand important to the company’s ability to deliver that outlook. Darden also carried approximately $2.14 billion of long-term debt as of May 31.
Brinker International, Inc.’s concentration is more pronounced. Chili’s generated $1.41 billion of fourth-quarter company sales, compared with $1.52 billion for Brinker overall, while Maggiano’s comparable sales declined 3.9% in fiscal 2026. As per Brinker’s fiscal 2026 Form 10-K, $419.7 million of long-term debt and finance leases were reported as of June 24, compared with $110 million of cash. A weaker Chili’s comparable-sales result would therefore affect a larger portion of Brinker’s reported sales.
More Hedge Funds Hold Brinker
Insider Monkey, which tracks more than 1,000 hedge funds, recorded 32 hedge fund holders of Darden in Q2, down from 39 in Q1. Brinker had 48 holders in Q2, compared with 49 in Q1. Short interest also differs between the companies, with Darden’s at approximately 5.9% of the float and Brinker’s at roughly 13.5%.
Darden Restaurants, Inc. provides greater scale and diversification, but its latest results show a gap between Olive Garden and LongHorn. Brinker International, Inc. has faster comparable-sales growth, with Chili’s producing five consecutive years of gains, but Chili’s also represents most of Brinker’s sales. Those differences frame the comparison as Darden prepares to report on September 24.
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