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Darden Restaurants (DRI) shares gained after the Olive Garden parent company reported earnings and lifted its sales outlook. The company's results come as restaurants run promotions to appeal to value-conscious consumers, like Olive Garden's never-ending pasta deal or Chili's (EAT) and Applebee's (DIN) respective value meals.
Guggenheim Securities senior analyst Gregory Francfort joins Market Domination with Julie Hyman and Josh Lipton to share his outlook for the restaurant industry in 2025.
"Looking back at 2024, it's been somewhat of a challenging year from a top-line perspective for restaurants, cost inflation has come down, [and] you still have labor going up," Francfort says.
The analyst adds, "Food costs are much more benign than they were 12 months ago, and as we look out over the next 12 months, we expect food costs maybe ticks up a little bit [as] labor [is] kind of still sticky" and consumers spend more.
He says a key challenge for restaurants right now is "having to try to balance a consumer that's pushing back a bit with also delivering a bottom line that satisfies the investor base."
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This post was written by Naomi Buchanan.