Earnings Call Fiscal 2016 Q3 April 5, 2016 Disclaimer IMPORTANT - PowerPoint PPT Presentation

Earnings Call Fiscal 2016 Q3 April 5, 2016

Disclaimer IMPORTANT NOTICE The following slides are part of a presentation by Darden Restaurants, Inc. (the "Company") and are intended to be viewed as part of that presentation (the "Presentation"). No representation is made that the Presentation is complete. Forward-looking statements in this communication regarding our expected earnings performance and all other statements that are not historical facts, including without limitation statements concerning our future economic performance and expenses, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are first made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward- looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports. These risks and uncertainties include food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business, labor and insurance costs, technology failures including a failure to maintain a secure cyber network, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive profitable sales growth, our plans to expand our smaller brands Bahama Breeze, Seasons 52 and Eddie V's, a lack of availability of suitable locations for new restaurants, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products and services, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our intellectual property, impairment in the carrying value of our goodwill or other intangible assets, failure of our internal controls over financial reporting, an inability or failure to manage the accelerated impact of social media and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission. 1

Non-GAAP Information The information in this communication includes financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”), such as adjusted net earnings per diluted share from continuing operations. The Company’s management uses these non -GAAP measures in its analysis of the Company’s performance. The Company believes that the presentation of certain non-GAAP measures provides useful supplemental information that is essential to a proper understanding of the operating results of the Company’s businesses. These non - GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. 2

Earnings Call Fiscal 2016 Q3 April 5, 2016

Fiscal Third Quarter Highlights Darden Sales ($bn) Same-Restaurant Sales Growth - Comparable Calendar Basis 4.2% 3.8% $1.88 $1.85 3.4% $1.73 $1.69 $1.65 $1.61 $1.60 $1.56 2.9% FY14 FY15 FY15 FY16 FY15 FY16 FY15 FY16 Q4 1 Q1 Q2 2 Q3 2 Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Darden Adjusted EPS 3 $1.21 $1.08 $0.99 $0.68 $0.54 $0.32 $0.54 $0.28 FY14 FY15 FY15 FY16 FY15 FY16 FY15 FY16 Q1 Q4 1 Q2 2 Q3 2 1 FY15 Q4 includes the impact of the additional week due to a 53 week fiscal year. 2 FY16 Q2 includes the negative impact of the Thanksgiving holiday shift, which occurred in Q3 of FY15. 3 EPS values adjusted for special items. A reconciliation of GAAP to non-GAAP numbers can be found in the additional information section of this 4 presentation.

Positive Sales and Earnings Momentum Same-Restaurant Sales 1 Q3 Highlights 4.9% 4.9% +600 bps 3.4% 2.8% 2.5% 2.2% Calendar Same-Restaurant Sales 0.5% Same-Restaurant Sales Industry Outperformance 1 FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 6 th 3.0% OG To Go Sales Calendar Same- Consecutive Qtr. of Same- Restaurant Guest Count Restaurant Sales Growth Launched 42% 20% Catering Delivery 18% 17% OG To Go Nationwide 22% 23% 15% 2-Year Growth 14% Q1 Q2 Q3 Q4 FY15 FY16 1 FY16 Same-Restaurant Sales on a comparable calendar basis. Industry excluding Darden brands. 5

Strong Segment Profit Growth Q3 Highlights 2.7% +400 bps Same-Restaurant Sales 1 Calendar Same-Restaurant Sales 5.4% Same-Restaurant Sales Industry Outperformance 1 5.2% 4.8% 3.6% 2.7% 2.6% 12 th -0.7 % Calendar Same- Consecutive Qtr. of Same- FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 Restaurant Guest Count Restaurant Sales Growth 2 nd Year 29% Brand of the Year Ace Metrix Segment Profit Growth 1 FY16 Same-Restaurant Sales on a comparable calendar basis. Industry excluding Darden brands. 6

Same-Restaurant Sales Growth at all Brands Same-Restaurant Sales 1 5.4% 3.1 % 3.7% 3.6% 3.1 % 3.2% 3.1% 2.4% FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 5.3% 5.2% 5.3 % 3.8% 3.8% 3.1% 1.2% FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 6.3% 5.8% 3.2% 6.3 % 2.5% 1.7% -0.6% FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 6.4% 6.1% 5.0% 4.3 % 4.4% 4.3% 0.9% FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 9.6% 5.2% 4.9% 1.3 % 3.9% 3.2% 1.3% FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 1 FY16 Same-Restaurant Sales on a comparable calendar basis 7

Financial Update

Fiscal Third Quarter Highlights 6.2 % $1.21 * Adjusted Diluted EPS from Fiscal Calendar Continuing Operations Same-Restaurant Sales 22 % $64 million Adjusted Diluted EPS Growth vs Dividends Paid Last Year 6 2.3 million Straight Quarters of Double Digit Shares Repurchased Adjusted EPS growth * EPS values adjusted for special items. A reconciliation of GAAP to non-GAAP numbers can be found in the additional information section of this presentation. 9

Fiscal Third Quarter Adjusted Earnings Fiscal 2016 Q3 Adjusted Earnings Growth Drivers 1 Fiscal 2016 Q3 Diluted Net EPS from Continuing Operations $0.84 Debt Retirement Costs 0.34 Real Estate Plan Implementation 0.03 Fiscal 2016 Q3 Adjusted Diluted Net EPS from Continuing Operations $1.21 Fiscal 2016 Q3 Adjusted Diluted EPS vs. Fiscal 2015 Q3 Adjusted Diluted EPS $0.22 Growth % 22.2% Net Incremental Ongoing Impact for Real Estate Transactions Three Months Ended ($ millions, except per share) 02/28/2016 GAAP Rent and Other Taxes (Restaurant Expense & G&A) $32 Depreciation & Amortization (15) Reduction in Interest Expense (11) Net Incremental Expense $6 Net Incremental Reduction to EPS $0.03 1 EPS values adjusted for special items. A reconciliation of GAAP to non-GAAP numbers can be found in the additional information section of this presentation. 10

Adjusted EBIT Margins increased 200 basis points As As Adjusted Reported Q3 2016 Q3 2016 Q3 2016 vs. Q3 2015 (bps) ($ millions) Favorable/(Unfavorable) Food & Beverage 29.1% $537.8 29.1% 160 Restaurant Labor 31.0% $572.5 31.0% (10) Restaurant Expenses 16.5% $305.2 16.5% (60) Marketing 2.7% $50.7 2.7% 30 Restaurant-Level EBITDA 20.6% $381.3 20.6% 120 G&A 5.2% $89.2 4.8% (30) Depreciation & Amortization 3.6% $67.0 3.6% 100 Impairments (0.1)% ($2.1) (0.1%) 10 EBIT 12.0% $227.2 12.3% 200 Interest Expense 4.5% $11.8 0.6% 70 EBT 7.5% $215.4 11.7% 270 Income Tax Expense 1.6% $58.4 3.2% (150) 21.7% 27.1% Note: Effective Tax Rate EAT 5.9% $157.0 8.5% 130 Note: Continuing operations, values may not tie due to rounding. A reconciliation of GAAP to non-GAAP numbers can be found in the 11 additional information section of this presentation.

Sales and profit increased in all segments All of our segments had positive sales growth … ($ millions) Fine Dining Other $1,020 $957 $425 $404 $256 $232 $146 $139 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 …coupled with significant Segment Profit 1 growth ($ millions) Fine Dining Other Segment Profit 21.0% 21.6% 16.3% 20.0% 22.3% 23.2% 16.8% 16.5% Margin % $220.1 $201.4 $85.0 $65.9 $42.3 $39.0 $33.9 $30.9 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 1 Segment profit calculated as sales less costs of food & beverage, restaurant labor, restaurant expenses and marketing expenses. 12