DRI

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How DRI rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

Text kept

72%

of sentences unchanged

Added

new sentences

Dropped

sentences removed

Length

−178

words, now 9,690

New in FY2026

Our results of operations depend, in part, on our ability to anticipate and react to changes in the price and availability of food, ingredients, labor, health care, utilities, fuel, and other related costs over which we may have little control.
We have experienced and may continue to experience higher than normal inflationary conditions with respect to most or all of these costs during fiscal 2026.
We seek to leverage our size to achieve economies of scale in purchasing, but there can be no assurances that we can always do so effectively.
In addition, our ability to offset the effects of inflation through pricing actions may be constrained by competitive dynamics and consumer demand sensitivity, and if menu pricing does not sufficiently offset rising costs or adversely affects guest traffic, our operating margins and results of operation could be adversely affected.
Our business results depend, in part, on a number of industry-specific and general economic factors, many of which are beyond our control, and may adversely affect consumer behavior, our sales, and our results of operations.
Economic recession, a protracted economic slowdown, a worsening economy, political instability, increased unemployment, increased inflation, increased energy prices, rising interest rates, a downgrade of the U.S. government’s long-term credit rating, imposition of retaliatory tariffs on important U.S. imports and exports or other industry-wide cost pressures have affected and can continue to affect consumer behavior and spending for restaurant dining occasions and may lead to a decline in sales and earnings.
Our long-term growth depends on our ability to recruit and retain high-quality team members to work in and manage our restaurants.
Changes and further anticipated changes in immigration laws, regulations, and enforcement could decrease the pool of candidates with legal work authorizations, cause disruption in the workforce for all companies that rely on hourly workers, and increase the costs, time, and requirements to hire new employees.
A failure to maintain the organizational capacity necessary to support leadership excellence and develop adequate bench strength with the key skill sets required for growth or a loss of key skill sets could jeopardize our ability to meet our business performance expectations and growth targets.
Our restaurant operations are subject to United States federal, state, and local laws governing such matters as minimum wages, working conditions, overtime, and tip credits.
Labor inflation, including increases in federal, state, and local minimum wage rates, may require us to increase not only the wages of our minimum wage employees, but also the wages paid to employees at wage rates that are above minimum wage.
In addition, if property and liability insurance becomes less available or more difficult to obtain, we may incur higher premium costs and face increased exposure to uninsured losses.
The United States and other countries have experienced, or may experience in the future, outbreaks of viruses, such as the novel coronavirus that caused COVID-19, norovirus, avian flu, “SARS,” “MERS,” H1N1, “swine flu,” or other diseases.
If a virus or other disease is transmitted by human contact or respiratory transmission, our employees or guests could become infected, or could choose or be advised, to avoid gathering in public places, any of which could adversely affect our restaurant guest traffic and our ability to adequately staff our restaurants, receive deliveries on a timely basis, or perform functions at the corporate level.
In addition, regardless of the source or cause, any report of food-borne illnesses caused by pathogens such as E. coli, hepatitis A, norovirus, listeria, salmonella, or other food safety issues including food tampering or contamination at one of our restaurants, whether true or not, could adversely affect the reputation of our brands and have a negative impact on our sales.
Social media has dramatically increased the speed with which negative publicity, including actual or perceived food safety incidents, is disseminated before there is any meaningful opportunity to investigate, validate, respond to, and mitigate an issue.
As technology continues to play an increasing role in our guests’ experiences, disruptions, failures, or other performance issues with guest-facing technology systems could impair the benefits that technology provides to our business and negatively affect our relationship with our guests.
In addition, the rapid evolution and increased adoption of artificial intelligence technologies may increase our, our service providers’, and key suppliers’ cybersecurity risks.
We are subject to licensing and regulation by state and local authorities relating to health, sanitation, environmental impact, safety and fire standards, and the sale of alcoholic beverages.
We are also subject to federal, state, and local laws governing employment practices and working conditions.
There also has been increasing focus by governmental authorities on other environmental matters, such as climate change, the reduction of greenhouse gas emissions, and water consumption.
Compliance with these laws and regulations can be costly and time consuming, and any failure or perceived failure to comply with these laws or any breach of our systems could harm our reputation or lead to litigation, which could adversely affect our financial condition or results of operations.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements, the consequences of litigation relating to current or future laws and regulations, or an insufficient or ineffective response to significant regulatory or public policy issues could negatively impact our cost structure, operational efficiencies, and talent availability, and therefore have an adverse effect on our results of operations.
As a result, our diverse portfolio of restaurant brands is continually challenged to evolve our menu offerings to appeal to these changing customer preferences, while maintaining our brand character and retaining popular menu items.
The harm may be immediate without affording us an opportunity for effective redress or correction.
In addition, the use of social media for business purposes presents various risks, including the improper disclosure of proprietary information, exposure of personally identifiable information, fraud, and the dissemination of inaccurate information.
Negative comments about our Company and/or our brands, as well as the inappropriate use of social media vehicles by our guests or employees, could increase our costs, lead to litigation, or result in negative publicity that could damage our reputation.
A failure to sufficiently innovate, develop guest relationship initiatives, cultivate and sustain brand loyalty, or maintain adequate and effective advertising could inhibit our ability to maintain brand relevance and drive increased sales.
The long-term effects of climate change and global warming may result in more severe, volatile weather or extended droughts, which could increase the frequency and duration of weather impacts on our operations.
As of May 31, 2026, 2,104 of our 2,202 restaurants operating in the United States operate in leased locations, and the leases are generally non-cancellable for some period of time.
In addition, at the end of a lease term and expiration of all renewal periods, we may be unable to renew a lease without substantial additional cost, if at all.
Shortages, delays, or interruptions in the supply of food items and other supplies to our restaurants may be caused by animal disease outbreaks affecting livestock and/or poultry; severe weather; natural disasters such as hurricanes, tornadoes, floods, droughts, wildfires, and earthquakes; macroeconomic conditions, such as tariffs and trade disputes, resulting in disruptions to the shipping and transportation industries; labor issues, such as increased costs or worker shortages or other operational disruptions at our suppliers, vendors, or other service providers; the inability of our vendors or service providers to manage adverse business conditions, obtain credit, or remain solvent; or other conditions beyond our control.
At our existing brands, we may not be able to maintain brand relevance and restaurant operating excellence to achieve sustainable same-restaurant sales growth and warrant new unit growth.
Certain of our domestic and all of our international locations are operated by franchisees or licensees.
We believe that we have selected high-caliber operating partners and franchisees with significant experience in restaurant operations, and we provide our operating partners with training and support.
If the franchisee or licensee does not successfully open and operate its restaurants in a manner consistent with our standards, or guests have negative experiences due to issues with food quality or operational execution, our brand values and reputations could suffer, which could have an adverse effect on our business.
These include, among other things, international economic and political conditions, foreign currency fluctuations, trade disputes, potential increases in tariffs, differing cultures, and consumer preferences.
We regard our Olive Garden ® , LongHorn Steakhouse ® , Yard House ® , Ruth’s Chris Steak House ® , Cheddar’s Scratch Kitchen ® , The Capital Grille ® , Chuy’s ® , Seasons 52 ® , Eddie V’s Prime Seafood ® , Bahama Breeze ® , The Capital Burger ® , Darden ® , and Darden Restaurants ® service marks, and other service marks and trademarks related to our restaurant businesses, as having significant value and being important to our marketing efforts.
ESG-related matters have received increased focus recently from investors, employees, ratings agencies, governmental agencies, and other stakeholders, often with differing and competing expectations and standards.
These actions and proceedings may involve allegations of illegal, unfair or inconsistent employment practices, including wage and hour violations and employment discrimination; guest discrimination; food safety issues including poor food quality, food-borne illness, food tampering, food contamination, and adverse health effects from consumption of various food products or high-calorie foods; other personal injury; violation of “dram shop” laws (providing an injured party with recourse against an establishment that serves alcoholic beverages to an intoxicated party who then causes injury to himself or a third party); trademark infringement; violation of federal securities laws; or other concerns.

and 6 more.

Gone since FY2025

Our results of operations depend significantly on our ability to anticipate and react to changes in the price and availability of food, ingredients, labor, health care, utilities, fuel and other related costs over which we may have little control.
While inflationary conditions have somewhat abated in recent periods, we have experienced and continue to experience higher than normal inflationary conditions with respect to most or all of these costs during fiscal 2025.
We attempt to leverage our size to achieve economies of scale in purchasing, but there can be no assurances that we can always do so effectively.
Our business results depend on a number of industry-specific and general economic factors, many of which are beyond our control, and may adversely affect consumer behavior and our sales and our results of operations.
Economic recession, a protracted economic slowdown, a worsening economy, political instability, increased unemployment, increased inflation, increased energy prices, rising interest rates, a downgrade of the U.S. government’s long-term credit rating, imposition of retaliatory tariffs on important U.S. imports and exports or other industry-wide cost pressures have affected and can continue to affect consumer behavior and spending for restaurant dining occasions and lead to a decline in sales and earnings.
Our long-term growth depends substantially on our ability to recruit and retain high-quality team members to work in and manage our restaurants.
Anticipated changes in immigration laws and regulations could decrease the pool of candidates with legal work authorizations, cause disruption in the workforce for all companies that rely on hourly workers and increase the costs, time and requirements to hire new employees.
A failure to maintain appropriate organizational capacity and capability to support leadership excellence (adequate resources, innovative skill sets and expectations) and build adequate bench strength required for growth or a loss of key skill sets could jeopardize our ability to meet our business performance expectations and growth targets.
Our restaurant operations are subject to United States and Canadian federal, state and local laws governing such matters as minimum wages, working conditions, overtime and tip credits.
As federal, state and local minimum wage rates increase, we may need to increase not only the wages of our minimum wage employees, but also the wages paid to employees at wage rates that are above minimum wage.
Further, the decreased availability of property and liability insurance has the potential to negatively impact the cost of premiums and the magnitude of uninsured losses.
The United States and other countries have experienced, or may experience in the future, outbreaks of viruses, such as the novel coronavirus that caused COVID-19, norovirus, avian flu or “SARS,” “MERS,” H1N1 or “swine flu,” or other diseases.
For example, public concern over avian flu may cause fear about the consumption of chicken, eggs and other products derived from poultry, and the inability to serve poultry-based products would restrict our ability to provide a variety of menu items to our guests.
If a virus is transmitted by human contact or respiratory transmission, our employees or guests could become infected, or could choose, or be advised, to avoid gathering in public places, any of which could adversely affect our restaurant guest traffic and our ability to adequately staff our restaurants, receive deliveries on a timely basis or perform functions at the corporate level.
In addition, regardless of the source or cause, any report of food-borne illnesses caused by pathogens such as E. coli, hepatitis A, norovirus, listeria or salmonella, or other food safety issues including food tampering or contamination at one of our restaurants could adversely affect the reputation of our brands and have a negative impact on our sales.
Social media has dramatically increased the speed with which negative publicity, including actual or perceived food safety incidents, is disseminated before there is any meaningful opportunity to investigate, respond to and address an issue.
As technology continues to play an increasing role in our guests’ experiences, disruptions, failures or other performance issues with guest-facing technology systems could impair the benefits that they provide to our business and negatively affect our relationship with our guests.
In addition, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our and our service providers’ and key suppliers’ cybersecurity risks.
Risks Related to the Integration of Chuy’s The inability to successfully integrate the Chuy’s brand’s operations into our business could harm our ability to achieve the sales growth, cost savings and other benefits we expect to be able to realize from Chuy’s operations.
The integration of the Chuy’s business into our operations is a complex, costly and time-consuming process that may not be successful.
The primary areas of focus for successfully combining the business of Chuy’s with our operations include, among others: retaining and integrating management and other key employees; integrating information, communications and other systems; and managing the growth of the combined company.
Even if we successfully integrate the business of Chuy’s into our operations, there can be no assurance that we will realize the anticipated benefits.
We expect that the acquisition of Chuy’s will result in various benefits for the combined company including, among others, business and growth opportunities and significant synergies from increased efficiency in purchasing, distribution and other restaurant and corporate support.
Increased competition and/or deterioration in business conditions may limit or delay our ability to expand this business.
As such, we may not be able to realize the synergies, goodwill, business opportunities and growth prospects anticipated in connection with the acquisition of Chuy’s.
We are subject to licensing and regulation by state and local authorities relating to health, sanitation, safety and fire standards and the sale of alcoholic beverages.
We are subject to federal, state, and local laws governing employment practices and working conditions.
There also has been increasing focus by United States and overseas governmental authorities on other environmental matters, such as climate change, the reduction of greenhouse gas emissions and water consumption.
Compliance with these laws and regulations can be costly, and any failure or perceived failure to comply with these laws or any breach of our systems could harm our reputation or lead to litigation, which could adversely affect our financial condition or results of operations.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future laws and regulations, or an insufficient or ineffective response to significant regulatory or public policy issues, could negatively impact our cost structure, operational efficiencies and talent availability, and therefore have an adverse effect on our results of operations.
As a result, our diverse portfolio of restaurant brands are continually challenged to evolve our menu offerings to appeal to these changing customer preferences, while maintaining our brand character and retaining popular menu items.
During periods of high public health risk such as during the COVID-19 pandemic, many consumers choose to order food To Go or for delivery rather than dining in at full-service restaurants.
If other future public health issues cause these preferences to increase, we may need to further adapt our offerings to respond to these additional changes.
The harm may be immediate without affording us an opportunity for redress or correction.
In addition, a variety of risks are associated with the use of social media, including the improper disclosure of proprietary information, negative comments about us, exposure of personally identifiable information, fraud, or out-of-date information.
The inappropriate use of social media vehicles by our guests or employees could increase our costs, lead to litigation or result in negative publicity that could damage our reputation.
A failure to sufficiently innovate, develop guest relationship initiatives, or maintain adequate and effective advertising could inhibit our ability to maintain brand relevance and drive increased sales.
The long-term effects of climate change and global warming will result in more severe, volatile weather or extended droughts, which could increase the frequency and duration of weather impacts on our operations.
As of May 25, 2025, 2,065 of our 2,159 restaurants operating in the United States and Canada operate in leased locations, and the leases are generally non-cancellable for some period of time.
In addition, at the end of the lease term and expiration of all renewal periods, we may be unable to renew the lease without substantial additional cost, if at all.

and 14 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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