Key Takeaways
- Darden’s LongHorn Steakhouse grew same-restaurant sales 6.8% on a comparable calendar basis in the quarter ended August 30, 2026. Olive Garden, owned by the same company, grew 1.0%.
- Both brands are owned by Darden Restaurants, Inc., whose publicly issued long-term debt is rated Moody’s Baa2, S&P BBB and Fitch BBB according to its fiscal 2026 Form 10-K (filed July 24, 2026). Those ratings are investment grade, but they rate Darden’s debt, not any lease: whether a LongHorn or Olive Garden lease carries Darden’s credit depends on the entity that signs it and any Darden guarantee.
- Our tracked inventory currently shows 17 LongHorn and 8 Olive Garden NNN listings, with median asking cap rates of 5.50% and 5.50%. Split by building age, the samples are too small to show a reliable pricing difference between the brands.
- Darden bases the capital budgets for new Olive Garden, LongHorn, Cheddar’s and Chuy’s restaurants on land-only leases, under which Darden owns the building and the investor owns the land. That changes the tax math for buyers who want depreciation.
- As of October 8, 2026, the LongHorn ground leases built in 2025 or 2026 that InvestmentGrade.com tracks had a median asking cap rate of 5.25%, about the same as the 10-year Treasury yield (5.27% on October 6, 2026, FRED series DGS10). Some of those asking cap rates may be based on rent that has not started yet, so the gap is not a like-for-like yield premium.
Two Brands, One Parent
A restaurant lease is only as durable as the operator’s willingness to keep paying rent on that building, and the restaurant’s sales bear directly on that decision.
That makes Darden Restaurants a useful case study. LongHorn Steakhouse and Olive Garden share the same parent company, yet their latest quarterly results moved at very different speeds. The question for a real estate investor is what that difference does, and does not, tell you about which buildings to own.
Same Parent, Very Different Quarter
Darden Restaurants (NYSE: DRI) reported its fiscal 2027 first quarter on September 24, 2026, covering the thirteen weeks that ended August 30, 2026. Total sales rose 5.1% to $3.2 billion, and every segment posted positive same-restaurant sales. But the brand-level numbers tell two different stories.
| Fiscal Q1 2027 | Olive Garden | LongHorn Steakhouse |
|---|---|---|
| Same-restaurant sales (comparable calendar) | +1.0% | +6.8% |
| Segment sales | $1,329.8M (+2.2%) | $860.9M (+10.9%) |
| Segment profit | $270.8M (+1.2%) | $154.6M (+14.6%) |
| Segment profit margin | 20.4% (from 20.6%) | 18.0% (from 17.4%) |
| Restaurants at quarter end | 953 (from 933) | 624 (from 595) |
| Average check per person (fiscal 2026) | About $25.00 | About $28.50 |
| Average annual sales per restaurant (fiscal 2026) | $5.8M | $5.6M |
Sources: Darden fiscal 2027 first quarter release (September 24, 2026) and Darden Form 10-K for fiscal 2026 (filed July 24, 2026). Growth rates and margins calculated by InvestmentGrade.com from reported figures.
LongHorn grew sales almost five times faster than Olive Garden, expanded its margin while Olive Garden’s slipped, and added a net 29 restaurants over the past year against Olive Garden’s 20. This was not a one-quarter blip either. For the full fiscal year that ended May 31, 2026, LongHorn’s same-restaurant sales rose 7.2% against Olive Garden’s 4.0%, and LongHorn’s average restaurant volume climbed from $5.2 million to $5.6 million.
The faster-growing brand is not the cheaper one: LongHorn’s average check per person in fiscal 2026 (about $28.50) was higher than Olive Garden’s (about $25.00). Darden’s filings report the results but do not explain guests’ choices, so treat any story about why one brand is growing faster as a hypothesis.
Olive Garden is still the bigger, higher-margin business, and it still grew. The divergence is useful to landlords because the two brands share a parent, so differences in unit performance are easier to see.
Why a Landlord Should Care About a Steakhouse’s Same-Store Sales
Darden Restaurants, Inc.’s publicly issued long-term debt carries a Moody’s Baa2, S&P BBB and Fitch BBB rating, according to its fiscal 2026 Form 10-K (filed July 24, 2026) as recorded in our ratings database. Darden says it manages its business and financial ratios to target an investment-grade bond rating. Those ratings describe Darden’s debt; they do not guarantee rent. A LongHorn or Olive Garden lease may be signed by a Darden operating subsidiary rather than Darden Restaurants, Inc., and a subsidiary’s lease obligation is not automatically guaranteed by the parent. Where Darden Restaurants, Inc. signs or guarantees both leases, they rest on the same parent credit; otherwise, evaluate the entity named in each lease. If you want the full explanation of what the BBB line means, our investment grade guide covers the rating scale in depth.
Even where both leases carry the same Darden guarantee, unit performance still matters. Three reasons.
- Renewal odds. Credit speaks to the obligor’s capacity to pay rent during the primary term. It tells you very little about whether the tenant renews at year 10 or year 15. That decision is made restaurant by restaurant. In our view, a restaurant with rising sales gives its operator more reason to exercise options than a flat one, but that is a judgment, not a rule.
- Rent coverage. The lower rent is as a share of restaurant sales, the more room the operator has to keep paying it. As a hypothetical example, a price of $3.4 million at a 5.25% cap rate implies about $178,500 of annual rent, about 3.2% of LongHorn’s $5.6 million fiscal 2026 average annual sales per restaurant. Individual restaurants vary widely, so a system average says little about any one location; ask whether the lease requires sales reporting.
- Productivity per square foot. LongHorn’s current prototype is about 5,800 square feet with 180 seats. Olive Garden’s is about 7,700 square feet with 250 seats. On those prototypes, LongHorn produces roughly $965 of annual sales per square foot against roughly $755 for Olive Garden. A smaller building may also be easier to re-lease if a tenant ever leaves, depending on the site and local demand.
A rating speaks to the rated company’s capacity to pay its debts. It does not guarantee rent, and it bears on a lease only where the rated entity signs or guarantees it. Unit sales bear on what the building is worth when the lease comes up for renewal, and that is where two Darden brands can produce very different outcomes for their landlords.
What the Market Is Paying Right Now
Live asking cap rates for LongHorn Steakhouse, Olive Garden and comparable tenants:
| Tenant | S&P / Moody’s | Median asking cap rate | Middle half of listings | Listings | Median vs. 10-year Treasury |
|---|---|---|---|---|---|
| LongHorn Steakhouse (rated entity: Darden Restaurants, Inc.) | BBB / Baa2 | 5.50% | 5.25% to 5.60% | 17 | +26 bps |
| Olive Garden (rated entity: Darden Restaurants, Inc.) | BBB / Baa2 | 5.50% | 5.11% to 5.81% | 8 | +26 bps |
Active listings InvestmentGrade.com tracks with an asking cap rate (stated in the listing, or computed from its stated income and price when no rate is stated), listings last observed October 16, 2026. Asking cap rates are not closed-sale cap rates. The middle half is the range from the 25th to the 75th percentile of listings. The 10-year Treasury yield is 5.24% as of October 1, 2026 (FRED series DGS10). Ratings are the agency ratings in our ratings database for the entity shown, which may be a parent company; the rating type (for example issuer, senior unsecured debt, long-term debt or revenue bond ratings) varies by company and is shown on each tenant page. A rating applies to a lease only if the rated entity signs or guarantees it, so confirm the tenant and any guarantor in the lease. n/a means no verified rating is on file.
Rating types: the table note describes its ratings as corporate issuer ratings, but the Darden ratings shown for LongHorn Steakhouse and Olive Garden are the ratings Darden Restaurants, Inc. reports for its publicly issued long-term debt (fiscal 2026 Form 10-K, filed July 24, 2026). None of them rates a lease; confirm the tenant and any guarantor named in the lease.
InvestmentGrade.com tracks net lease listings across the U.S. These are the live figures for the two largest Darden brands by restaurant count, from our listing data, which refreshes weekly.
| Brand | Active listings | Asking cap rate range | Median asking cap rate | Asking price range |
|---|---|---|---|---|
| LongHorn Steakhouse | 17 in 9 states | 4.95% to 6.00% | 5.50% | $2.41M to $5.00M |
| Olive Garden | 8 in 7 states | 4.75% to 6.40% | 5.50% | $2.06M to $5.00M |
Source: InvestmentGrade.com tracked listings, live. Asking cap rates and asking prices, not closed sales.
Other Darden brands are not yet broken out in our live listing statistics:
| Brand | In the listings we track |
|---|---|
| Cheddar’s Scratch Kitchen | At least one active listing as of October 8, 2026; ask us for current listings |
| Chuy’s | At least one active listing as of October 8, 2026; ask us for current listings |
| The Capital Grille | At least one active listing as of October 8, 2026; ask us for current listings |
| Yard House, Ruth’s Chris, Seasons 52, Eddie V’s | None identified as of October 8, 2026 |
The headline medians tell only part of the story. Asking cap rates also vary with building age, lease structure and remaining term. As of October 8, 2026, the Olive Garden listings InvestmentGrade.com tracks included buildings from the 1980s alongside 2026 construction, and splitting either brand’s listings by building age leaves only a handful in some groups, too few to show a reliable difference between the brands. These are asking cap rates, not closed sales. Read the lease, not the median.
The New-Build Wave Is a Ground Lease Wave
If you are shopping new LongHorns, you will notice that many are ground leases. That is consistent with Darden’s plans: in its fiscal 2026 annual report, Darden states that its new-restaurant capital investments for Olive Garden, LongHorn, Cheddar’s and Chuy’s are based on land-only leases. Under Darden’s land-only leases, Darden owns the building and equipment, and the investor owns the land.
| Darden restaurant real estate (May 31, 2026) | Count |
|---|---|
| Company-operated restaurants | 2,202 |
| On sites Darden owns | 98 |
| Land-only leases (Darden owns the building) | 1,150 |
| Ground and building leases | 655 |
| Space, in-line and other leases | 299 |
Source: Darden Form 10-K for fiscal 2026, Item 2, Properties.
Darden plans 26 to 30 new LongHorns and 22 to 26 new Olive Gardens in fiscal 2027, after opening 27 and 22 respectively in fiscal 2026. Some of those sites may reach the investment market as newly built ground leases. As of October 8, 2026, the LongHorn listings InvestmentGrade.com tracks that were built in 2025 or 2026 were each offered as a ground lease; confirm the property rights in each offering and lease.
Ground leases have real strengths: the tenant has invested millions in a building sitting on your land, which gives it a reason to stay. But owning the land under a ground lease differs from owning both the land and the building in ways every buyer should understand:
- Depreciation. Land is not depreciable (Treas. Reg. 1.167(a)-2). Under a land-only ground lease the tenant owns the building, so the buyer of the land generally acquires little or no depreciable basis and little for a cost segregation study to reclassify. If depreciation matters to your plans, compare properties where you would acquire the building and other depreciable improvements along with the land, and confirm with your tax advisor how much depreciable basis you would actually acquire.
- Reversion. What happens to the building at the end of the lease depends entirely on the lease language. Some leases give the landlord the improvements; some require the tenant to remove them. Read that clause before you price the residual.
- Financing. Loan terms and proceeds on the land under a ground lease can differ from those on a property that includes the building. Get lender feedback before you commit.
- Term. As of October 8, 2026, the newly built LongHorn and Olive Garden listings InvestmentGrade.com tracks that state a remaining term show about 10 years. Confirm the term, the rent increases and the option periods in the lease.
The Treasury Test
Every NNN yield should be compared with a Treasury benchmark. The 10-year U.S. Treasury yield was 5.24% on October 1, 2026 (FRED series DGS10), and the live table above shows each brand’s median asking cap rate against it.
| Option | Yield or median asking cap rate |
|---|---|
| 10-year U.S. Treasury (October 1, 2026) | 5.24% |
| LongHorn Steakhouse listings we track (live median ask) | 5.50% |
| Olive Garden listings we track (live median ask) | 5.50% |
As of October 8, 2026, the LongHorn listings InvestmentGrade.com tracks that were built in 2025 or 2026, each offered as a ground lease, had a median asking cap rate of 5.25%, about the same as the 10-year Treasury yield of 5.27% on October 6, 2026 (FRED series DGS10). Some of these restaurants are newly built, and an asking cap rate on a new restaurant may be calculated on rent scheduled to begin after it opens rather than rent being paid today. Confirm the rent commencement date before treating the gap to Treasuries as a yield premium.
A new LongHorn ground lease priced near the Treasury yield is not necessarily overpriced. The buyer is paying for any scheduled rent increases, ownership of the land and a site Darden selected for a new restaurant. But on asking cap rates there is little or no premium over a government bond. Buyers should know that going in and compare listings of older buildings as well.
Darden’s own credit is also available in the bond market. Darden financed its October 2024 Chuy’s acquisition with a portion of the proceeds of senior notes, and as of May 31, 2026 it had unsecured notes outstanding maturing in 2027, 2029, 2033, 2035, 2037 and 2048, with coupons ranging from 3.85% to 6.80%. A bondholder gets a fixed coupon, a set maturity and a security that can be sold before maturity. An NNN owner gets an interest in real estate and any rent increases the lease provides. Real property held for investment or for use in a trade or business can qualify for a section 1031 exchange if the exchange meets the statute’s requirements (IRC 1031(a)(1)). Depreciation is available only to the extent the owner acquires depreciable basis in the building or other improvements; a buyer of the land under a land-only ground lease, where the tenant owns the building, generally acquires little or none. This is general information, not tax advice. We break down that trade-off in investment grade bonds vs. NNN real estate.
The Less Common Darden Brands
Darden describes a portfolio of nine brands, but the NNN listings we track are concentrated in LongHorn and Olive Garden. Among the 2,218 Darden restaurants open at the end of the latest quarter were 112 Chuy’s, 95 Yard Houses, 83 Ruth’s Chris Steak Houses, 75 Capital Grilles, 44 Seasons 52s and 32 Eddie V’s. As of October 8, 2026, the listings InvestmentGrade.com tracks included at least one Chuy’s and one Capital Grille property for sale, and none for Yard House, Ruth’s Chris, Seasons 52 or Eddie V’s.
There are structural reasons. Darden’s annual report says new Yard House, Ruth’s Chris, Capital Grille, Seasons 52 and Eddie V’s restaurants are budgeted on ground-and-building leases, and Darden describes The Capital Grille and Eddie V’s as having locations in major metropolitan cities, which may mean fewer stand-alone single-tenant buildings come up for sale. Chuy’s joined Darden in October 2024, so its legacy leases may still name a pre-acquisition entity rather than Darden. For any acquired-brand lease, confirm exactly who signed the lease and whether Darden stands behind it. The logo on the building is not the credit on the lease.
If you want to be the first call, tell us.
How to Choose Between a LongHorn and an Olive Garden
- If you want a brand-new building, both brands offer new-build ground leases. Compare the entity that signs the lease and any Darden guarantee, then location, rent increases, lease term and when rent starts.
- If you want more yield, look at older buildings, and weigh each restaurant’s sales trend, building age and remaining term.
- If depreciation matters to your 1031 plan, compare what you would actually own: buying the land together with the building and other depreciable improvements can provide depreciable basis that buying the land under a land-only ground lease generally does not. The amount depends on the basis you actually acquire; confirm with your tax advisor.
- If you are comparing against other casual dining tenants, see our Chili’s and Outback Steakhouse profiles for current ratings and asking cap rates.
- Always verify the guarantor, remaining term, rent increases, option periods, reversion clause and any sales reporting requirement.
If You Already Own an Older Olive Garden
Olive Garden’s parent has investment-grade debt ratings, and one quarter’s sales do not change the lease you own. But if you own a seasoned Olive Garden, particularly an older building with a shorter remaining term, it helps to know what it is worth. Whether the right move is to hold, extend, refinance or sell depends on your lease and your goals. A current valuation makes that decision easier.
Frequently Asked Questions
Is LongHorn Steakhouse investment grade?
LongHorn Steakhouse is a brand of Darden Restaurants, Inc. Darden’s publicly issued long-term debt is rated Baa2 by Moody’s, BBB by S&P and BBB by Fitch, according to Darden’s fiscal 2026 Form 10-K (filed July 24, 2026) as recorded in our ratings database, and those ratings are investment grade. They rate Darden’s debt, not a lease. A LongHorn lease may be signed by a Darden operating subsidiary, and a subsidiary’s lease obligation is not automatically guaranteed by Darden Restaurants, Inc., so confirm the tenant entity and any parent guarantee in the lease before relying on Darden’s ratings.
Do LongHorn and Olive Garden have the same credit rating?
Both brands are owned by Darden Restaurants, Inc., so the published ratings that apply to both are Darden’s long-term debt ratings. Whether a specific lease carries Darden’s credit depends on who signs it: a lease signed by a Darden operating subsidiary without a Darden Restaurants, Inc. guarantee is that subsidiary’s obligation, not rated Darden debt. Beyond the lease obligor, the brands differ in unit performance, building size and lease structure.
What asking cap rates do LongHorn Steakhouse properties have in 2026?
The 17 LongHorn NNN listings InvestmentGrade.com currently tracks have a median asking cap rate of 5.50%, ranging from 4.95% to 6.00%. As of October 8, 2026, the listings built in 2025 or 2026 had a median asking cap rate of 5.25%, and some of those may be priced on rent that has not started yet. Asking cap rates are not closed-sale cap rates.
What asking cap rates do Olive Garden properties have in 2026?
The 8 Olive Garden NNN listings InvestmentGrade.com currently tracks have a median asking cap rate of 5.50%, ranging from 4.75% to 6.40%. As of October 8, 2026, the sample mixed new construction with buildings from the 1980s, so compare building age, lease structure and remaining term. Asking cap rates are not closed-sale cap rates.
Why are new LongHorn properties often ground leases?
Darden’s annual report states that new-restaurant capital investments for Olive Garden, LongHorn, Cheddar’s and Chuy’s are based on land-only leases. Under those leases Darden owns the building and equipment, and the investor owns the land. Of Darden’s 2,202 company-operated restaurants at May 31, 2026, 1,150 were on land-only leases.
Can I depreciate a LongHorn ground lease?
Generally very little, because land is not depreciable (Treas. Reg. 1.167(a)-2) and, under Darden’s land-only leases, Darden owns the building during the lease, so the buyer of the land generally acquires little or no depreciable basis. Investors who want depreciation or a cost segregation benefit may prefer properties where they acquire the building and other improvements along with the land; the benefit depends on the depreciable basis actually acquired. Confirm your situation with your tax advisor.
Are Chuy’s, Ruth’s Chris or Yard House properties available as NNN investments?
Sometimes. As of October 8, 2026, the listings InvestmentGrade.com tracks included at least one Chuy’s and one Capital Grille property for sale, and none for Yard House, Ruth’s Chris, Seasons 52 or Eddie V’s. Darden budgets new Yard House, Ruth’s Chris, Capital Grille, Seasons 52 and Eddie V’s restaurants on ground-and-building leases, and acquired brands such as Chuy’s may have leases signed by pre-acquisition entities, so the guarantor must be confirmed.
Is a LongHorn NNN property better than a Darden bond?
They serve different goals. A Darden bond offers a fixed coupon and maturity and can be sold before maturity. A LongHorn NNN property offers any rent increases the lease provides and land ownership, and as investment real property it is potentially eligible for a section 1031 exchange if the holding-purpose and exchange requirements are met (IRC 1031(a)(1)). Building depreciation is available only to the extent the buyer acquires depreciable basis in the building or other improvements, which a buyer of the land under a land-only ground lease generally does not. As of October 8, 2026, newly built LongHorn ground leases were asking cap rates close to the 10-year Treasury yield, and some may be priced on rent that has not started yet, so confirm when rent begins before comparing yields. This is general information, not tax advice.
Looking at a LongHorn or Olive Garden?
Investment Grade provides acquisitions and dispositions advisory for investment-grade net lease properties, including access to listings, underwriting, financing coordination and 1031 exchange timing. On the majority of transactions, there is no separate fee to the buyer because the listing broker pays a cooperating commission. Where one is not available, compensation is agreed with you in advance.
Talk to us about Darden NNN properties →
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Considering a sale? We can give you a current valuation of your LongHorn, Olive Garden or Cheddar’s property.
Maturing debt? Lenders will look at the lease, the tenant entity and any guarantee. We coordinate refinancing through a broad lender network.
Related Research
- LongHorn Steakhouse Credit Rating and NNN Cap Rate
- Olive Garden Credit Rating and NNN Cap Rate
- Investment Grade Tenant Credit Ratings Index
- NNN Cap Rates 2026 by Tenant Credit Quality
- Best Investment Grade NNN Tenants for a 1031 Exchange
- Investment Grade Bonds vs. NNN Real Estate
Sources and methodology. Operating results: Darden fiscal 2027 first quarter release (September 24, 2026). Credit ratings, debt, properties, unit economics and opening plans: Darden Form 10-K for fiscal 2026 (filed July 24, 2026). Treasury yield: Federal Reserve Bank of St. Louis (FRED) series DGS10; live figures show their date, and the fixed comparison uses October 6, 2026. Listing data: InvestmentGrade.com tracked listings; live figures refresh weekly, and figures labeled October 8, 2026 are from that date; asking cap rates, not closed transactions. Sales per square foot uses current prototype sizes and is an estimate. InvestmentGrade.com is not a credit rating agency. This article is for information only and is not investment, tax or legal advice. Updated quarterly after Darden reports earnings.
