Performance, Growth and Shareholder Value Are Always
on the Menu at Darden.

To Our Shareholders, Employees and Guests,

Our fiscal 2011 was a year of clear improvement in the U.S. economy. And despite its frustratingly slow pace, the recovery was welcome relief following the extended downturn of the prior several years. Given its suddenness and severity, the downturn was a very strong test of many industries and for many companies. Looking back on this challenging period, we offer two important observations.

We have long believed in the vitality of the full-service restaurant industry, and its performance during the period only reinforces our view. Full-service dining demonstrated great resilience through the toughest phase of the downturn, with cumulative total sales growth of 3.2 percent from December 2007 through September 2010. That growth stands in stark contrast to results in a number of other important consumer categories, including limited-service dining, apparel, department stores, home improvement and automobiles – each of which had a cumulative sales decline over this period. In fact, full-service dining performed more in line with two categories typically thought of as consumer staples, superstores and supermarkets, which grew as well. We view this as compelling evidence full-service restaurants provide dining occasions that are an indispensable part of the lifestyles consumers live today.

We are also pleased to report that Darden performed extremely well within full-service dining during the economic downturn. Your Company delivered cumulative total sales growth of 19.6 percent from December 2007 through September 2010, far exceeding the full-service restaurant industry overall and setting the stage for strong financial results in fiscal 2011 as the economic recovery began to take shape. Perhaps most pleasing is how our teams took the tough times as an opportunity to build an even stronger foundation for future success by enhancing our capabilities in very significant ways. With these changes, some of which are summarized below, we are more confident than ever that What's on the Menu at Darden for years to come is continued profitable market share growth and a competitively superior total shareholder return.

Fiscal 2011 Financial Highlights

Buoyed by the return of same-restaurant sales growth and acceleration in new restaurant openings, Darden generated competitively superior sales and earnings growth in fiscal 2011.

• Sales from continuing operations were $7.50 billion, a 5.4 percent increase from fiscal year 2010's $7.11 billion. This compares to a 1.5 percent increase in total sales growth for the year for the Knapp-Track benchmark for full-service restaurant chains.
• Our sales growth from continuing operations reflects a balance of new and same-restaurant sales growth. Combined U.S. same-restaurant sales increased 1.4 percent for the Company's major full-service dining brands (Olive Garden, Red Lobster and LongHorn Steakhouse), exceeding the same-restaurant sales increase of 0.7 percent for the Knapp-Track U.S. benchmark for full-service restaurant chains, and increased 4.8 percent for the Specialty Restaurant Group (The Capital Grille, Bahama Breeze and Seasons 52). The Company also had a net addition of 70 new restaurants.
• Net earnings from continuing operations for fiscal 2011 were $478.7 million, a 17.6 percent increase from net earnings from continuing operations of $407.0 million in fiscal 2010. Diluted net earnings per share from continuing operations for fiscal 2011 were $3.41, a 19.2 percent increase from diluted net earnings per share of $2.86 in fiscal 2010.
• In fiscal 2011, net losses from discontinued operations were $2.4 million and diluted net losses per share from discontinued operations were $0.02, related primarily to the carrying costs and losses on the remaining properties held for disposition associated with Smokey Bones and Bahama Breeze closings from fiscal 2007 and fiscal 2008. Including losses from discontinued operations, combined net earnings were $476.3 million in fiscal 2011, 17.8 percent above the combined net earnings of $404.5 million in fiscal 2010. Including losses from discontinued operations, combined diluted net earnings per share were $3.39 in fiscal 2011 compared to $2.84 in fiscal 2010.
• Olive Garden's total sales were $3.49 billion, up 5.2 percent from fiscal 2010. This reflected average annual sales per restaurant of $4.8 million, the addition of 31 net new restaurants and a U.S. same-restaurant sales increase of 1.2 percent.

• Red Lobster's total sales were $2.52 billion, a 1.3 percent increase from fiscal 2010. Average annual sales per restaurant were $3.6 million and U.S. same-restaurant sales were up 0.3 percent.
• LongHorn Steakhouse's total sales were $984 million, up 11.6 percent from fiscal 2010. This reflected average annual sales per restaurant of $2.9 million, the addition of 23 net new restaurants and a U.S. same-restaurant sales increase of 5.4 percent.
• The Specialty Restaurant Group's total sales were $502 million, a 19.0 percent increase from fiscal 2010 that reflected solid growth from each of its three brands. Total sales increased 14.5 percent at Capital Grille to $277 million based on the addition of four new restaurants and a same-restaurant sales increase of 6.2 percent. Total sales increased 5.6 percent at Bahama Breeze to $137 million based on the addition of one new restaurant and a same-restaurant sales increase of 2.4 percent. And total sales increased 75.8 percent at Seasons 52 to $88 million based on the addition of six new restaurants and a same-restaurant sales increase of 4.4 percent.
• We continued the buyback of Darden common stock, spending $385 million in fiscal 2011 to repurchase 8.6 million shares. Since our share repurchase program began in fiscal 1996, we have repurchased over 162 million shares of our common stock for $3.40 billion.

Sustaining Profitable Market Share Growth and a Competitively Superior Total Shareholder Return

Darden's success during both the economic downturn and the initial phase of recovery is a testament to our portfolio of compelling brands. Each has a well-defined, relevant and differentiated brand promise, delivers on that promise with consistently strong guest experiences in our restaurants and offers a powerful value proposition. And each is the product of a proven strategic framework that emphasizes building great brands through the combination of brand management excellence and restaurant operations excellence, then supporting those brands with a robust and cost-effective operating platform and a vibrant culture.

2011 Financial Highlights

*53-week fiscal year

Taking full advantage of our sales
growth opportunities

Full-service dining is part of the fabric of American life. And we see solid growth ahead, with annualized long-term sales growth of 3 percent in the full-service dining segment overall and 5 percent for chains.

However, we have noted for some time now that, while vibrant, the full-service dining industry continues to mature as the rate of growth in the important 50-to-65 year old age cohort slows and as consumers spend with greater discipline. These dynamics put a premium on successfully competing for market share.

Our successful long-term track record managing brands reflects a relentless focus on maintaining relevance to current guests and for current dining occasions, something that will remain a critically important aspect of brand building at Darden. Still, we recognize the need to do more.

We believe it is imperative that we increase our current brands' relevance to "new" guests and for "new" occasions, and that imperative is behind a number of steps we took during the downturn. Two of the most significant were establishing enterprise-level Marketing and Restaurant Operations functions, led by a Chief Marketing Officer and Chief Restaurant Operations Officer, respectively. These leaders and their teams are charged with "expanding the core" within existing restaurants by driving innovation in core menu and promotional offerings, advertising messages and channels, and in-restaurant operating and restaurant supervision practices, and more fully leveraging guest-facing technology, among other things.

We also responded to the new dynamics in our industry with a much more aggressive focus on "extending the core," which involves taking our brands to promising new markets, developing new restaurant formats and identifying additional ways to take advantage of the tremendous equity our brands have with current guests. Led by our Business Development team, these efforts include international expansion into

the Middle East via our partnership with the Americana Group. The agreement is to open a minimum of 60 Red Lobster, Olive Garden and LongHorn Steakhouse restaurants in the region over the next five years. And the first two, both Red Lobsters, are scheduled to open this summer. These efforts also include a new synergy restaurant format that facilitates entry into smaller domestic markets. The first restaurant, pairing Red Lobster and Olive Garden in one building with separate dining rooms and service teams but a shared restaurant management team and kitchen space, successfully opened in fiscal 2011, and several others are under development.

Driving strong profitability

While strong total sales growth supports our brands' ability to maintain powerful value propositions because it enables us to leverage the meaningful fixed and semi-fixed costs in our business, sales growth alone is insufficient. That's why there is a consistent focus each year on continuous refinement and enhancement of operating standards and operating support to eliminate unnecessary spending that does not drive guest value. We think of this as incremental cost reduction. Another important dynamic for our industry, however, is the likelihood that a sustained rise in global wealth, especially in emerging nations with large populations, will put persistent upward pressure on our food and energy costs. This dynamic is the reason we have supplemented conventional incremental cost management with aggressive transformational cost reduction. We have been identifying opportunities to run and support our business in fundamentally different and more cost-effective ways.

Implementation of three transformational initiatives has been underway for several years now and collectively they will generate meaningful additional cost savings in fiscal 2012 and beyond. These include further automating our supply chain, meaningfully reducing the usage of energy, water and cleaning supplies in our restaurants and centralizing maintenance of our restaurant facilities. In fiscal 2011, we introduced a fourth, optimizing labor costs within our restaurants, and it has great promise for fiscal 2012 and beyond as well.

The combination of consistent incremental cost management and systematic transformation of our operating platform so that it is ever more cost-effective is crucial. Together, these efforts support the value propositions essential to the growth of our brands. Just as importantly, they help ensure that, as we grow market share, we do so with solid profitability. We believe this will translate into a top-quartile S&P 500 total shareholder return, mirroring the level of return we have generated since our debut as an independent, publicly-traded company in 1995.

Building a vibrant culture

Our work building strong brands and developing a more robust operating platform is heavily dependent on a vibrant culture. We have to be a nimble organization capable of responding quickly and effectively to capture new opportunities or address emerging business challenges. We have to be a values-based organization to attract and develop the best people. And we need engaged employees who are willing to embrace the transformational change we are undergoing by volunteering the discretionary effort that ultimately separates the best companies in service industries from all others.

Darden has long had a strong culture. That comes through loud and clear in the results of our ongoing employee surveys, which consistently show engagement levels well above restaurant industry and overall corporate norms. It is also why, based upon a rigorous and comprehensive assessment process, Darden earned recognition from FORTUNE magazine in 2011 as one of its "100 Best Companies to Work For."

Still, given how essential a vibrant culture is for sustained success, we paid considerable attention during the downturn to this traditional area of strength. We invested in more robust workforce insights to further enrich our understanding of the aspirations of employees at every level. We added training and development resources and expertise to enable us to do a better job of helping people achieve their dreams. And we buttressed our internal communications function to ensure our teams better understand enterprise, brand and individual restaurant-level goals and objectives, why these make sense and each person's role in achieving them.

Conclusion

We operate in an industry that is part of the fabric of Americans' lives. Your Company has a dominant share position today, with total annual sales that are approximately double those of our nearest competitor. And our focus on stronger brand building, developing an even more cost-effective operating platform and creating a more vibrant culture leaves us well positioned to sustainably and profitably grow market share going forward. That's why we remain highly confident we will achieve our long-term goal – which is to build a great company, now and for generations.

Thank you for being a shareholder and placing your trust in us.

Clarence Otis, Jr.

Chairman and Chief Executive Officer

Andrew H. Madsen

President and Chief Operating Officer