UPDATE 1-Darden profit slides as costs soar, Olive Garden drags

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June 20 (Reuters) - Darden Restaurants Inc reported a much-lower-than-expected quarterly profit as costs soared and sales at its flagship Olive Garden restaurant chain fell.

Legal and other costs related to the company's plan to separate its Red Lobster chain also hurt the company's profit.

Darden is selling its struggling Red Lobster seafood restaurants in a $2.1 billion deal that is being challenged by two major shareholders who want the company to take other steps to improve profitability.

The company's shares fell as much as 5 percent in premarket trading on Friday.

Net income fell to $86.5 million, or 65 cents per share in the fourth quarter ended May 25 from $133.2 million, or $1.01 per share, a year earlier.

Analysts on average had expected a profit of 94 cents per share, according to Thomson Reuters I/B/E/S.

Total costs increased 7 percent to $1.62 billion. Food and beverage cost rose 8.4 percent to $505.5 million.

Sales at Olive Garden restaurants fell about 3 percent to $926 million, while Red Lobster's sales dropped about 6 percent to $664 million.

Net sales rose 3.6 percent to $1.65 billion. Including discontinued operations, sales rose less than 1 percent to $2.32 billion. Analysts expected sales of $2.33 billion.

Darden's same-restaurant sales have been lagging those of fast-casual rivals such as the less-expensive Chipotle Mexican Grill.

Darden is the largest operator of full-service restaurants in the United States. Its other chains include LongHorn Steakhouse, Seasons 52 and Capital Grille.

Orlando-based Darden's shares were down 4 percent at $47.61 in premarket trading.

(Reporting by Lisa Baertlein in Los Angeles and Shailaja Sharma in Bangalore; Editing by Joyjeet Das)