Unlimited soup, salad, breadsticks – what more could a diner want? The predictability of the menu at Olive Garden propelled diners back to Darden Restaurants’ flagship chain, boosting it to a 3.2% increase in same-store third quarter sales compared with last year.
Though its sales increase is less than half the rate posted by Longhorn Steakhouse, revenue of $1.39 million and net profit of $320,000 eclipsed Longhorn’s $854,200 in revenue and $159,000 in profits.
Milos Eric, general manager of OysterLink, told The Food Institute the strong showing doesn’t mean consumers have changed their attitude toward Olive Garden.
“What helped is that they’re aligned with customers’ current priorities. Consumers are more price-sensitive; they select restaurants based on consistency in food, service and predictability of menu items/prices. Promotions and clear portion-to-price value helped a lot,” Eric said.
Sanwar Mal Khokhar, a mixologist and beverage program leader, at Sanjh Restaurant & Bar, a fine-dining restaurant in Dallas, agreed.
“Guests are playing it safe with their choices. They don’t want surprises in flavor, portion or, most important, the bill,” Khokhar said.
“With a place like Olive Garden, everything is predictable: the food, the drinks, the portions, the pricing. That removes a lot of friction in the decision.”
“And that’s where the real value is,” he added. “When a place becomes predictable in a good way, people stop comparing it with other options. It becomes their default place.”
Darden President and CEO Rick Cardenas described the company’s Q3 earnings as “strong,” boasting the group had “widened” the gap with competitors. He also touted “high team member and manager retention,” which he said enables consistency.
Darden’s other properties include Yard House, Ruth’s Chris Steak House, Cheddar’s Scratch Kitchen, The Capital Grille, Chuy’s, Seasons 52 and Eddie V’s.
Restaurant Dive reported Olive Garden had cut some of its promotions during the quarter because of expectations for warmer weather. In the current quarter, Olive Garden plans a buy-one-take-one promotion that will run for a week longer than last year’s, though Cardenas denies the plans have anything to do with competitors.
But Khohar said he doesn’t think promotions make all that much difference.
“Deals might bring people in once but not the repeat guest. What really works is the familiarity. People don’t want to experiment every time they go out, especially right now. They just want something that won’t disappoint,” he said.
The fast-casual restaurant sector experienced a slowdown last year, and a reset appears to be underway as uncertainty builds in the economy as a whole.
“Olive Garden has the benefit of consumer trust, and guests will always choose businesses like this in uncertain times,” Eric said.
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