Olive Garden grows
Sales are up despite no more pasta refills
Olive Garden sales are up even though discounts are down as the giant chain of red-sauce joints battles inflation, executives said.
Comparable sales at Olive Garden’s 884 familystyle restaurants, famous for their “Never Ending Pasta Bowl” promotion, were up 6.5% in the quarter ended May 29.
Total comparable sales for its parent company — Darden Group which also owns chop houses LongHorn Steakhouse and Capital Grille — were up 11.7%.
With nearly 2,000 restaurants, Darden beat Wall Street’s expectations on both the top and bottom.
Olive Garden still offers its “never-ending first course” — soup, salad and breadsticks — but the chain started to “wind off ” discounting during the pandemic, Darden chief executive Rick Cardenas said on an earnings call on Thursday. “We don’t see a need to do a deep discount promotion.”
While higher costs for labor and food has dented profits at its two biggest chains, Olive Garden and LongHorn, Darden said its margins are still better than they were pre-COVID.
Darden is forecasting sales to rise to between $10.2 billion and $10.4 billion with same-restaurant sales growth between 4% to 8%.
Cardenas said the company is “well staffed” and has been able to keep its menu prices at below inflation rates.
Diners at Olive Garden, which offers free refills on soup, breadsticks and salad, are ordering as much now as ever, said Cardenas, who succeeded longtime CEO Gene Lee in May.
But the free pasta refills have quietly disappeared, according to a report last year. Cardenas said at the time that the free-carb promotion had a negative impact on profitability.
Still, “We haven’t see a lot of check management,” Cardenas said meaning diners skipping an appetizer, dessert or drinks to keep tab low. The restaurant, instead of touting discounts, has moved to boosting popular menu items like its Alfredo sauce which it has added to more dishes.
An ad for the sauce “is the highest rated ad we’ve had in years,” Cardenas said.