Millennials, low prices boosting Olive Garden

Florida chain’s surge comes as competitors struggle

The once stodgy Italian dining chain Olive Garden has made a financial comeback with help from two unlikely sources: young diners and carry-out meals.

Olive Garden, and its Orlando-based parent company Darden, is now back on top of the restaurant world, with the chain recording 11 straight quarters of same-restaurant sales growth. Darden’s stock price is at an all-time high and about 150 percent higher than three years ago.

And those elusive millennial eaters who were supposedly ditching Olive Garden for hip, independent restaurants are actually part of the reason.

CEO Gene Lee said that millennials are 30 percent of Darden’s customers, compared with just 24 percent of the population.

“Believe it or not, millennials still want to come to restaurants,” Lee said during a call with investors last week.

Young consumers haven’t completely abandoned the habits of their baby boomer parents, said Christopher Muller, who teaches at Boston University.

“Millennials haven’t stopped buying homes and going to sit-down restaurants; they are just doing it a little later,” Muller said. “Now these younger people are starting families, and that’s always been Olive Garden’s core audience.”

While Olive Garden performed well during the Great Recession as consumers looked for value, sales dropped starting in 2012. The chain’s same-restaurant sales decreased 10 times in 12 quarters between 2012 and 2014. The chain was criticized for having a bloated menu and losing customers to fast-casual chains that offered quality food at lower prices.

But Olive Garden has rebounded by being efficient, cutting the menu down to core pasta dishes and keeping prices low.

In the last three years, Olive Garden has introduced a series of low-priced menu items, including unlimited soup, salad and breadsticks for $7.

Olive Garden has also seen a big boost in its takeout business while much of the industry grapples with third-party delivery.

In the last quarter, takeout business was nearly 13 percent of Olive Garden’s total sales. Take-out orders are also up 58 percent in the last years.

Meanwhile, Olive Garden’s competitors in the Italian dining segment have struggled. Romano’s Macaroni Grill is closing restaurants. Carrabba’s Italian Grill, based in Tampa, saw its same-restaurant sales drop 2 percent in the first quarter compared with a year ago.

By comparison, Olive Garden sales were up 4.4 percent in its most recent quarter when compared with the year before.

THE WASHINGTON POST/FILE Olive Garden says millennials and value pricing are driving the chain’s turnaround.

AP/FILE The chain has rebounded since 2014 by being efficient, cutting the menu to core dishes and keeping prices low.