Olive Garden said it will continue to raise prices to offset a drop in sales last quarter.
The restaurant chain that serves Italian dishes has joined a growing group with declining sales. As more people aim to spend less, they also are choosing to dine out less often. In response, several chains have opted to offer meal deals and discounts.
But Olive Garden is implementing a different strategy.
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Olive Garden to keep raising prices
Olive Garden's parent company, Darden Restaurants, said it was aware that other chains were encouraging customers with discounted prices.
“We’re not doing that,” Darden CEO Rick Cardenas said during an analyst call on June 20. “Even at a time that our competitors have ramped up discounting.”
The dining industry has struggled for several years, beginning with the COVID-19 pandemic. Restaurants initially hiked up prices, which customers seemed willing to pay. However, those customers are now pushing back amid high inflation, CNN reports. Some eateries have placed temporary discounts on the increased menu prices, with mixed results.
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In the most recent quarter, Olive Garden locations open for at least 16 months reported a 1.5% decrease in sales. Inflation has been especially challenging for those with lower incomes.
“The pullback is mostly at the below-median household income. … Our other (customer) groups are stable or growing,” said Raj Vennam, chief financial officer of Darden Restaurants.
Olive Garden price hikes will be low, company says
As customers complain about high menu prices for restaurant chains like McDonald's, Darden officials said they aim to keep price increases low. Last quarter, Olive Garden increased menu prices by 1%, which reflected negatively on dollar sales but encouraged customers to keep returning.
“While Olive Garden same-restaurant sales were below the industry, same-restaurant guest counts outperformed the industry,” Vennam said. “This dynamic was due to our decision to minimize pricing.”
Olive Garden increased prices by about 3.5% during the last fiscal year, compared with an average of about 4% across other Darden entities.
With 110 Olive Garden locations, Texas has more than any other state according to ScrapeHero. This accounts for about 12% of all the chain's U.S. restaurants. Austin has three Olive Garden restaurants.
Click here to find an Olive Garden near you.
What restaurants are owned by Darden?
Darden Restaurants own the following brands:
- Olive Garden
- LongHorn Steakhouse
- Yard House
- Ruth's Chris Steak House
- Cheddar's Scratch Kitchen
- The Capital Grille
- Seasons 52
- Eddie V's
- Bahama Breeze
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Olive Garden raises prices amid low sales, inflation - Austin American-Statesman
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