A lot of customers went to Olive Garden for a bowl of all-you-can-eat pasta this fall, and many of them chose to pay a little extra to add a protein of their choice.
Strong demand for the chain’s recurring Never-Ending Pasta Bowl promotion helped the Italian casual-dining chain to a 2% same-store sales increase in the quarter ended Nov. 24. It was Olive Garden’s first positive same-store sales result in four quarters, and a sign that a chilly consumer landscape may be starting to thaw heading into the new year.
“The more average-income consumer is starting to feel a little bit better,” said Rick Cardenas, CEO of Olive Garden parent Darden Restaurants. He specifically noted an increase in visits from customers earning between $50,000 and $100,000 per year.
With 925 locations, Olive Garden is a bellwether for casual dining and for restaurants in general. Its results showed that many consumers are still looking for value. Customers ordered a record number of refills during the Never-Ending Pasta Bowl’s extended 12-week run, executives said. The dish was priced at $13.99. But a record number of customers also opted to pay $4.99 to add a protein to their pasta, indicating that some are starting to feel more confident financially.
The optimism was evident at Darden’s other casual-dining brands as well. Same-store sales rose 7.5% at LongHorn Steakhouse and were positive at Cheddar’s Scratch Kitchen and Yard House.
Underlying traffic trends have continued to improve in the current quarter, executives said. And the company has other sales-building plans in place for Olive Garden. Delivery with Uber is now available at 100 locations, where it is accounting for about 1.5% of sales. Volumes are increasing week over week, though the brand has yet to put any marketing behind the service and believes the sales are not yet incremental.
Olive Garden also brought back a pair of fan-favorite dishes, Steak Gorgonzola and Stuffed Chicken Marsala, and will unveil a third in January backed by advertising and a “compelling price point,” Cardenas said.
For the rest of its fiscal year, which ends in June, Darden is expecting same-store sales growth of 1.5% across its nine core concepts. The recently acquired Chuy’s and Ruth’s Chris were excluded from the forecast.
Tempering the strong results somewhat were Darden’s fine-dining concepts, where same-store sales fell 5.8% year over year. This was due in part to hurricanes in the Southeast and the shift of the busy Thanksgiving holiday into the current quarter. But some customers also seemed to be trading down from the segment.
“It appears that consumers who were splurging on fine dining, basically those who are making less than $150,000, have continued to pull back,” Cardenas said. “So it's impacting fine dining a little bit.”
But overall, Darden's sales for the quarter rose 6%, to $2.9 billion, which included sales from Chuy's 103 locations. And investors liked what they saw out of the company's workhorse brands. Its stock was up nearly 15% as of midday Thursday.
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