After posting one of its worst quarters in recent memory, Olive Garden saw business bounce back over the summer.
According to data from researcher Placer.ai, traffic to the Italian casual-dining chain was positive in May, June and August. That comes after months of traffic declines at many full-service restaurants, and follows a quarter in which Olive Garden’s same-store sales fell 1.5% year over year.
But traffic at Olive Garden rose 5.5% in May, 2.8% in June and an impressive 7% in August, according to Placer.ai. It fell 4.4% in July.
With 908 restaurants nationwide and more than $5 billion in annual revenue, Olive Garden is the country's largest casual-dining chain and therefore a key barometer for consumer behavior.
The improvement was evident at other Darden brands as well. Traffic grew at Cheddar’s Scratch Kitchen in May, June and August, and LongHorn Steakhouse gained traffic every month since April, continuing a hot streak for the steakhouse chain.
Placer.ai said the results point to a recovery in consumer dining habits, especially in full service, which has struggled to generate consistent traffic growth coming out of the pandemic. A greater emphasis on value could also be helping full-service chains attract more customers and even steal some share from fast-food restaurants.The return of Olive Garden’s Never-Ending Pasta Bowl promotion on Aug. 26, for instance, may have given the chain a boost at the end of the month. The promotion, which offers all-you-can eat pasta starting at $13.99, is designed to appeal to price-conscious consumers. It will run through Nov. 17.
On its last earnings call, executives said Olive Garden would do more to communicate value, such as advertising create-your-own pasta for $12.99 and highlighting its signature offer of unlimited breadsticks and soup or salad with every entree.
Value tactics have worked at other chains, too. McDonald’s has had success with its $5 meal deal, and Chili’s $10.99 3 for Me offer has been a big hit.
“We're seeing signs of bifurcation across the restaurant industry, with higher-income consumers helping to drive an uptick in fine-dining chains, but macro pressures prompting lower- to middle-income consumers to seek out value options across QSR and casual dining,” said R.J. Hottovy, head of analytical research at Placer.ai, in a statement.
Darden is scheduled to report its earnings results for June through August on Sept. 19.
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