Olive Garden restaurant exterior sign
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It’s not an easy time to be a restaurant in 2017. Plenty of chains are struggling and dozens of underperforming restaurants are being shut down.
Yet the Olive Garden keeps rising to the top.
Olive Garden just enjoyed its tenth consecutive quarter of same restaurant sales growth, according to parent company Darden Restaurants, Inc.’s third quarter earnings call.
Same restaurant sales growth was 1.4% for the past quarter and customers haven’t lost their appetite for popular yearly promotions such as BOGO offers and Never Ending Classics menus.
If you’re a fan of Olive Garden, you’ll want to know about these developments…
Shrimp Scampi is now the #1 best-selling item on the menu, Bloomberg reports. The seafood dish unseats the previous top plate, which was Chicken Alfredo.
Chicken Alfredo packs 1,480 calories and Shrimp Scampi weighs in at just 500 calories. Hmm, maybe that had something to do with the changing of the guard?!
Speaking of Shrimp Scampi, Olive Garden began rolling out its Taste of the Mediterranean menu to some 800 restaurants across the country in January. Here’s the lineup:
One reporter who sampled the lineup describes it as “much more hit (especially the parmesan-crusted zucchini side dish) than miss.”
Pricing is subject to change without notice.
Citing the impact of minimum wage increases on its catering and carryout businesses, Lee noted that pricing had bumped up slightly across the chain in February.
But it’s not likely to remain that way.
“Our philosophy going forward is we’re going to try to drive that down a little bit lower than what it has been historically,” CEO Gene Lee said during the earnings call. “I don’t want to say too much more about it from a competitive standpoint, but we believe long-term if we can continue to underprice the marketplace, we’re going to wake up a few years from now and have a real value gap [between us and our competitors.]”
Lee noted that keeping close tabs on costs is going to be the key to lower prices.
“We understand that cost management is going to be extremely important, so that we can continue to put value on the plate for the consumer.”
Remember how last decade it seemed like there was a Starbucks on every corner? The coffee shop’s stores cannibalized customers from each other and the brand got oversaturated.
Well, Olive Garden is not there yet, but they could inching dangerously close to that territory.
“The opportunity to open [new] Olive Garden [locations] is not as plentiful,” Lee told analysts and investors. “We’re not fully penetrated with Olive Garden, but we’re getting closer and closer and it’s getting harder and harder to find locations where…we could get that return [on investment] because of cannibalization and other factors.”
That said, there are still plans for a few new stores to open in the coming weeks. The Olive Garden website lists two locations in particular that are on tap:
Beyond that, an anticipated 30 to 35 new locations will be coming online in 2018. However, it’s not immediately clear if those projected openings will be Olive Gardens or another restaurant concept from Darden’s portfolio.
Because it is so hard to find suitable new locations to open Olive Gardens, Darden Restaurants plans to spend money remodeling about 100 existing locations for the foreseeable future.
“In 2018, we anticipate total capital spending of between $360 million and $400 million of which $150 million to $175 million is related to growth…and the remainder being related to approximately 100 Olive Garden remodels, ongoing restaurant upkeep, technology and other spending,” SVP and CFO Rick Cardenas told analysts and investors.
Much of the buzz internally at Darden right now is about Cheddar’s Scratch Kitchen, which was recently acquired by the company.
The restaurant emphasizes made-from-scratch cooking served in a casual environment.
With 165 locations across 28 states, Cheddar’s is poised to be a rising star in the Darden stable — second in importance perhaps only to Olive Garden itself.
“We definitely think that Cheddar’s long-term will be the number three brand,” Lee says. “It could possibly be the number two brand inside the portfolio.”
Read more: 8 of America’s favorite restaurant chains are desperate for customers
This post was last modified on March 29, 2017 6:09 pm
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