Olive Garden’s Conundrum Evolving Consumers

Olive Garden was once where if you were hungry consumers flocked for endless salad and breadsticks and you did not have to pay-a-lot for the meal.  It was friends or family dinning any day of the week.  After listing to Darden CEO Gene Lee it sounded a lot like Olive Garden has become a place for special occasion dinning.

Lee stated that in May of this year that they “had the best Mother’s Day in Olive Garden history,”  Here is where the conundrum come in  All told, the brands’ same-store sales in the latest quarter rose just 1.7 percent. Darden revenue fell 4.7 percent, to $1.8 billion, from $1.9 billion the previous year, due largely to one fewer week in the quarter and that was with the “best Mother’s Day in Olive Gardens history”.

The undercurrents of the evolving consumer and the fast growing consumer adoption of grocerant niche food offerings did reveal a bright spot for this legacy chain.   Ready-2-Eat and Heat-N-Eat fresh prepared food to go / take-out orders have risen 19% this year and 40% on a two year basis with Take-Out fresh prepared food now accounting for 10.8% of total sales at Olive Garden. 

Lee went on to explain that the fast evolving consumers placed 20% of the Take-Out order Online and Lee noted that the check average for Online orders was higher than orders placed inside the stores.  For those of you keeping track Olive Gardens food and beverage costs were 28.9 percent of sales, falling 130 basis points from a year ago, due to lower food costs. 

 Customer migration from full service dining continues due to an up-tick in new avenues of fresh food points of distribution.  Companies that regular reader of this blog have come to know well including the ilk of IKEA, Barns & Nobel, Wegmans, Sheetz, Rutter’s Farm Stores, Whole Foods, and Green Zebra Grocery to name but a few.   

Is your company Looking A Customer Ahead?  Does your company look more like yesterday than tomorrow?  Tacoma, WA based www.FoodserviceSolutions.us can help you understand and excel within the grocerant niche.  Consumers are dynamic not static and you must be as well.   For more information contact Steve@FoodserviceSolutions.us today.