Can Darden Restaurants Missteps of the past Help Light the Path Forward

 

Time and time again we all stumble.  Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® believes that good companies are simply better at recovering from those stumbles.  Let’s take a look at Darden Restaurants, the parent company of Olive Garden and other popular restaurant chains, has faced its share of challenges and missteps over the years. Here are some notable moments that stand out and future success they may take:

1.       Ignoring Activist Hedge Funds: In 2014, activist hedge funds like Barington Capital and Starboard Value pushed for changes at Darden. Barington called for the spin-off of the struggling Red Lobster and Olive Garden chains, while Starboard Value bought a stake in the company and proposed its own ideas for turning Darden around¹.

2.       Red Lobster Spin-Off: Under pressure from activist investors, Darden agreed to spin off Red Lobster. However, this decision upset Starboard Value, which felt it wasn’t consulted and could result in significant losses for shareholders¹.

3.       Red Lobster Sale: Darden went ahead and sold Red Lobster for $2.1 billion, a move that Starboard and Barington criticized as a “fire sale.” This decision turned out to be a big mistake, leading to further tensions between Darden and its shareholders¹.

4.       Earnings Decline: Shortly after the Red Lobster sale, Darden’s earnings fell by one-third, adding to the company’s challenges¹.

5.       COVID-19 Impact: The pandemic had a significant impact on Darden’s sales. While takeout sales rose, overall comparable-store sales declined, affecting brands like Olive Garden and LongHorn Steakhouse².

Success Does Leave Clues

for Building a 

Larger Share of Stomach

It is important to note that these moments highlight some of the key mistakes and challenges Darden Restaurants has faced. Despite these missteps, the company continues to operate and adapt in a competitive industry. Let’s take a look at just how

 Darden Restaurants can take several strategic steps to regain customer support and enhance their brand reputation once again:

1.       Menu Innovation: Continuously refresh the menu with new and exciting dishes. Consider seasonal offerings, healthier options, and creative flavor combinations. Engage customers by seeking their input through surveys or social media polls.

2.       Quality Control: Ensure consistent food quality across all locations. Train kitchen staff rigorously and maintain strict quality standards. A single bad experience can deter repeat visits.

3.       Customer Experience: Focus on exceptional service. Friendly and attentive staff, clean facilities, and a welcoming ambiance contribute to positive customer experiences. Implement training programs to enhance service skills.

4.       Loyalty Programs: Introduce or revamp loyalty programs. Reward frequent diners with discounts, special offers, or exclusive events. Personalize offers based on individual preferences.

5.       Community Engagement: Participate in local events, sponsor community initiatives, and collaborate with nearby businesses. Show genuine interest in the community and build strong relationships.

6.       Online Presence: Optimize the restaurant’s website and social media profiles. Share mouthwatering food photos, behind-the-scenes glimpses, and customer testimonials. Respond promptly to online reviews and feedback.

7.       Health and Safety Measures: In the post-pandemic era, prioritize health and safety. Transparently communicate sanitation practices to reassure customers. Regularly sanitize dining areas and provide contactless options.

8.       Sustainability Efforts: Highlight eco-friendly practices, such as sourcing ingredients locally, reducing food waste, and using sustainable packaging. Customers appreciate businesses that care for the environment.

9.       Collaborations and Special Events: Partner with local influencers, chefs, or artists for special events. Host themed nights, wine tastings, or cooking classes. Create memorable experiences beyond regular dining.

10.   Feedback Loop: Encourage feedback from customers. Actively listen to their suggestions, address concerns, and adapt accordingly. A responsive approach builds trust and loyalty.

Johnson insists that good brands know that consistency and authenticity are key to long term success. By prioritizing customer satisfaction and staying attuned to market trends, Darden Restaurants can win back and retain loyal patrons to drive top line sales and bottom-line profits.

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company edify your brand with relevance.  Call 253-759-7869 for more information. 

Denny’s CEO’ and the Hypocrisy of Do No Harm

The retail landscape denial at Denny’s by the CEO John Miller simply mirrors restaurant industry trade magazines last gasp at retaining a following while denying that restaurant sector brand protectionism has become boring, yesterday’s news, and a food positioning disadvantage for consumers according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Consumers are dynamic not static.The fact is consumers are moving from the restaurant sector where company after company touts their brand power all the while year over year customer counts continue to dwindle.

Regular readers of this blog know consumers are migrating from the restaurant sector to C-store foodservice that is expected to grow another 6% in 2019. They are also going to new points of fresh food distribution the ilk of IKEA, Nordstrom, Ralph Lauren, and Club Store Costco as fresh food and coffee as preferred destinations. O’ yes recently legacy grocery sector service deli’s with redefined missions have elevated meals and meal components from bucks to fresh prepared food garnering customers.  

So, let’s look at what Denny’s CEO said and you will then get our view.  Miller said:

1.  Grocery stores like Whole Foods and Kroger have restaurants 'beating each other's brains out'

2.   Restaurants are competing to keep prices as low as possible and offering more deals, even as labor costs rise.

3.  "We're beating each other's brains out," Denny's CEO John Miller said of the restaurant industry's attempts to undercut rivals' prices.

4.Low grocery prices are contributing to restaurants' drive to keep prices cheap.

The fact is Denny’s and most U.S. legacy chain restaurants including the ilk of TGI Friday’s, Olive Garden, McDonald’s, Wendy’s, Carrols, Burger King and Pizza Hut look a lot like they did in 1989 than with the exception of a new furniture, paint, some technology that was add late in the cycle much still frustrates consumers according to Johnson.

Restaurant sectors CEO’s moto of do no harm has created a retail platform of yesterday, lacking the attributes of an evolving consumer.  Restaurant sector CEO’s are not “beating each other’s brains out” as Miller said.  They simply are acting like Neanderthals doing what they did in 1980, 1990, and 2000 and expecting that business model to work.  Customers have move on.  Today’s restaurant sector needs to evolve with a customer focus not a focus on Wall-Street metrics of the past according to Johnson.

All the while over-priced C-stores have put the roller grill on the back burner, lowered prices, introduced fresh food fast, at competitive price garnering consumers attention driving incremental customer migration from both the grocery sector and restaurant sector. 

The consumer price, service, value equilibrium has evolved the problem with many in the restaurant sector they are raising prices on yesterday’s products, refusing to innovate, rather than evolve their brands with customer relevance they continue to practice brand protectionism.

Our Grocerant Guru® has spoken at leading restaurant industry events including MUFSO, NRA and the National Restaurant Show has a ‘NRA Grocerant’ section.  Restaurant sector leader are well aware of the undercurrents of the evolving retail food market place.  However, it is easier for a Restaurant sector CEO to blame someone else or a competitor than to drive change within an outdate labyrinth of a legacy chain restaurant apparently.

The grocerant niche products and service provide the restaurant sector with a platform of options to deal with an impending increase in the minimum wage, for product stagnation, day-part customer malaise, and edifying the brand with customer relevance.

Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit Facebook.com/Steven Johnson, www.Linkedin.com/in/grocerant/ or www.twitter.com/grocerant/

Olive Garden: Price Drives Millennials Adoption

Reading the industry trade magazines one might think you need a rocket scientist to run a chain restaurant today or understand to understand their market positioning.  The simple fact is the old adage KISS (keep it simple stupid) works and works well.  Tacoma, WA based Foodservice Solutions® Grocerant Guru® Steven Johnson as regular readers of this blog know says give customers what they want at a price that’s fare and you will have ongoing top line sales and bottom line growth.

Olive Garden’s same-store sales increased 4.4 percent in the fourth quarter ended May 28, parent company Darden Restaurants Inc. said on last week.  It was the 11th consecutive positive quarter for the casual-dining Italian chain, and arguably its best. Darden CEO Gene Lee clearly believes in KISS.  

Leveraging Price has had its benefits for Olive Garden according to our own Grocerant Guru® including attracting the highly coveted Millennials consumers. Lee stated “We made the strategic choice to underprice to inflation, so we’re underpricing our competitors,”… “We have some large competitors out there donating significant share,”… ““We have a more compelling offer.” 

 Lee continued “Contrary to popular belief, Millennials still like going to restaurants,” … “Millennials still want to come to casual dining. Thirty percent of our guests are Millennials, compared to 24 percent of the overall population. So we over-index with Millennials.”

Darden has also simplified operations. Simplifying has helped improve service at the store and made the chains more desirable for consumers. LongHorn Steakhouse and Olive Garden started simplifying their operations three years ago according to Lee. 

“Don’t underestimate how simplifying the business helped us improve execution,” Lee said. “That’s been key to guest count growth. Better execution through simplicity.”  Foodservice retailers must understand that the price, value, service equilibrium has to be in balance or your bottom line bounce! Are you giving consumers what they want or what your want?

Invite Foodservice Solutions® to complete a Grocerant Program Assessment, Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 www.FoodserviceSolutions.us  of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869

Grocerant Offerings Save Darden’s Olive Garden

Regular readers of this blog know that Darden copied Maggiano’s Little Italy’s “Today and Tomorrow” grocerant niche Ready-2-Eat and Heat-N-Eat fresh food offering.  They also know that Darden started and stopped its copied version called buy one take one then restarted it without copying Maggiano’s “Marco Meal for Two”.  Once Darden refocused the grocerant niche they began expanding sales.  

Remember in retail the old adage the trend is your friend and the grocerant niche customer adoption in every sector of food retail is a trend with no end in-sight according to Foodservice Solutions® team. One thing is clear that is it’s working for Olive Garden as year over year same-store sales increased 1.4 percent in the period.  That by the way is the 10^th straight quarter of growth for Olive Garden and for a company in the middle of the casual dining sector that’s a big deal!

The facts are clear according to Olive Gardens CEO Gene Lee who stated “Olive Garden's to-go business is up 17% and 60% on three-year basis.  The fact is as Foodservice Solutions® Grocerant Guru® says “success does leave clues” and up 60% in three years is a sector of business you want to capitalize on.”  

Grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food that can be Mixed and Matched then bundled into a customized, personalized family meal continues to drive retail success in every sector of retail foodservice today.  Maggiano’s Little Italy’s only mistake was thinking they could not out-perform Olive Garden after Olive Garden copied them.  They were wrong Maggiano’s Little Italy’s has a qualitative point of differentiation in the minds-eye of the consumer.  

So, can Darden do more than copy marketing positioning?  Do they need to?  One thing is sure the team at Foodservice Solutions® continues to be busy helping retailers edify their brand offering with Foodservice Solutions® Grocerant Guru’s FIVE P’s of Food Marketing. 

Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit Facebook.com/Steven Johnson, Linkedin.com/in/grocerant/ or twitter.com/grocerant

 

Sears goes shopping for groceries.



Target, Walgreens, CVS, 7 Eleven, Rite Aid and Sears are all shopping for grocery products and new consumers. Each is hopping too increase brand loyalty, build customer frequency while building top line sales and bottom line profits. Within the retail food sector however the only sector showing solid positive growth is the grocerant niche with Ready-2-Eat and Heat-N-Eat fresh and prepared food.

Will Sears capitulate and follow the two low price leaders Walmart and Royal Ahold and get caught playing catch-up and missing the wave. That would be a very dumb move given the dollar stores sector has gutted any profitability from legacy grocers “center of the store”, with no signs of letting up on that strategy.

Given the mall and urban opportunity Sears could find room in the profitable grocerant niche with Ready-2-Eat and Heat-N-Eat fresh and prepared food. Walgreens early stumble in this sector created an opening. The stumble was driven in large part of legacy category managers protecting turf, not focused on consumer demand or demand growth. Success does leave clues and lets hope Sears pick a few up.

Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. For product or brand positioning assistance contact Steven A. Johnson and Foodservice Solutions® or visit http://www.linkedin.com/in/grocerant or on Facebook at Steven Johnson, GOOGLE: Steven Johnson Grocerants or twitter.com/grocerant