At Olive Garden Value Matters

 

Success does leave clues and when you have run a promotion 25th times aka the ‘Never Ending Pasta Bowl’ promo you know it works.  Yes, success does leave clues at Olive Garden and their consumers want expect value and the marketing team at Olive Garden is doing just what they should do, give them the value they expect, according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Once again Olive Garden is bringing back its Never Ending Pasta Bowl promotion after an abstaining for two years, putting an end to questions about whether the offer was gone for good. With sales lagging and customer year over year customer counts falling Olive Garden is once again focusing on the consumer and consumer expectations of the brand to drive top-line sales and bottom-line profits.

Olive Garden CEO Rick Cardenas, stated, “Anything that we do should emphasize our brand equity and be more profitable than they were before,”.

So, the 2022 version of the Never Ending Pasta Bowl will try to accomplish that with a higher price point: An unlimited serving of select pastas will cost $13.99, plus another $4.99 for toppings—meatballs, Italian sausage or crispy chicken. The last time the promo ran, in 2019, it cost $10.99. Will the price, value, service equilibrium drive customer into the stores? Or will the perception of never ending value drive consumers into the stores?

Olive Garden is simply reacting to current market conditions as many chains are pushing value offers to appeal to price-conscious consumers. But they’re charging higher prices than in the past as they look to strike a balance between driving sales and protecting their own profits.

Interestingly, Cardenas emphasized that Olive Garden’s value messaging will focus on generous portions rather than price.Cardenas continued , “We don't anticipate changing our messaging to be a pure value play,” …. “At Olive Garden, it's never-ending craveable Italian food. At [sister concept LongHorn Steakhouse], its quality, and they talk about quality. They don't have to talk about price.”

The consumer is dynamic not static and the return of the promo for the 25^th time shows how much the operating environment has changed in the past year. Olive Garden decided to ditch the Never Ending Pasta Bowl in 2021, when its restaurants were busy and short-staffed. Same-store sales that quarter exceeded the same period in 2019, the last time the promo ran.

Times they are a changing as this year is a different story. In its most recent quarter, Olive Garden’s same-store sales rose just 2.3% year over year, and traffic was down 9% compared to pre-pandemic levels. So it is turning to the Pasta Bowl once again. 

It will be available now until to Nov. 20. Pasta options are fettuccine, spaghetti, rigatoni and angel hair, and customers can choose from five sauces: creamy mushroom, traditional marinara, five cheese marinara, traditional meat sauce and alfredo. What is your price, value, service equilibrium?

Looking for success clues of your own? Foodservice Solutions® specializes in outsourced food marketing and business development ideations. We can help you identify, quantify and qualify additional food retail segment opportunities, technology, or a new menu product segment.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter

In a Battle for Share of Stomach

VALUE Matters

Wendy’s Hears Consumers Cries for Help with Inflation

 

At the intersection of what’s for dinner and what will it cost is a battle between restaurants and grocery stores for the hearts and minds of the consumer.  According to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® menu price hikes and grocery stores CPG prices increases are making consumers think twice before spending anything on dinner.

According to U.S. Bureau of Labor Statistics (BLS) data released on May 11, the Consumer Price Index (CPI) came in 8.3% higher in April compared to the previous April.

The food-at-home CPI is now 10.8% higher than this time in 2021, the biggest year-over-year hike since November 1980. In comparison, prices for food consumed away from home have gone up 7.2% since April of last year.

Wendy’s is battling to garner a larger share of stomach with a price, value, service equilibrium according to Johnson.  When Wendy's first has noticed inflation impacting consumer behavior it began thinking how it could highlight its value offerings in response.

Todd Penegor, The Wendy’s Co. CEO and president, said his company has seen consumer segmentation generally seen across all of the quick-service market, stating “What we've seen in the first quarter and the bucketing under $75,000 cohort of customers,” … “we have seen some of those folks start to slow on the traffic within the category, but that's been made up for by the folks making over $75,000.”

Working hard Wendy’s has to make sure its menu offers appeal to consumers who notice a tighter pocketbook. Penegor continued, “We're working so hard on our calendar to make sure that we've got digital offers in our app, continue to work to make sure that we have the ‘4 for $4’ offering out there,”. The company has also highlighted its $5 Biggie Bags and Buck Biscuit at breakfast.

In a Battle for Share of Stomach

You Can Win

It is at the intersection of value, quality and service that Penegor cautioned that Wendy’s promotions are focused on driving dollar sales as well as driving traffic long term.

While Wendy’s expanded its breakfast menu to Canada restaurants this month; it saw some softness in the U.S. daypart in the first quarter.

“As we looked at the breakfast business in Q1, the category was a little bit softer than we had anticipated,” Penegor said. “Clearly weather in January and February had an impact on the breakfast business. Omicron earlier in the quarter had an impact on the breakfast business. And what we didn't see is the category soften a bit on the breakfast daypart. With that said we gained dollar, and traffic share in the QSR burger category in Q1 at the breakfast daypart.”

Breakfast is an ongoing project and  Wendy’s is confident it can grow breakfast sales by 10% to 20% for the full year and “really be squarely in that $3,000 to $3,500 per week per restaurant by the end of the year. Penegor continued.

Regular readers of this blog with like to know that Wendy’s March Madness promotions drove customers to smartphone app purchases, he said, and in the U.S. the brand reached about 10% digital sales mix, he noted.

Wendy’s same-store sales were up 2.4% systemwide with a 1.1% increase at U.S. restaurants and a 14.1% increase at international units. Growth is still on the table, “We're expecting by the end of this year between 50 and 60 restaurants in the U.K., the combination of company restaurants and to delivery kitchens service,” noted Penegor. The company expects a growth rate of about 20% in international units this year, focused mainly on India, the Philippines and the United Kingdom.

Foodservice Solutions® team is here to help you drive top line sales and bottom-line profits. Are you looking a customer ahead? Does your messaging look more like yesterday that tomorrow?  Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may the clue you need to propel your continued success.