The land of breadsticks hasn’t always been so hot. For the past few years, Olive Garden’s sales have seriously slumped — until recently, that is. This isn’t good news for just Darden Restaurants, the group that owns Olive Garden, but for the casual dining segment in general.
(Check out our article on “The Downfall of Romano’s and How Casual Dining Can Be Saved” here.)
The fast-growing fast-casual segment, alongside the benefits of what put fast-casual on top — like demand for on-the-go dining, high-quality ingredients, and more affordable prices — has played a huge part in casual dining’s declining sales. And while Olive Garden isn’t expected to grow in foot traffic in 2016, it seems to have found its footing, at least for now.
Last month, at the end of June, Darden Restaurants, which has a new management team, experienced a surge in stock (up 4%) alongside a larger-than-expected growth in sales and profits. Starboard Value Partners, an investment firm that took a stake in the company in late 2013, seems to have played a big role in helping to recover the brand. After all, Olive Garden accounts for more than half (56%) of Darden’s total sales.
So, how did Olive Garden manage to turn itself around? It comes from a combination of things.
3 Takeaways for Every Restaurateur
Below are three ways Olive Garden is rising to the competition, and how you can, too:
1. Be consistent.
Olive Garden has tried to rebrand itself many times. The concept has implemented a slew of different campaigns, promotions and even a new logo within the past few years. This inconsistency may have had the opposite effect on consumers than the brand intended. Not knowing who you are as a brand is troublesome. If you don’t know who you are and what you stand for, how could anyone else? The gray area leaves your concept in just that — a gray area, and not top of mind.
Overall, Olive Garden is known to be an Italian casual-dining chain, but not everything on their extensive menu played into that. This is something Starboard Value Partners honed in on, elevating the menu from general to, now, more specialized to fit the concept. It still, however, offers an expansive list of menu options.
2. Know what you’re good at, and go where the people are.
What’s the first thing you think of when someone mentions eating at Olive Garden? It’s probably the warm, lightly salted breadsticks.
Olive Garden is rolling out — wait for it — breadstick sandwiches. And to promote this, there will be a nationwide, 20-city Breadstick Nation food truck tour, where they will be handing out free samples (think chicken parm breadstick sandwiches). Hold onto your napkins, people!
This is really smart for a couple of reasons. First of all, breadsticks. Second of all, sandwiches rank consistently high in Foodable Labs and RSMI data in terms of category segments. In fact, the majority of the Top 25 Overall Restaurants for Q1 2015 includes sandwich (including wraps and burgers) concepts, with Panera at No. 1. Simply put, this means that people are eating sandwiches, and lots of them. It makes sense: Sandwiches are filling, easy to eat on the go, and are affordable and easily customizable.
Olive Garden has lightened up on a lot of its promotions, but creating buzz through a food truck tour brings the brand face-to-face with consumers (top of mind), positions Olive Garden as more appealing to teenagers and Millennials (buying power), and creates promo buzz (especially on social media) with no risk involved.
3. Pay attention to consumer trends.
Olive Garden has taken consumers’ demand of speed of service, customization, and nutrition into consideration.
Many people choose to grab lunch during the work week, but the duration of your lunch break is usually not a choice. With 30 minutes to an hour, dining out at a casual sit-down restaurant is almost always out of the question. A slew of fast casual options have made the grab-and-go lunch easy and more affordable. But to level the playing field, Olive Garden rebranded its lunch offerings last year to “Pronto Lunch.” Starting at $6.99, the idea of the Pronto Lunch menu is to get guests in and out quickly.
Also — and this has reportedly been a huge pull for increased sales — Olive Garden has invested in to-go ordering. Diners can place orders online or via mobile and pick it up when it’s ready. No waiting. According to reports, nearly 10% of Olive Garden’s sales come from to-go orders, and Gene Lee, Darden President & CEO, said in an earnings call that he expects that number to double. Olive Garden also offers catering.
Customization is another thing consumers are demanding more of, which is why the Pronto Lunch menu includes a Tuscan Duo option, allowing diners to create their own lunch combination of soup or salad, and one of 15 selected main dish items. Olive Garden’s dinner menu offers a Create Your Own Pasta Bowl and a Create Your Own Tour of Italy. In terms of the out-of-store dining experience, Olive Garden allows for customization on its website — if you’re viewing the menu, you have the option to do so by grid format or list format, and have the ability to filter offerings by “new items” and “most popular items.” Discovery is important.
Nutrition and eating more consciously is another huge factor consumers look for when dining out. Of course, not everyone feels this way, but it’s important to cater to those looking for healthy options. It also increases the chances of larger groups dining at your restaurant because there will be something for everyone. Both Olive Garden’s lunch and dinner menus feature a Lighter Italian Fare section, including dishes like Citrus Chicken Sorrento and Herb-Grilled Salmon. A bonus: On the website, nutrition facts are offered for each dish.
Whether your restaurant is on the fritz or not, the three tips above are evergreen takeaways for any concept.