Even Olive Garden is becoming increasingly expensive for many Americans.
Darden, Olive Garden’s parent company, said in its latest quarterly report that the casual family restaurant chain, which serves “authentic” Italian cuisine, is seeing fewer customers from middle- and low-income families. .
“We’re clearly seeing a shift in consumer behavior,” said Darden CEO Rick Cardenas. “Lower-income consumers do seem to be leaving.”
Hit by inflation, Cardenas said diners making less than $75,000 are especially staying away from Olive Garden, while households earning $50,000 are shying away from the company’s fine dining brands.
The hospitality conglomerate’s luxury franchises include Longhorn Steakhouse, Cheddar’s Scratch Kitchen and Ruth’s Chris Steak House.
On the bright side, Darden said the company saw an increase in business from diners with revenue of $150,000 or more in the third quarter that ended Feb. 25.
Darden said last year he kept price increases below inflation while quietly canceling popular promotions such as free pasta refills at Olive Garden.
Olive Garden still offers “endless first courses” (soups, salads, breadsticks), but the chain began offering discounts during the pandemic.
Cardenas said Darden will focus on low turnover to reduce training costs in the midst of a tough economic environment that has kept consumers away.
“We believe carriers can deliver on their valuable brand promises and continue to appeal to consumers despite economic challenges,” Cárdenas said.
“That’s what we’re going to continue to focus on. We’re confident that we’re always going to be in a good position and prepared for whatever we have to deal with.”
Darden, a publicly traded company whose stock is listed on the New York Stock Exchange, was trading flat at about $163 per share as of Wednesday afternoon.
The company owns 2,022 restaurants, including 917 Olive Gardens, 572 Longhorn Steakhouses, 181 Cheddar’s Scratch Kitchens and 64 Capital Grilles.
Earlier this year, McDonald’s CEO Chris Kempczinski acknowledged that his fast-food chain was becoming increasingly unaffordable for low-income customers.
McDonald’s customers report menu prices are significantly higher at restaurants in wealthy areas of Connecticut, with Big Mac meals costing $18.
Restaurant chains such as McDonald’s and Chipotle have warned that they may be forced to raise prices further in California, where a new $20-an-hour minimum wage law goes into effect.
Additional reporting by Lisa Fickenscher
