Even Olive Garden is becoming increasingly too expensive for many Americans.
The casual family restaurant chain that offers an “authentic” version of Italian food has seen fewer middle- and lower-income diners coming through its doors, the Olive Garden’s parent Darden said in its latest quarterly report.
“We’re clearly seeing consumer behavior shifts,” Darden CEO Rick Cardenas. “The lower-income consumer does appear to be pulling back.”
Inflation-battered restaurant-goers who earn less than $75,000 are particular staying away from Olive Garden, and households that earn $50,000 are shunning the company’s fine-dining brands, according to Cardenas.
The hospitality conglomerate’s higher-end franchises include Longhorn Steakhouse, Cheddar’s Scratch Kitchen and Ruth’s Chris Steak House.
On the bright side, Darden said there was in increase in transactions from diners who boast incomes of higher than $150,000 in the third quarter, which ended Feb. 25.
Last year, Darden said it had kept price increases at below inflation, but also quietly axed popular promotions like free pasta refills at Olive Garden.
Olive Garden still offers its “never-ending first course” — soup, salad and breadsticks — but the chain started to cut discounting during the pandemic.
Cardenas said that Darden will place an emphasis on low staff turnover to cut down on training costs in in the midst of a tough economic environment where consumers are pulling back.
“We believe that operators can deliver on their brand promise with value and can continue to appeal consumers despite economic challenges,” Cardenas said.
“That’s what we’re going to continue to focus on doing. I remain confident that we’re well positioned and prepared for whatever we have to deal with.”
Darden, a publicly traded company whose shares are listed on the New York Stock Exchange, was trading flat at around $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 growing increasingly out of reach for low-income diners.
McDonald’s customers have reported significantly higher menu prices in restaurants in wealthy parts of Connecticut, where a Big Mac meal costs $18.
McDonald’s, Chipotle and other restaurant chains have warned they may be forced to hike prices even further in California, where a new $20-an-hour minimum wage law has taken effect.
Additional Reporting by Lisa Fickenscher