Olive Garden Hikes Prices Despite Sales Slump

Olive Garden to Increase Prices Despite Sales Slump

Olive Garden is going against the grain, choosing to raise prices instead of offering discounts like its competitors. The Italian chain's parent company, Darden Restaurants, has seen a 1.5% decrease in sales for locations open over 16 months. Darden CEO Rick Cardenas affirmed their strategy during an analyst call, saying, "We're not doing that. Even at a time that our competitors have ramped up discounting."

The dining industry has been struggling since the COVID-19 pandemic, and while customers initially accepted price hikes, they are now pushing back due to high inflation. Some restaurants have tried temporary discounts, but Darden is standing by its decision to raise prices, with CFO Raj Vennam noting that their customer groups outside of below-median household incomes remain "stable or growing."

Darden, which also owns LongHorn Steakhouse and Yard House, among others, increased Olive Garden's menu prices by 1% last quarter. While this may have contributed to the sales slump, Vennam stated that it encouraged customer retention, saying, "While Olive Garden same-restaurant sales were below the industry, same-restaurant guest counts outperformed the industry. This dynamic was due to our decision to minimize pricing."

• Darden Restaurants Analyst Call
• CNN Report on Olive Garden's Decision
• Darden Restaurants Website