On a two-year basis, Olive Garden’s total sales are up nearly 10 percent, which sails the industry benchmark by 840 basis points. Lee’s notion of striking a balance between traffic growth and guarding profitability? Olive Garden is simply doing it better than most. (In Q1, segment profit margin increased 40 basis points by leveraging the same-restaurant sales growth and managing costs effectively, the company said).
Additionally, half of Olive Garden’s negative traffic in the previous quarter was due just to catering delivery. Darden doesn’t give itself guest counts for that side of its business. If it adjusted methodology, the brand would have posted positive numbers, Lee said.
How Olive Garden is besting industry norms is a three-pronged discussion: execution through simplification (a Darden staple that’s been four years in the making), everyday value, and convenience. And on the latter point, doing so by inspiring off-premises visits through four-wall experience, not by broadening reach via aggregator platforms.
Lee said Olive Garden’s catering delivery metrics reflected the highest intent to recommend within the brand in Q1, “giving us confidence that our teams are delivering great experiences inside and outside the four walls of our restaurants.”
What Olive Garden did in regards to promotional activity in Q1 also provides a peek behind the company’s strategic curtain. It decided to separate its two strongest value promotions—the Buy One, Take One and Never Ending Pasta Bowl—to more evenly deliver the value messaging throughout the year. That change, along with associated media shifts and “weakening industry trends,” resulted in lower traffic than last year. But, again, “it was the right strategic decision for the long term,” Lee said.
In August, Olive Garden removed the “never ending” limits on its Pasta Pass with the introduction of a Lifetime Pasta Pass. The company offered 24,000 of its buzzy deal for $100. But at time of purchase, the first 50 people could upgrade to the lifetime offer for an additional $400. This year, guests got nine weeks of unlimited pasta, one more than 2018. Also, throughout the promotion, which started September 23, customers who didn’t win a pass could order unlimited pasta, soup, and salad starting at $10.99.