For Olive Garden, Lee said, it boils down to multi-purpose value and making sure it stretches across the platform. “So, some value in price, some value in portion, as we try to attract and talk to each and all the different constituents we have for consumers,” he said.
“I would say that Olive Garden is the value leader, and that we need to stay focused on that in making sure that we have the appropriate price point for all the consumers that want to use Olive Garden,” Lee added. “And I think that we have the ability to lead in that, not just follow.”
What does this look like? And how does it show up in a demographic shift? Are some consumers less sensitive to value? Is there a base that needs it? These are questions Darden is trying to answer, Lee said. And the solution is broad.
A portion of Olive Garden’s consumers, naturally, measure value by what they pay from a dollar standpoint and are looking for that means to entry. Others weigh portion size over price.
“We know that there is a guest base inside of Olive Garden that price plays a very important part of their decision making, and we have to have an offer out there, a lot of the time, so that they will come to us. If they don't have an offer they will go someplace else. We know that through our token analysis,” Lee said.
There are also customers, though, who responded favorably when Olive Garden increased the portion size of chicken in its Alfredo dish. Value scores went way up, Lee says.
“And so, we've got to think across a broad spectrum and define value different for each opportunity,” he said. “But we have to have something for that consumer that is very deal oriented and we know we have to have something out there most of the time.”
Basically, there has to be a value deal to get certain customers through the door. But ending there is a risky game to play with so many options in the marketplace, especially at the counter-service level.
The prime demographic at Olive Garden is 35–55. That’s good news for the brand, Lee said, because it’s a spending-friendly segment starting to mature with plenty of room ahead. In terms of millennials in particular—a group on the cusp of entering this window and staying there for a while—Lee said the guest segment shouldn’t be overgeneralized. They like choice, which is why Olive Garden’s customizable Cucina Mia platform has done so well. Yet they’re not all dollar-value hungry as some might assume. That changes as millennials transition into the next phase of their lives. Into the family category, for example.
“This is a very millennial friendly brand. It is a very social brand, and I would tell you that millennials love the value of Olive Garden because they can stretch their dollars,” Lee said.
That simply doesn’t always mean spending as little money as possible. Yet Olive Garden still needs offers to get value seekers through the door, whether they ladder up to more premium items or not.
Some current setups include the Early Dinner Duos for $8.99, continued everyday meal and drink specials, like 5 Drinks for $5, $7.99 lunch, and the aforementioned $5 Take-Home Entrees, where customers can tack on a classic to their meal at the end. Additionally, Olive Garden is currently running an Oven Baked Pastas LTO for $10.99, with options like Asiago Tortelloni Alfredo with Grilled Chicken.
Where the Olive Garden customer is getting their food is changing, too. The brand grew off-premises sales 17 percent, year-over-year, in Q2 driven by strong preference for the $5 Take-Home offer. The segment represented 17 percent of total sales in the quarter. The digital slice grew about 33 percent and mixed 38 percent of total to-go business.
Olive Garden remains emphatic in its resistance to third-party delivery, electing instead to focus on improving convenience and accuracy for take-out and catering. “We're investing capital dollars into our restaurants to ensure that we have the space and the right equipment to handle the additional demand,” Lee said. “And that will be a big effort over the next 12 to 18 months. And we think that we can take a little more friction out for the consumer.”