Latest news with #casualDining
Reuters
3 hours ago
- Business
- Reuters
Darden posts upbeat quarter on casual dining demand
Darden Restaurants forecast annual same-store sales above estimates after strong quarterly results on Friday, banking on demand driven by food delivery and advertising efforts at its casual dining chains such as Olive Garden. Alex Cohen has more.
Fast Company
6 hours ago
- Business
- Fast Company
Olive Garden and LongHorn help Darden beat earnings as Americans keep dining out
It seems Americans can't get enough of Olive Garden's never-ending soup or salad and breadsticks: The chain's parent company reported quarterly results on Friday that buck a broader slump in dining out trends. Darden Restaurants reported stronger-than-expected sales and earnings growth in its most-recent quarter that slightly beat analysts' estimates. The Orlando-based company reported that same-store sales increased 6.9% at Olive Garden and 6.7% at LongHorn Steakhouse, which both beat analysts' expectations. Across the company's 11 brands, same-restaurant sales rose 4.6%. The company, not surprisingly, credits its model for its success. Rick Cardenas, Darden's president and CEO, said the company has been 'very prudent' in keeping its price changes below inflation. 'What we believe is happening right now in the casual dining space is our consumers are figuring out that casual dining is a great value,' he said Friday on a call with Wall Street analysts. 'Consumers want to go out and spend their hard-earned money, and we think we're taking some wallet share from fast food and fast casual.' Americans have soured on fast food lately, as both McDonald's and Chipotle reported declines in same-store sales during their first quarters, albeit for different timeframes than Darden. Traffic at U.S. quick-service restaurants—which includes the likes of McDonald's and Chipotle—has been steadily declining, and fell again in May versus last year, according to figures from Revenue Management Solutions (RMS), which provides insights about the restaurant industry. Saving money is the main reason keeping people from heading out to eat, as 69% of Americans say they're eating at home more often, according to KPMG's Consumer Pulse Summer 2025 report. And consumers surveyed said they expect to spend 7% less at restaurants each month this summer. Olive Garden's Momentum Despite weakness elsewhere in the industry, Darden is forecasting solid growth in its 2026 fiscal year that's now underway. The company forecast total sales growth of 7% to 8% following gains of 6% in the 2025 fiscal year. One thing that's helped Olive Garden, Darden's biggest brand, is a delivery partnership with Uber Direct. In the most-recent quarter, Uber Direct accounted for about 3.5% of Olive Garden's total sales. And more broadly, Cardenas said that Darden is focusing on how to keep up its recent strength, particularly for Olive Garden. 'We're going to continue to find ways to keep that momentum going.'
Yahoo
a day ago
- Business
- Yahoo
10 Reasons This Popular Italian Restaurant Is No Longer America's Favorite Casual Dining Chain
What happened to Olive Garden? At some point down the line, it clearly lost its way. The restaurant chain has been around for decades, and made its name offering affordable and accessible versions of Italian classics to the masses (even if every now and again it shot itself in the foot with its, shall we say, brave attempts to create new dishes). This formula worked exceptionally well for Olive Garden, and until recently, its owner Darden was rubbing its hands together at the fact that the restaurant was America's top casual dining chain. However, in 2025, things took a turn for the worse for the brand. Olive Garden was knocked off the top spot by Texas Roadhouse, which pulled ahead in popularity with a massive increase in sales, to become the biggest casual dining option in the United States. Olive Garden, meanwhile, was seen to have stagnated in its sales in the last few years, giving the steak chain the opportunity to start dominating. So what happened? Where did Olive Garden start to go wrong, and why has it been struggling to keep its customers in the last few years? In this article, we've got everything you need to know about Olive Garden's fall from grace. Read more: The Ultimate Ranking Of Texas Roadhouse Steaks It's fair to say that Olive Garden has been resting on its laurels for a while. The restaurant operates with an "if it ain't broke, don't fix it" mentality, which you can see in its unwavering menu. Unfortunately, this lack of innovation (and perhaps investment) has meant that competitors like Texas Roadhouse have been able to surge ahead by combining a rock-solid growth strategy with an understanding of what customers want. One big reason cited for Texas Roadhouse's overtaking of Olive Garden is the public's increased taste for steak in a post-pandemic world. While Texas Roadhouse is obviously helped here by being a steak chain, it's arguable that Olive Garden could have cottoned onto this too, and pushed or expanded its steak choices. Instead, it allowed Texas Roadhouse to swoop in. What's more, Texas Roadhouse invested significantly in its staffing and operations processes and supercharged its new store growth, which paid off massively. Oh, and it's also managed to keep its prices low despite inflation, whereas Olive Garden ... hasn't. While Olive Garden does use certain ingredients to keep its prices lower, it appears that isn't enough anymore. One of the big things that Olive Garden has always hung its hat on is its affordability. For years, folks could rely on the promise of an Italian (or, at least, Italian-like) meal without breaking the bank. However, in recent years, Olive Garden's somewhat lost the handle on its pricing, creating a gap for chains like Texas Roadhouse to step into. In an earnings call in 2024, Darden CEO Rick Cardenas admitted that the brand was seeing fewer lower-income customers through its doors. In particular, folks who were earning below $75,000 were less likely to be dining at Olive Garden than in previous years. Now, you can blame that on a lot of things (like inflation, cost of living, and the general desire for folks to save their pennies), but when you see that other restaurant chains are rising up and dominating, you kinda have to look at what you're doing wrong. The answer, it seems, is that Olive Garden's prices are outpacing people's ability to pay for them, leading to a drop in customers that are arguably its core audience. One of the things about the Olive Garden menu is that it's relatively static, and while it's definitely evolved over the years, it's also largely been defined by its pastas and breadsticks. However, every now and again it takes away customer favorites — and it's clear that this hasn't been received especially well by some folks. Two items that it pulled off the menu, its Steak Gorgonzola Alfredo and its Stuffed Chicken Marsala, were removed during the pandemic, a fact that customers didn't love. At the end of 2024, it announced that it was bringing the two options back, as well as improving on its Never Ending Pasta Bowl by adding a garlic herb sauce option. Why is this significant? Well, the reintroduction of the dishes and the expansion of the pasta bowl came during a period when Olive Garden was shedding customers. It was clear that people were heading elsewhere for their meals, especially for steak-based options, which Olive Garden was missing one more of by removing the steak pasta from its menu. As such, these dishes coming back seems to be a pretty desperate grab for attention after making some big mistakes that may have cost it some business. On top of that, folks are maybe just tiring of some of the unhealthy dishes at Olive Garden. It's pretty brutal out there in the restaurant world, folks. 2024 was a difficult time for restaurants across the board, and 2025 hasn't proved to be the salvation that a lot of people hoped it would be. You can see how urgent the need was to retain customers in some areas through the various discounts that chain restaurants rolled out throughout 2024, with various meal deals flooding the market. There was one business that held out on this trend, though: Olive Garden. Oh, and it cost them, too. In an earnings call in March 2024, Darden CEO Rick Cardenas faced repeated questions about the logic of offering discounts from investors, which he repeatedly refuted. "We're not going to change our strategy. We're not going to become a discount kind of heavily promotional brand," Cardenas stated in the Darden Restaurants earnings call. "We worked really hard through COVID and before to get to what we think is a better, stable, stronger business for us for the long-term, and we would be willing to deal with short-term pressures to not change our strategy to get to the long-term." While we understand that logic, it's also clear that other brands have achieved success from discounting and keeping things affordable. Texas Roadhouse, for instance, offers discounts and specials that can allow people to save money — and it keeps its prices on the right side of inflation. Olive Garden does have fan-favorite deals, but that might not be enough. The bigger the restaurant chain, the more likely it is that something's going to go wrong — and when things take a turn for the worst, the P.R. crisis that unfolds can often hit these joints pretty hard. Olive Garden suffered a big blow back in 2023 when a Michigan customer accused the restaurant of serving him a bowl of minestrone soup with a rat's foot floating in it. Thomas Howie stated that he had placed the foot in his mouth before feeling a stabbing pain and realizing that it was from a claw. Howie sought medical attention and damages from the restaurant, which flatly denied the allegations. Although many restaurants have endured similar fates and come out the other side, this event came in that crucial period when chains were doing whatever they could to lure back customers after COVID restrictions. Having one of their own accusing them of such a breach in standards is hardly what they want, and probably didn't help much in getting people back through the door. Plus, regardless of whether Howie was telling the truth or not, this moment put Olive Garden's name in the papers for all the wrong reasons. Chain restaurants often start strong, and then over time, they start to suffer from diminishing returns for their customers. Part of this is that folks simply get tired of their offerings, but a bigger factor is that customers often notice when the restaurants start cutting corners in response to difficult economic circumstances. Accusations of deteriorating food quality have been aimed at Olive Garden for a while now, with people pointing out that it's lost its ability to produce food that feels homemade or authentic — which is, after all, a key part of its appeal. "At one point Olive Garden was an actual Italian restaurant," said one defeated customer on Reddit. "The glut of family restaurants gave way to corporations buying out smaller operators, homogenizing the product, and taking their profits from the margins." Ouch. Oh, and the way Olive Garden serves its pasta is a big no-no, too. Other people have noticed the drop in quality on a taste level, comparing Olive Garden's food to supermarket fare. Another Reddit commenter mentioned a poor-quality frozen lasagna they'd eaten, remarking, "The taste of plastic was overwhelming and horrible even though I followed the directions completely. A while later I was at Olive Garden and ordered the lasagna. It tasted exactly the same as the one from the grocery store." You can tell the health of a restaurant by the happiness of its servers. If a chain restaurant is renowned for its cheery staff, you can bet that it's running like a tight ship, with the people working there feeling valued and looked after. If, on the other hand, the servers find working there to be a challenge, then it's a clear sign that something's going wrong — and those bad vibes are guaranteed to rub off on the customers. Servers have taken to online message boards to discuss how difficult it is to work at Olive Garden, pointing towards poor floor flow, low pay, and bad staff retention. They've also highlighted the fact that Olive Garden doesn't add auto-gratuity for parties of more than eight people, which can lead to a serious limiting of the workers' incomes. This, naturally, leads to disgruntled servers who feel like the company is cutting corners with them — and who wants to walk into a restaurant where the staff feel like they don't want to be there? No wonder people are drifting towards Texas Roadhouse, which ranked as having some of the best customer service around in a 2024 report from Datassential and QSR. It's not unreasonable to expect large chain restaurants to have fairly watertight sanitation processes. However, sometimes things can go the other way, with restaurants that you expect to be regularly spick and span turning out to be grimy, filthy, and neglected. Unfortunately, Olive Garden has been accused of such things, and both social media videos and sanitation reports have exposed fairly unpleasant issues behind its cheery facade, which have perhaps sent customers scurrying away. One infamous viral TikTok video from 2021 created a headache for Olive Garden, when a former employee took it to task for its sanitation. In the video, a former employee pointed out that her restaurant had a terrible slug problem in the soda fountain, with the creepy crawlies coming out of the nozzles themselves. Pretty gross, huh? More recently, too, Olive Garden has been put to task online through a 2024 inspection report from an Asheville store. This inspection report noted multiple sanitation violations, including employees not washing their hands properly or using hairnets. Three of these violations were deemed critical, perhaps pointing to a lower standard in the store itself — and it's not unreasonable to think that customers may have noticed. Are folks simply wanting to eat in cleaner restaurants these days? Probably. Ah, the iconic Olive Garden breadsticks. These sizable chunks of bread are arguably the most appealing thing about eating at the restaurant, and the fact that they're unlimited is obviously a big sell. However, Olive Garden's most famous side dish has, in recent years, proved pretty controversial. In 2024, a TikTok video (well, a video of a picture) went viral of an Olive Garden breadstick with letters printed on it. The letters, which appeared in what seemed to be black ink, were revealed by a commenter to be from the bag that the breadsticks come in. Now, we don't know about you, but we're not wild about the idea of printer ink rubbing off on our pieces of bread. Unfortunately, this moment caused a storm for Olive Garden, at a crucial time when they should have been focusing on regaining customer trust and business. What was even worse was how the company reacted. Olive Garden commented on the video asking for the customer to email its customer service department, and it was later revealed that it sent the affected person a $100 gift card. What it didn't do, however, was offer an explanation to the millions of people who had viewed the video. It appeared that the restaurant hid the truth, and this didn't go unnoticed by customers, who likely wanted to eat somewhere else after this. Legal action can significantly challenge a brand's image, and in the last few years, Olive Garden has had to deal with a fair bit. At the end of 2020, it suffered a dent in its reputation when former employees alleged that they faced race- and gender-based discrimination while on shift. Per People magazine, Adam Jones, an employee at the Times Square Olive Garden who had worked at the branch in 2008, stated that he and other employees faced hostile working conditions. Jones, who describes himself as African-American, stated that both he and other Black employees received worse treatment than non-Black ones, and when he raised these issues with a manager, they were ignored. Darden, the company that owns Olive Garden, denied the allegations and stated that they were baseless. The firm also hit back by pointing out how much money it had invested in the care of its workers, particularly since the start of the COVID-19 pandemic. Nonetheless, the lawsuit caused a lot of media noise, with people questioning whether Darden was really looking out for its employees. Hungry for more? Sign up for the free Daily Meal newsletter for delicious recipes, cooking tips, kitchen hacks, and more, delivered straight to your inbox. Read the original article on The Daily Meal.
Forbes
a day ago
- Business
- Forbes
Why Private Equity Is Coming For Casual Dining
Arlington Heights, IL, USA - August 14, 2024: Olive Garden is a popular American casual dining ... More restaurant chain specializing in Italian-American cuisine. You can't charge $18 for a mediocre burger anymore and expect to survive, especially with private equity circling. The era of casual dining has come to an end. Nostalgia isn't enough to keep the doors open, and the cracks are turning into collapses. TGI Fridays just filed for bankruptcy. Jack in the Box is flailing. Others are quietly shrinking, stuck between rising costs, outdated models, and changing consumer expectations. To most, it looks like an industry in terminal decline. However, investors who are paying attention perceive a sector that is poised for transformation. Behind the failing units and flatlined comps lie brands with real equity, untapped assets, and inefficient structures screaming for reinvention. For private equity, activist investors, and special situation specialists, this isn't a graveyard, it's a treasure map. The restaurant industry is being repriced. And those who know how to restructure from the inside out are already sharpening their knives. Restaurant chains can be highly profitable when managed with discipline. Many operate on asset-light, franchise-heavy models that throw off steady income with minimal capital intensity. Others sit on under-monetized real estate or legacy leases that, if unlocked, can reshape the balance sheet. And while their operations may be stale, their brand equity still carries psychological weight with consumers. That's a dream set up for private equity and special situation investors. Why? The sector is overflowing with fragmentation, inefficiency, and strategic bloat, which are the very traits that smart capital seeks when hunting for mispriced opportunities. Most public restaurant chains today are overly complex, mismanaged, or stuck in a strategic identity crisis. The stock prices reflect that. But behind the scenes, there's real potential not for a revival of the old model, but for a reinvention of what these businesses could be with the right financial structure and operational reset. The gap between public market valuations and private market potential is again widening, and for those with the tools to execute it, the upside is being served right now. Our previous idea with the Cheesecake Factory was a winner. Once a cornerstone of American casual dining, TGI Fridays now faces bankruptcy. Private ownership wasn't enough to save it. Why? The reasons include a stale concept, slow innovation, and operational complacency. The brand didn't evolve, and the market moved on. Jack in the Box isn't faring much better. Despite decades of existence, Jack in the Box's sales remain stagnant, its strategy appears confused, and investors are becoming increasingly uneasy. The problem extends beyond performance; it also involves a vacuum in leadership and identity. Then there's Red Lobster. Red Lobster's recent bankruptcy serves as a prime example of financial engineering gone wrong. But look closer: it still has name recognition, real estate value, and a loyal customer base. Mismanagement, not irrelevance, sank the ship. The pattern is clear. These aren't businesses that failed because dining is dead. Leadership stagnated, complexity escalated, and there was no accountability. None of these collapses were inevitable. With aligned incentives and operational clarity, many of these names could have been restructured, not written off. A view of TGI Fridays on the New Mersey Retail Park, in Speke, Liverpool, one of 35 of the chains ... More restaurants to close with immediate affect with the loss of 1,000 jobs. TGI Fridays will remain on UK high streets following a rescue deal for the chain. Breal Capital and Calveton UK have acquired 51 restaurants after the group's previous operator fell into administration. Picture date: Monday October 7, 2024. (Photo by Peter Byrne/PA Images via Getty Images) Red Lobster's recent bankruptcy serves as a prime example of not wanting things to be flawless. They seek undervalued assets, scalable operations, and straightforward revenue streams. The restaurant industry currently possesses all three of these characteristics. Many of these chains still have strong brand awareness, large franchise networks, and even hidden real estate value. However, high costs, outdated menus, and unclear strategic priorities conceal these strengths. A typical playbook shows the same problems: inadequate capital allocation, too many buybacks while innovation slows down, and franchising plans that aren't consistent or scalable. The chance? You don't have to come up with a new way to do things. You merely need to clean up the model, make operations more efficient, and put growth ahead of financial engineering. That includes changing the prices on the menu to match what customers want and to show how much money the business can really make with better management. This is not a consumer collapse, which is beneficial. The restaurant industry currently possesses all three of these characteristics. desire a clear, high-quality experience. Brands that simplify their operations, maintain focus, and deliver quality services will succeed in the future. They should refrain from trying to cater to everyone's needs. In summary, the restaurant business remains intact. It just needs someone with the willpower to fix it. Ottawa, Canada - May 12, 2024: Red Lobster location on Merivale Rd. The casual dining restaurant ... More chain, headquartered in Orlando, Florida, announced in April that it was searching for a new buyer or a possible bankruptcy filing. 1. Stale Stock Price With Strong Brand Recognition → A lagging share price doesn't mean the brand is dead. If it still resonates with consumers, there's room for a strategic reset. 2. Franchise-Focused Model That's Mismanaged → Franchises generate recurring, high-margin cash flows. Poor oversight or inconsistent execution is a fixable flaw—one activist's love. 3. Insider Ownership Trends Or Quiet Accumulation → Watch for insider buying or outside investors quietly building a position. It often signals someone sees untapped value. 4. Declining Same-Store Sales Without Structural Decline → A short-term sales dip is a red flag—but only if it's a trend. If the concept still works, operational fixes can drive a rebound. 5. Inefficient Capital Allocation Or Corporate Bloat → If cash is flowing into buybacks or debt service instead of innovation, it's an open invitation for change. Even across the Atlantic, activist investor Irenic Capital has taken a 2% stake in SSP Group, the operator of Upper Crust and other travel food outlets. The hedge fund is pressuring management to improve margins, suggesting the stock could be worth twice its current valuation. The move sets the stage for a potential private equity takeover, echoing a broader trend: undervalued consumer-facing brands with operational inefficiencies are now prime targets for strategic resets. The market hasn't fully considered the value of many of these struggling restaurant brands yet. But that window won't stay open for long. When private equity and activist investors start circling again, multiples will change, and the chance to buy before restructuring starts will go away rapidly. Smart investors are already looking for inefficiencies, poorly allocated cash, too many layers in a company, and assets that aren't being used to their full potential. Only the most disciplined or forward-thinking capital will respond quickly when interest rates are high. Everyone else will be late and must pay more for something they could have had for less. What will happen to the businesses that refuse to change? They won't simply vanish; instead, they'll undergo dismantling, sale, or render useless. This sector is already starting to change shape. The only question to consider is who will enter the market early enough to take advantage of it?
Yahoo
31-05-2025
- Business
- Yahoo
Red Robin ‘far from claiming victory' despite comps growth
This story was originally published on Restaurant Dive. To receive daily news and insights, subscribe to our free daily Restaurant Dive newsletter. Red Robin had a strong first quarter as the casual dining chain posted 3.1% comparable restaurant revenue growth, according to an earnings release. Despite the strong showing, 'we are far from claiming victory,' CEO and President David Pace said in the release, adding there "is still more work to be done as we continue the comeback journey." This strong growth was driven by long-term investments in labor, loyalty and equipment, GJ Hart, former CEO and current advisor, said on the brand's earnings call. Hart, who announced his resignation last month, led the brand through the first years of a turnaround plan. Pace said Red Robin's operational foundations are strong, but the brand needs to extend and consolidate changes that have included new flat-top grills, increased staffing and efforts to encourage managers to visit more tables. The CEO also said Red Robin still has room to improve the guest experience and will focus on marketing in the coming year. Kevin Mayer, the brand's CMO, departed in February, according to SEC filings. The brand has taken measures to fill Mayer's shoes. 'Recently, Russ Klein has joined our team for a one year term to help us build our marketing foundation and strategy,' Pace said. 'Russ brings us a widely recognized track record of success in effectively reconnecting well known brands with their customer bases.' Klein is the former CEO of the American Marketing Association, and held previous leadership posts at Arby's and Burger King, according to his LinkedIn profile. A firm marketing strategy will be particularly important for the brand. Casual chains, most notably Chili's, have done very well in the current, value-focused environment by marketing themselves as affordable competitors to QSRs. Chili's massive traffic leaps of late followed several quarters of solid same-store sales growth, also driven by a long turnaround effort. There is some evidence from recent quarters that many consumers are looking to dine more on weekends and special occasions. This is especially true for on-premise dining, and consumers are trading up from QSRs to more experiential restaurant formats, which offer a form of value that's not captured neatly in pricing. Red Robin's strong performance in the quarter pushed its net income to $1.2 million, up from a $9.5 million loss in the year-ago quarter. The brand sold off three company-owned restaurants for $5.8 million, using the proceeds to pay down debt. Still, the brand's leaders sought to manage expectations for the rest of the year, with CFO Todd Wilson noting that Q2 will lap the relaunch of its loyalty program last year. This means same-store sales growth will face a 240 basis point headwind next quarter, making it unlikely that Red Robin will repeat its comps growth in the near future. Recommended Reading GJ Hart resigns as Red Robin CEO Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
