After a chilly winter at Olive Garden, business appears to be warming up again for spring.
Same-store sales at the casual-dining chain increased 0.6% during the quarter ended Feb. 23. That marked a slowdown from the previous period, and it was below the industry average of 0.9% tracked by Black Box Intelligence.
The chain blamed the sluggishness largely on bad winter weather, which it said was even worse than last year. The weather had about a 100 basis-point impact on same-store sales, and the shift of Thanksgiving into the quarter shaved off another 90 basis points, executives said.
That mirrors what many other restaurants have said about the first portion of 2025.
But Olive Garden also said that business has picked up through the first three weeks of March. That was a surprise given a severe drop in consumer confidence this month. According to the University of Michigan, sentiment fell to 57.9 in March, its lowest point since November 2022 and down from 64.7 in February.
Darden officials suggested that going out to eat is one of the few indulgences consumers still allow themselves in tough times.
“Even if they say they're feeling less optimistic, we haven't seen a huge correlation between that and dining out,” said Rick Cardenas, CEO of Olive Garden parent company Darden Restaurants, during an earnings call Thursday. “So, changes in consumer sentiment haven't necessarily translated to material changes in consumer spending.”
He noted that spending at Olive Garden is up in every income bracket except those earning less than $50,000 a year.
And Darden has a positive outlook for the quarter: It is projecting 3%-plus same-store sales growth across all of its 11 brands, and they are currently running right in line with that projection, CFO Raj Vennam said.
Darden’s stock was up more than 4% as of Thursday afternoon.
The 927-unit Olive Garden is Darden’s largest brand and the largest casual-dining chain in the U.S. As such, it is viewed as a bellwether for the segment and for restaurants in general.
Over the past year or so, the chain has been working to boost traffic, particularly by appealing to value-minded consumers. Next week, it’s bringing back its popular buy one, take one deal that gives customers an in-restaurant entree plus a chilled meal to take home for a total of $14.99.
The offer has historically been Olive Garden’s second-best traffic-driving promotion behind the Never-Ending Pasta Bowl, and it is returning for the first time in five years. This time around, it has a higher price tag, reflecting Olive Garden’s shift away from deep discounting. But it still offers the abundance that the chain has been aiming for, Cardenas said.
“Nothing dramatically has changed in our strategy, and it really wasn't because of things going in the marketplace,” he said of the reintroduction of the buy one, take one deal. “We just believe that this is the right way to communicate our brand that fits all of our filters.”
It follows the 12-week run of the $13.99 Never-Ending Pasta Bowl promotion in the fall. And it joins the relaunch of two fan favorites, steak gorgonzola alfredo and stuffed chicken marsala, as well as a $12.99 three-meat manicotti special.
Olive Garden promoted the fan favorites on TV for six weeks last quarter and saw a significant boost in traffic and sales during that time, Cardenas said.
The chain has one more traffic-driving strategy up its sleeve: delivery. It now offers delivery from Uber at almost all of its locations. At the end of last quarter, delivery at an initial group of pilot restaurants accounted for about 2.5% of sales, and the remaining restaurants were getting close to that number, Cardenas said.
About 40% to 50% of those delivery sales have been incremental, he said, and the chain has yet to put a lot of marketing behind the service. It is planning a full marketing push, including TV ads, at the end of the current quarter. The campaign will be partially funded by Uber.
Delivery has proven promising enough that Darden is now testing the service at 10 locations of Cheddar’s Scratch Kitchen, with plans to roll it out further at the 182-unit chain.
Same-store sales at Darden’s other concepts for the quarter were as follows: LongHorn Steakhouse (2.6%), fine dining (-0.8%), other business (-0.4%), consolidated Darden (0.7%).
The consolidated figure does not reflect the performance of Chuy’s, which was recently acquired and won’t be included until it has been with Darden for 16 months.
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