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MAMMA MIA!: Olive Garden will raise prices as sales dip

Execs blamed the sales shortfall on financial stress among its less-wealthy clients

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Unlimited breadsticks? More like unlimited price hikes.

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Popular American restaurant chain Olive Garden said it plans to keep raising its menu prices. Those intentions were made clear when top executives admitted that sales in the latest quarter dropped as inflation-wary customers paid fewer visits.

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Same-store sales at Olive Garden — or sales at locations open at least a year, a closely watched industry metric — fell 1.5% in the quarter ended May 26, the New York Post reported. That missed Wall Street’s expectations for flat sales, according to the chain’s parent company Darden.

In an earnings call with analysts last week, Darden execs blamed the sales shortfall on financial stress among its less-wealthy clients, who continue to battle with food inflation.

“Consumers are generally concerned about inflation and they are becoming more concerned about the job market,” chief executive Rick Cardenas said on the call, per the Post.

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According to financial chief Raj Vennam, “The pullback is mostly at the below-median household income,” adding, “Our other (customer) groups are stable or growing.”

It’s not stopping Orlando-based Darden from hiking prices this year. Cardenas said the company is loathe to offer discounts on its food to bring in customers.

Darden — which also operates the LongHorn, Ruth’s Chris and Capitol Grille steakhouse chains, says it will raise prices companywide on average by 2% to 3% over the next 12 months.

Olive Garden’s menu prices rose by 1% late last year.

They will rise again this month, executives said, without offering specifics.

“We’re not going to do things to buy sales even with the increasing discounting our competitors are doing,” Cardenas said. “Our focus is on profitable sales growth.”

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Darden estimates that its same-store sales growth in fiscal 2025 will increase by 1% to 2% and that customer traffic will ramp up this year as inflation decreases.

“Last year we had a little too high profit margin,” Vennam said. “It was industry leading and we had talked about not pricing as much” this year.

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It’s the second straight quarter that same-store sales dipped at Olive Garden. There was a 1.8% decline in the previous quarter.

Other major restaurants chains including Applebee’s, Cracker Barrel and McDonald’s have attributed slowing sales to lower income consumers spending less at restaurants.

Darden said LongHorn Steakhouse is edging out Olive Garden as the best performing chain in the company’s portfolio.

The budget-friendly chop house was the lone brand to grow sales, notching a 4% same store sales increase in the quarter.

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