Inflation eats away at profits at Olive Garden’s parent company

Inflation is eating away at Olive Garden owner Darden Restaurants, which said its profits were being eaten away by rising food and labor costs.

The Orlando-based company – which also owns chains such as LongHorn Steakhouse and Capitol Grill – has been reluctant to raise prices, especially at Olive Garden, even as workers demand higher wages and raw food costs rise. .

As consumers eat out at restaurants as much as they did before the pandemic — and in some cases more — the restaurant industry is struggling to pass on or absorb higher costs.

Darden said in June that he had kept price increases below inflation, but also quietly cut popular promotions such as free pasta refills at Olive Garden.

Olive Garden is still offering its “endless first course” — soup, salad and breadsticks — but the chain has begun cutting discounts during the pandemic, executives said on an earnings call in June.

Diners dine at the restaurant as much as they did before the pandemic.
The Washington Post via Getty Im

Shares of the company fell more than 3% on Thursday after the company announced that its profit fell to $193 million in the last quarter ended August 28, from $230 million a year ago.

Darden’s total sales rose 6.1% to $2.4 billion in the quarter, but its costs rose more than 9% for its brands, which include LongHorn Steakhouse, Yard House and The Capital Grille. .

“I am pleased with the performance of all of our brands in what remains a challenging inflationary and uncertain macroeconomic environment,” Darden Chief Executive Rick Cardenas said in a statement.

A LongHorn Steakhouse starter.
There are 549 LongHorn Steakhouses across the country.
Bloomberg via Getty Images
A Capital Grille restaurant.
Darden Restaurants owns eight brands, including The Capital Grille.
Elizabeth Lipman

“We had a strong quarter,” he added, “and we saw a more normal seasonality return to our business that we didn’t experience last year.”

Olive Garden’s comparable sales increased 2.3% in the latest quarter, compared to a 6.5% increase in the prior quarter.

New York Post

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