September 25, 2022
Inflation is eating into profits at Olive Garden’s corporate parent

Inflation is blowing out of Darden Restaurants, the owner of Olive Garden, which said its profits are being chewed up by rising food and labor costs.

The Orlando-based company – which also owns chains including Longhorn Steakhouse and Capital Grille – has been reluctant to raise prices, particularly at Olive Garden, even as workers demand higher wages and rising raw food costs. We do.

While consumers are eating as much outside food as they ate before the pandemic – and in some cases more – The restaurant industry is grappling with how to pass on or afford the high costs.

Darden said in June it kept price hikes below inflation, but also quietly removed popular promotions like free pasta refills at Olive Garden.

Olive Garden still offers its “never-ending first course” — soup, salad and breadsticks — but the chain began to cut discounts during the pandemic, officials said on an earnings call in June.

A table of customers at Olive Garden.
Diners are eating as much food as they did before the pandemic.
Washington Post via Getty Im

The company’s stock fell more than 3% on Thursday after the company reported that its profit fell to $193 million in the most recent quarter ended Aug. 28, from $230 million a year earlier.

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

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

A Longhorn Steakhouse entrance.
There are 549 Longhorn Steakhouses nationwide.
Bloomberg via Getty Images
A Capital Grill restaurant.
Darden Restaurants owns eight brands including The Capital Grill.
Elizabeth Lipman

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

Comparable sales at Olive Garden grew 2.3% in the most recent quarter, compared to an increase of 6.5% in the previous quarter.

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