How do you turn around a restaurant chain?
That’s what’s foremost on the minds of the folks at Darden, who recently announced the latest steps in trying to revive declining sales at Olive Garden. Online ordering is being rolled out across the United States, as is a lunchtime guarantee for customers in a rush. So, too, the introduction of more inexpensive items to menus, such as flatbreads. But most important, for a chain which long ago led the way for making wine an everyday beverage for the average American consumer, is a return to focus on wine.
Olive Garden recently reported a 3.4 percent drop in same-restaurant sales for the year that ended May 25, its biggest drop in three years. Now that parent Darden has almost completed the sale of the venerable Red Lobster chain, it is expected to focus on its plan to revive its biggest restaurant chain.
One problem has been watching the reducing impact of the Baby Boomer generation, as traffic stalls along with household income, and Millennials and other younger consumers see Olive Garden offerings as predictable, according to analysts. And the growth of slightly faster, slightly less expensive chains like Chipotle Mexican Grill, are also seen as cutting out potential consumers for Olive Garden.
Olive Garden always did two things very well: mainstreaming Italian-style dishes once difficult to find in many parts of the country, and making wine sales a centerpiece of their focus, with glasses and samples offered to customers upon entry and alliances made with Italian wine producers to promote the European mindset that a meal without wine simply isn’t a complete meal.
Olive Garden had difficulties in many markets, where young servers who have been raised with extreme anti-alcohol outlooks needed to be coached to suggest wine with lunch or even dinner. But as the chain grew, those issues became less important, and the chain soared as the early part of the century made wine drinking an all-American behavior.
But now good wine is available at far more restaurants, chains and independents, so the fact that the Garden is planning to intensify its focus on beverage alcohol - specifically wine but also some specialty cocktails, and using mobile apps to better train servers how to recommend wines and pair wines with food - shows how much they seem to be playing catch-up in an area where they were once highly admired.
It’s not an unusual tale: restaurant chains as they grow will frequently move away from core competencies, and the green eye-shade crowd will cut back on the support and attention beverage programs deserve and require these days. People will either order a glass of wine or beer or cocktail or they won’t, figure the corner-cutters - it’s got nothing to do with how well we showcase or manage or feature our selections. And so a chain as powerful in wine buying as any single entity in the country now hopes to regain profitability by once again making wine a key component of its public image as well as a profit center.
Olive Garden could account for as much as 60 percent of Darden’s revenue once Red Lobster is spun off, so how well these recent tweaks work matters greatly to the chain. And to the wine business, which will be watching closely if “Hospitaliano” will once again mean many raised glasses.