Olive Backyard is making an attempt to carry the road on growing menu costs.
AP
Inflation is taking a chew out of Olive Backyard proprietor Darden Eating places, which mentioned its earnings are getting chewed up by the rising value of meals and labor.
The Orlando-based firm — which additionally owns chains together with LongHorn Steakhouse and Capital Grille — has been reluctant to lift costs, notably at Olive Backyard, whilst employees demand increased wages and uncooked meals prices surge.
Whereas shoppers are consuming out as a lot as they did earlier than the pandemic – and in some circumstances extra – the restaurant trade is fighting the way to go alongside or take up increased prices.
Darden mentioned in June it has saved worth will increase at under inflation, but additionally has quietly axed in style promotions like free pasta refills at Olive Backyard.
Olive Backyard nonetheless affords its “endless first course” — soup, salad and breadsticks — however the chain began to chop discounting throughout the pandemic, executives mentioned on an earnings name in June.
The corporate’s inventory slid 4.4% on Thursday after the corporate reported that its revenue fell to $193 million in the latest quarter ended Aug. 28 from $230 million a yr in the past.
Darden’s whole gross sales grew by 6.1% to $2.4 billion within the quarter, however its prices rose extra to 9% at its manufacturers, which embrace LongHorn Steakhouse, Yard Home and The Capital Grille.
“I'm happy with the efficiency of all our manufacturers in what stays a difficult inflationary and unsure macroeconomic surroundings,” Darden chief government Rick Cardenas mentioned in an announcement.
“We had a strong quarter,” he added, “and we noticed extra regular seasonality return to our enterprise, which we didn't expertise final yr.”
Comparable gross sales at Olive Backyard rose by 2.3% in the latest quarter in comparison with a 6.5% improve within the earlier quarter.
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