Darden Restaurants Faces Pressure to Improve Speed Amid Declining Sales

In an increasingly fast-paced dining landscape, Darden Restaurants is under pressure to improve operational efficiency across its diverse portfolio, which includes Olive Garden, LongHorn Steakhouse, and fine dining establishments like The Capital Grille.

Darden Restaurants President and CEO Rick Cardenas acknowledged the need for speed during the company’s first-quarter earnings call Thursday (Sept. 19).

“We operate in a very dynamic, competitive industry,” Cardenas said, highlighting that while full-service restaurants have traditionally offered a leisurely experience, modern diners seek quicker dining options. “In a world that has gotten faster, full-service restaurants have not kept up.”

While the company reported a 1% total sales increase, to $2.8 billion, same-store sales slipped 1.1%. Additionally, same-store sales declined 2.9% at Olive Garden and sank 6% in its fine dining segment. Meanwhile, same-store sales rose 3.7% at LongHorn Steakhouse.

Darden Restaurants officials recognize today’s consumers have less time to spare and are looking for alternatives that cater to a speedier experience.

“We’re trying to capture that occasion where guests have a little less time to eat than they did 10 years ago,” Cardenas said. “This is about the speed and pace of meals. This is a guest needs’ challenge. They have other options to dine. The full-service restaurant category really hasn’t gotten faster. We see opportunities to speed up our process. We’re going to spend our time to improve our time.”

Cardenas said the company makes investments in technology “all the time” and “one of the things we were talking about is how do we help the restaurant get a little faster. Our focus is to work on our operations and if we need more technology to help that, we will. Over time, we believe being a little faster is going to be beneficial to our guests, to our team, and to our investors.”

Menu Update, Delivery Deal

Cardenas said the company is revitalizing its menu, beginning with the return of the Never Ending Pasta Bowl at Olive Garden. This promotional initiative aims to attract customers back, particularly following a significant decline in traffic in July, which was impacted by severe weather and increased travel. Chief Financial Officer Raj Vennam noted that while sales have improved since then, ongoing strategic adaptations are essential for sustained recovery.

“The significant step down in traffic during July led to our first-quarter earnings being lower than expected,” Vennam said. “Following the softness in July, our sales trend has continued to improve. Considering this recovery as well as the planned initiatives to support the remainder of the fiscal year, we are reiterating our guidance for fiscal 2025.”

The company announced a strategic partnership with Uber Technologies, set to launch with a pilot program with Olive Garden in late 2024. By leveraging Uber’s logistics network, Darden Restaurants aims to offer seamless, on-demand delivery through its own channels, ensuring proprietary guest data is maintained.

Once launched, customers will be able to order delivery from Olive Garden’s website and app at more than 900 company-owned locations across the U.S. Deliveries will be powered by Uber Direct, using Uber’s logistics network to bring Olive Garden meals directly to customers’ homes.

“Guests have been asking us for home delivery options and they continue to show they are willing to pay for the convenience,” Cardenas said. “As we continued to evaluate delivery, it was important for us to find a way to address this guest need state without disrupting the team member or guest experience and without compromising our competitive advantages and simple operating model. Uber is a partner we believe shares that vision and can meet our expectations. Their investment in a custom-integration, commitment to Olive Garden’s first-party delivery growth, and efficiency and speed at a national scale, made this exclusive partnership a clear choice.”

Despite the challenges, Cardenas remains optimistic about the company’s long-term prospects, adding, “I am confident in the actions all our brand teams are taking to address their guests’ needs without compromising the long-term health of our business for short-term benefits.”