Digital Latecomer Darden Restaurants Looks To Return Of Table Service

Darden Restaurants, parent company of several casual dining giants including Olive Garden and Longhorn Steakhouse, announced its FY2021 third quarter results on Thursday (March 25), seeing a 26.1 percent year-over-year decrease in sales, a significantly steeper drop than the 19.4 percent decrease of the previous quarter. However, the company’s same-restaurant sales turned positive in the first three weeks of March, reports CNBC, as newly vaccinated consumers return for in-restaurant dining.

“You know, it’s amazing — people get their vaccination, the first thing they do is they go to a restaurant, even though they probably should wait a few days,” Darden Chief Executive Officer Gene Lee said on a call with analysts. “There are a lot of people, we’re noticing, especially near vaccination sites, that this is their first time out in a year, and they’re just so excited to be back … People are happy to be out, and it’s definitely noticeable. There’s a good vibe in our restaurants right now.”

Despite making investments in new technologies and expanded off-premises options, the company seems to be largely looking toward this return to table service to bring sales back up to pre-pandemic levels. Digital channels accounted for 19 percent of total sales, driven by the rollout of curbside pickup across brands and car-side at some locations. This share of sales may be significant for a company that previously relied so heavily on in-restaurant dining, but it lags behind the digital sales of restaurants that had been investing in these technologies before the outbreak of the pandemic, with digital sales in some cases accounting for almost half of all sales.

Darden’s off-premises channels may be something of a band-aid — as Lee said, “I do believe that, as we get to offer more capacity, and we see this in individual restaurants, that the off-premise will start to will start to fall off,” though he added that he believes “that our off-premise business will still be robust when all is said and done.”

While many restaurant companies have been spending the past few months touting updates to their apps and loyalty programs and rolling out innovative in-store technologies, Darden remains vague about its technological advancements beyond the addition of new order-ahead pick-up and check-in options.

“We’re going to continue to invest in technology to reduce friction in the guest experience and reduce friction in the team member experience,” Chief Operating Officer Rick Cardenas said on the call. “We’ve given you some examples of what we’ve already done this year with shifting everything to curbside … we’re actually going to … make the process of checking in to the restaurant, easier. We’re doing a lot of things going forward, without getting into too much detail. We expect to spend more money in technology than we have this year.”

Even amid the industry-transforming events of the last year, executives stressed the company’s commitment to its “Back-to-Basics” operating philosophy, which has been in effect since 2015, and which focuses largely on offering “attentive service” and an “engaging atmosphere” in the restaurants, though takeout options are included in the philosophy as something of an afterthought. As the company looks to rebuild its in-restaurant presence, it is facing challenges in rebuilding its workforce, as many have left the food service industry after COVID-related job losses and/or contagion concerns associated with the contact-heavy profession.

“I think our greatest challenge right now is staffing, trying to attract people to come to work,” said Lee. “What we’re focused on is really back to basic restaurant operations. And one of those things that we focus on there is hiring great people … and so that’s our number one priority right now.”

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