Darden Restaurants had its first earnings call since its board was completely replaced two months ago, on which it heavily emphasized to-go ordering at its largest chain. “Olive Garden has great food that travels very, very well.”
With activist hedge fund Starboard Value's complete takeover of Olive Garden parent Darden Restaurants' board in October, everyone knew change was in the air for the fast casual Italian chain.
On Darden's second-quarter earnings call Tuesday evening, the company announced that it is indeed the dawn of a new era for Olive Garden, where sales grew by 0.5% in the last three months, compared to a decline of 1.3% in the previous quarter. But the most significant change in the brand's strategy announced on the call isn't that the chain will start salting its pasta water. Instead, the future success of Olive Garden, according to management, will rely heavily on its takeout business.
“[One piece] that I believe is really important in the Olive Garden momentum is to-go.” Darden's interim CEO Eugene Lee said on the call. “We're seeing that business grow at 15%. Consumers want convenience.”
As evidence for the success of Olive Garden's nascent takeout push — online ordering became available in July, and mobile capabilities only on Nov. 3 — Lee announced the brand now receives more than 30,000 online orders each week, and that Olive Garden's takeout business accounts for 8.6% of its total sales. Lee sees that number climbing to as high as 12% in the near future.
Moreover, the average check for Olive Garden to-go orders is 30% higher than that of in-store diners, many of whom are foregoing bottomless breadstick baskets in the restaurant, preferring to slip into a carbohydrate-induced stupor in the comfort of their own living rooms.
“So we have some people that we're trading out of the in-restaurant experience to the to-go experience. [But] it's not like this is totally a negative trade for us,” Lee said. “And it's a big part of our strategy, as we've identified convenience as a need that we can meet for the consumer because of the type of food that we serve.”
Lee added that Olive Garden's menu is well-suited for takeout, emphasizing his faith in the pasta-to-go concept.
“Olive Garden has great food,” he said. “That travels very, very well.”