These Popular Restaurant Chains Plan On Keeping Prices Competitive, CEO Says
Inflationary pressures have left their mark on restaurant chain prices over the past year. Dine-in staple Outback Steakhouse raised its prices by 5%, the cost of eating at McDonald's has gone up about 8% compared to April of last year, and Chipotle by 10% since February. Starbucks alone saw a whopping 20% increase in the cost of a cup of coffee during the same time frame.
But not all restaurant companies plan on passing such substantial additional costs to customers. Amid the growing popularity of its brands Olive Garden and LongHorn Steakhouse, restaurant operator Darden says it will continue prioritizing value and boasting prices below those of its rivals.
"We think it's prudent to be cautious and preserve flexibility, rather than pass through some costs [to customers] that may not be permanent," said Rick Cardenas, president and CEO of Darden Restaurants during an earnings call on June 23.
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The company reported sales growth across its portfolio of brands, with same-store sales climbing about 12% compared to last year. The growth is mostly driven by its fine-dining chains, like The Capital Grille and Eddie V's, which made up a 35% growth in same-store sales. Olive Garden reported a growth of 6.5% and LongHorn Steakhouse benefitted from the growing popularity of steakhouses with a 10.5% same-store sales increase for the quarter.
Darden credits its stellar performance to its competitive pricing and it aims to keep that upward momentum. The company believes inflation prices aren't permanent and food costs will stabilize again. And by riding inflation out and resisting price hikes, it will gain an edge over competitors who can't be as flexible.
While steakhouses have been raising prices, LongHorn has managed to keep its prices consistent–even offering a $5.99 & Under menu. However, Olive Garden has disappointed fans looking for the once-popular deal on bottomless pasta.
That's not to say that prices at Darden restaurants remain in a time capsule. Last year Olive Garden reportedly raised its prices by 2%, below the industry average at the time but still more than nothing. Additionally, in January of this year, Newsweek reported that Darden as a whole raised its prices by 2% during its last quarter and had another 4% increase underway.
The company also announced plans for 55 to 60 new restaurant openings in 2023.
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