Darden to focus on menu revamp, pricing as major brands see sales softness

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Olive Garden’s advertising strategy has moved away from focusing on one or two new dishes, occasionally with a price point, to featuring broader platform ideas, according to Madsen.

Next week's launch of the chain's “two for $25” promotion is aimed at putting the focus back on affordability. “It offers guests the opportunity to enjoy unlimited soup or salad, their choice of entrée plus a shareable appetizer for dessert all for $25,” Madsen explained, adding that the promotion leverages the unlimited soup or salad course that is already included in every entrée.

Further into fiscal 2013, promotions will meet the “elevated need for affordability,” he said.

Red Lobster revamps menu

During Darden’s second quarter, which begins in September, Red Lobster will introduce what Madsen called "the most comprehensive core menu change at the brand in the last decade.”

He noted, “They’ve been working on this menu transformation for nearly two years to make sure it’s compelling for their guests, can be executed at a high level consistently by operations and contributes to profitable guest-count growth.”

Madsen also said the new Red Lobster menu will include a “significant number” of items at less than $15 and will expand the number of non-seafood selections “to eliminate the veto vote.”

“It’s important to have both price-approachable and premium-price offers so that we don’t commoditize Red Lobster or any of our other brands around price,” Clarence Otis, Darden’s chairman and chief executive, said during the call. Darden also owns LongHorn Steakhouse, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s.

Beyond rolling out its revamped menu, Red Lobster also plans to work on increasing same-store guest counts, which Madsen said were about 15 percent below what they were 10 years ago.

Current promotions include s $14.99 Seafood Feast, which Madsen said produces a margin “that contributes to profit growth in absolute and percent terms with appropriate guest-count growth.”

The fourth quarter produced disappointment for the usually popular Lobsterfest promotion, Otis said, because it occurred amid a spike in retail gasoline prices. “That reduced consumers’ discretionary income and more importantly had an adverse effect on their confidence,” he explained.

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