We Finally Know Why Olive Garden Is So Cheap
Who among us doesn’t enjoy a complimentary, hot, fresh-out-of-the-oven breadstick or an endless bowl of pasta? That sort of hearty, home-cooked meal is exactly what has made Olive Garden the popular franchise it is today.
Although it May Not be precisely “authentic” Italian, There is a reason why this dish has become so well-known in American society that it even inspired a “Saturday Night Live” parody.
With Family-friendly costs, The restaurant with a Tuscan motif appears to be successful in making its patrons feel like part of the family.
The Olive Garden also offers a wide variety of food on their enormous menu, including pasta, steak, soups, salads, and whatever stuffed ziti fritta is.
So how could Olive Garden feed guests at over 875 sites endless pasta bowls without costing a fortune? Find out by reading on!
Olive Garden is Cleaning the Carpet in Restaurants Less Often
It costs money to serve customers endless bowls of pasta and breadsticks, so Olive Garden’s parent firm Darden Restaurants has had to come up with some, shall we say, inventive ways to reduce expenses without raising prices.
One remedy? The frequency of carpet cleaning is being reduced, according to Darden CEO Gene Lee. “According to procedure, carpets should be cleaned once a month.
If You do it more frequently than that, You really damage the carpet, So there isn’t much of a benefit,” Lee told ABC News.
Now, while it may seem like they are here cutting a significant corner, hold off on contacting your community’s health department just yet.
Ron Defeo, a spokesman for Darden, did add some clarification: “The restaurants are continuously cleaned and vacuumed throughout each and every day.”
However, you might have to find a different place to eat your BOGO chicken alfredo if you like a restaurant that receives a twice-monthly steam cleaning.
Olive Garden Pays Lower Wages and Relies on Gratuities to Keep Employees Well-paid
The Parent Company of Olive Garden, Darden Restaurants, Announced plans To raise the minimum wage at all of its locations to $12 per hour beginning in January 2022. This includes staff members who also receive tips, such as hostesses, busboys, and servers.
With this salary increase, Darden anticipates that entry-level employees will now make an average of about $20 per hour. In Other words, Olive Garden wants to save money by paying its employees less And relying on the tips of the patrons to make up the difference.
For instance, preliminary data suggests that white servers receive better tips than black servers. Workers who have tips deducted from their pay find it difficult to count on a consistent income.
Even Darden CEO Gene Lee acknowledged that compensation for their employees can vary greatly since local tipping customs affect pay. Starting pay or wage rates, according to Lee, “vary very, very greatly depending on area and general demand.
In The back of the house, We have workers who earn $25 to $28 per hour. Additionally, Depending on the region, you may work that same job for $18 per hour in some regions of the nation.
Olive Garden had to Rethink its Unlimited Breadsticks Deal
One of Darden’s major investors, the hedge fund Starboard Value, produced a slideshow describing all of the ways they want the parent company of Olive Garden to reduce expenses back in 2014.
One of their primary complaints was that the well-known endless breadsticks from Olive Garden had gone worse and were now more like “hot dog buns.”
Starboard said that the iconic breadsticks at Olive Garden were a significant contributor to food waste and that switching to a different recipe would save them almost $5 million annually.
But, before you get too worried about The Man stealing your breadsticks, keep in mind that the goal was to reconsider how they were presented, not to do rid of them.
Starboard claimed that by following a strategy to offer one breadstick each customer at the table, plus one extra, they’d save a lot of wasted carbohydrates because most customers don’t eat all of the breadsticks and they reportedly go bad after approximately seven minutes of sitting on the table.
if customers want more, They can ask for it. This guarantees that diners receive fresh, warm breadsticks as well as minimal food waste and financial savings, all of which should result in lower prices for customers.
Those Never Ending Dishes Might be Coming To an End
Olive Garden investors weren’t the only ones who had problems with the breadsticks. In an effort to cut down on the number of times they had to go back and forth to the kitchen to get additional salad, servers frequently brought overdressed, enormous salads to the table, according to Starboard Value, which noted that Olive Garden’s famed endless salads were also causing food waste and a loss of revenue. Lots of salad ended up in the trash as a result.
This is similar to Olive Garden’s Never Ending Pasta Bowl promotion. Darden’s new CEO, Rick Cardenas, informed investors that the promotion, which had not been offered since 2019, will be discontinued permanently.
It makes sense that they weren’t exactly earning money when they offered consumers limitless spaghetti bowls, unlimited breadsticks, and unlimited salad or soup for $10.99.
While you may be unhappy that something billed as “never ending” has ended, keep in mind that you can always spring for a second entree as long as Olive Garden can keep their prices low.
The Chain has Simplified to Cut Back on Waste
Unlimited breadsticks, pasta, and salad are just a few of the food waste issues listed by Starboard Value as contributing contributors to Olive Garden’s increased food expenses.
They further asserted that Olive Garden’s extensive, varied, And occasionally questionably authentic Italian cuisine contributed significantly to the high levels of food waste. Variety is One of the things that people Enjoy most about Olive Garden, But there is such a thing as too much of a good thing.
Longer ordering wait times, more mistakes in the kitchen, and confusion among consumers were all caused by the vast menu. Basically, it’s challenging to maintain quality when there is too much diversity.
The biblically long menu at Olive Garden, according to Starboard Value, “presents a cheap diner image and signals to the customer that ‘we do everything, but nothing well.'”
But for a company that is recognized for giving customers lots of options, this creates a genuine bind. Gene Lee, the CEO of Darden, put it succinctly when he asked, “How do we continue to simplify our menu offerings and maintain our high variety ratings?” It’s a difficult situation, but Olive Garden appears to have found a solution.
A Large Customer Base helps Olive Garden Keep Prices Low
A large client base is another factor that allows a national business like Olive Garden to keep pricing so competitively low.
There will be 875 Olive Garden locations in the country by 2021. When many businesses are struggling, Olive Garden is thriving thanks to its loyal client base.
In fact, according to Business Insider, Olive Garden and LongHorn Steakhouse are Darden’s two largest restaurant businesses.
They even opened 57 locations in Brazil, Colombia, the Dominican Republic, and Panama to propagate their breadstick religion there.
Additionally, Gene Lee, CEO of Darden, has stated categorically That this is not the case, despite some claims to the contrary.
“I know you all don’t think millennials go to casual dining restaurants,” said Lee, “but 30% of all our guests are millennials.” Even while millennials are held responsible for a variety of issues, raising Olive Garden prices cannot be one of them. It turns out that millennials eat more than just avocado toast!
Cheaper Ingredients Help Keep Prices Low
The Fact that you can enjoy a large, satisfying meal at Olive Garden for Not much money is one of its appeals. And Part of the reason for that is that spaghetti, Which has long been a staple in the cupboards of poor college students, is one of its main ingredients.
Therefore, Olive Garden Doesn’t Need to charge a hefty price for an entrée like fettuccine alfredo in order to make a tidy profit. The Other key components are heavy cream, butter, an egg, seasoning, and parmesan cheese, which can be purchased in a whole tub for less than three dollars.
A Pound of fettuccine costs about $1.50. You Could make enough homemade fettuccine alfredo to feed an entire family for under ten dollars.
It’s Simple to understand how Olive Garden makes such a significant profit off these very basic ingredients when you consider that they charge about $15 for the same dish (the price varies somewhat depending on location).
Breadsticks, like breadsticks, are produced from simple ingredients that you most likely already have at home. Your pricing will continue to fall as they make more money.
Take Out is Big Business with Olive Garden
As of 2021, Olive Garden was making record profits, unlike many restaurants over the previous two years. So how did they Manage to Not only survive but also thrive during a pandemic that forced so many restaurants to close their doors?
But more significantly, they never made use of third-party delivery services like DoorDash, PostMates, or Uber Eats, which are well-known for charging eateries using their services a hefty percentage. Simply put, that convenience has a significant price.
As Darden Restaurants CEO Gene Lee described it, “We have no interest in participating in our food offering through third-party channels.”
As Lee noted, many restaurants are increasing food prices to pass along those third-party costs to their patrons. Olive Garden is discovering that customers are willing to go a distance to pick up their food even though it is less convenient than delivery because they have such a loyal client base.
It’s still far simpler to order takeout than to find a Nonna who will make you some pasta, after all. or prepare meals on your own!
Prices May have to Rise in the End
Despite all the cost-cutting measures Olive Garden has taken over the years, it appears that prices will still be rising, although gradually.
Olive Garden’s parent company, Darden, revealed that they will have to hike prices by 4% as a result of inflation driving a 9% increase in food and beverage expenditures over this past quarter.
It seems sense that food prices are growing given that worker pay have increased by 9% over the previous quarter.
Olive Garden is not the only restaurant seeing the effects of inflation as companies and the economy bounce back from the pandemic.
However, Olive Garden’s parent business is still hopeful that the little hike won’t scare away too many customers. Fair enough, the rising price of gas will likely be what keeps folks at home.
The company model, cost-cutting methods, ingredient sourcing, menu engineering, operational effectiveness, marketing plan, and customer experience all contribute to Olive Garden’s capacity to provide affordable meals.
Olive Garden keeps its reputation as a chain of inexpensive restaurants while still offering a nice eating experience by carefully controlling these factors.
Frequently Asked Questions (FAQs)
To improve the dining experience for customers and establish a distinctive value proposition, Olive Garden provides endless breadsticks. It’s a distinguishing quality that has come to represent the Olive Garden brand.
Olive Garden works hard to serve its patrons meals that are both savory and fresh. While they might forgo premium ingredients to keep costs down, they nonetheless place a high priority on offering a pleasurable dining experience.
Prices at different Olive Garden restaurants could be a little different because of things like local prices and consumer demand. However, they continue to follow a set pricing plan to guarantee accessibility throughout their chain.
Olive Garden sets itself apart from traditional Italian eateries by providing reasonably priced meals with sizable servings. Although it might not offer an authentic Italian dining experience, it serves a wider range of customers looking for good value.