Olive Garden's Old Trick Keeps Working
Olive Garden, one of the pioneers in the casual Italian segment, posted a 2.9 percent same-store sales increase for the quarter ended Aug. 31, its 48th consecutive quarter of same-store sales increases.
A spokesman attributed the winning streak to "the continued strength of operations," which includes its perennially popular "Never-Ending Pasta Bowl" promotion. The promotion offers customers all the pasta they can eat--the current iteration boasts 42 possible combinations of noodles and sauce--for $7.95.
In August, Olive Garden renewed the seven-week limited-time offer, which debuted in 1995, adding two new sauces--Spinach Alfredo and Sundried Tomato Parmesan--and new advertising from Grey Advertising in New York. "Every year we look to bring news to the promotion," the spokesman said, referring to the two new sauces. Within the restaurants, Olive Garden supports the promotion with food-and-wine pairing menus and table tents.
The value-oriented promotion shows that Olive Garden "is in tune and in sync with how the consumer is changing preferences and priorities," said Dennis Lombardi, executive vice president in charge of food service strategy at WD Partners, the Columbus, Ohio-based design and development firm.
"Just when customers were pulling back, putting disposable income into the gas tank or credit-card debt, they're there with a great offer that just screams value." Overall, sales at full-service casual restaurants are soft, Lombardi noted.
Curiously, the promotion also succeeds in getting customers to spend more money at Olive Garden: Customers "go there thinking that they'll have this great value, and by the time they get there, they see something that looks good for $9.99, and they'll trade themselves up," Lombardi explained.