Never Ending Pasta is back at OG
Inflation remains a headwind for consumers, particularly those in households making less than $50,000 a year, and that is a significant portion of Olive Garden consumers. When DRI reported 1Q23 earnings, there were many questions about Olive garden traffic trends. Based on the data from the call and 10k, OG's average check is up 10% from 2019, implying that traffic is down 9%. The declining traffic can be attributed to management's decision to slow discounting at Olive Garden, which has significantly improved the brand's profitability. After the quarter ended, we asked the question, "If sales continue to slow, will OG discounting come back?" We now have our answer.
Following a two-year hiatus, Olive Garden is bringing back its Never Ending Pasta Bowl. During an earnings call in 2021, Rick Cardenas, the president and COO of Darden Restaurants, said the two-year break from the bowl hadn’t had a negative impact on sales and wasn’t needed to bring in customers. “But as we look forward, we don’t know if we’ll bring and when we’ll bring Never Ending Pasta Bowl back because we have a never-ending abundance every day with our never-ending first course, referring to the restaurants’ never-ending soup, salad, and breadsticks. Less than a year later, with traffic under pressure, Olive Garden has announced Never Ending Pasta Bowl is back. From October 3 to November 20. "You can enjoy unlimited servings of your favorite pasta combinations, soup or salad, and breadsticks starting at $13.99. You can add never-ending toppings — meatballs, Italian sausage, or crispy chicken — for $4.99 each."
When asked on the 1Q23 earnings call about the need to increase promotions due to the weak traffic trends, Ricardo Cardenas, now the President and Chief Executive Officer of Darden, said, "Yeah. I think a couple of things. One is, let's not read into it that we're seeing a huge, huge reduction in that consumer. We're seeing a little bit of change in the behavior from that consumer, but not huge. And so we don't want to change what we do just to capture a segment of the population."
Well, I guess something has changed.
A survey confirming what we already know
What's behind the recent slowdown of the plant-based meat category? According to new research from Deloitte, several factors are at play, including a more limited addressable market, the pressure from inflation, and questions around the products' perceived health and environmental credentials - "The addressable market may be more limited than many thought. Dramatically improved taste in recent years (vouched for by seven in 10 consumers) unlocked new interest in PBA meat.(6) But the portion of the US population open to trying (and repeat buying) it may already have reached a saturation point. The number of consumers who sometimes buy PBA meat for themselves or a household member did not grow in 2022 (figure 1 below). The half (53%) who aren’t buying it may not be easily reachable, partly due to cultural resistance to a product some view as “woke.”(7) Others, many of whom say they want to reduce their red meat consumption, still aren’t interested in PBA meat.(8)"
