(WJET/WFXP) — Olive Garden has announced that it will continue to raise prices, following a drop in sales last quarter.
The CEO stated that the company is still avoiding offering discounts to attract customers, despite a decrease in sales and loss of customers. During the company’s earnings call held on Thursday, Darden executives attributed the sales slump to the financial stress of inflation, which is affecting a portion of their customers.
The pullback is mostly at the below-median household income. … our other [customer] groups are stable or growing
Raj Vennam, Financial Chief
Inflation remains a headache for small business owners
Darden Restaurants, the company that owns and operates restaurants like Olive Garden, Longhorn Steakhouse and Cheddar’s Scratch Kitchen, reported they will be increasing prices company-wide by an average of 2% to 3% over the next year. Olive Garden had already seen a 1% increase in menu prices last year. This price increase would be seen across all of the restaurants that Darden owns.
With this plan, Darden estimates they will see a 1% to 2% growth in sales in 2025.
Prices across fast-food chains have seen a 31% rise in the past 10 years, McDonalds seeing the highest increase at a 100% inflation rate.
This comes as a “price war” is unfolding in the restaurant industry. Many chains are beginning to offer deeply discounted deals in an attempt to attract more customers. McDonalds recently announced a new $5 meal deal attempting to address concerns over the rising prices.
Wendy’s and Starbucks also joined in offering value meals. Wendy’s offering a $3 breakfast and Starbucks offering a $6 breakfast sandwich and coffee combo.
