Customers
arrive
at
an
Olive
Garden
location
in
San
Antonio,
Texas.
Callaghan
O’Hare
|
Bloomberg
|
Getty
Images
Casual-dining
chains
are
gaining
customers
who
have
grown
frustrated
with
higher
fast-food
prices,
Darden
Restaurants
CEO
Rick
Cardenas
said
on
Thursday.
While
Darden
itself
hasn’t
benefited
from
the
shift,
its
competitors,
like
Chili’s
owner
Brinker
International
and
Applebee’s
parent
Dine
Brands,
have
been
reigniting
a
rivalry
with
their
fast-food
counterparts
—
and
it
seems
to
be
working.
Chili’s
introduced
an
ad
campaign
that
calls
out
the
Big
Mac
and
other
fast-food
burgers
for
their
prices.
Dine
Brands
CEO
John
Peyton
told
CNBC
in
May
that
Applebee’s
has
been
leaning
into
deals
to
win
over
fast-food
diners.
On
Darden’s
quarterly
earnings
call
Thursday,
Cardenas
told
analysts
that
industry
data
is
showing
“a
little
bit
of
a
shift
from
[quick-service
restaurants]
to
some
of
those
competitors”
in
casual
dining.
As
of
May,
full-service
menu
prices
had
risen
3.5%
over
the
last
12
months,
compared
with
a
4.5%
increase
for
those
of
limited-service
eateries,
according
to
Department
of
Labor
data.
The
overall
consumer
price
index
rose
3.3%
in
that
period.
Consumers
have
been
feeling
the
pinch
of
the
more
than
two
years
of
price
hikes,
even
with
fast-food
chains,
which
typically
benefit
from
tougher
economic
environments
because
consumers
trade
down
to
their
cheaper
meals.
But
both
full-service
restaurants
and
grocers
alike
have
been
highlighting
their
own
value
compared
to
fast-food
meals,
whether
it’s
the
actual
price
or
the
overall
experience
and
quality.
In
particular,
McDonald’s
has
faced
backlash
from
customers,
social
media
users
and
even
House
Republicans
for
its
higher
prices.
In
an
open
letter
in
late
May,
the
company’s
U.S.
president,
Joe
Erlinger,
hit
back
at
critics
claiming
its
menu
prices
have
doubled,
saying
its
prices
are
up
40%
since
2019.
Even
so,
the
company
has
taken
steps
to
try
to
appeal
to
price-conscious
diners.
On
Thursday,
McDonald’s
announced
a
new
$5
value
meal,
plus
free
French
fries
on
Fridays
with
any
purchase
of
at
least
$1
for
its
mobile
app
customers.
Darden
has
been
using
a
different
strategy
to
win
over
diners.
It
has
leaned
on
television
advertising
and
kept
its
overall
pricing
lower
than
inflation
to
attract
customers.
In
its
fiscal
fourth
quarter,
the
company
reported
flat
same-store
sales
growth
and
weaker-than-expected
revenue,
although
its
earnings
beat
Wall
Street’s
estimates.
Cardenas
said
the
company
has
dealt
with
a
“consistently
weaker
consumer
environment,”
as
well
as
increased
discounting
and
marketing
pressure
from
its
rivals.
Still,
executives
touted
that
its
restaurants
are
outperforming
the
broader
casual-dining
segment.
Shares
of
Darden
rose
more
than
1%
in
morning
trading
on
Thursday.
The
company’s
stock
has
fallen
6%
this
year,
dragged
down
by
concerns
about
the
consumer
environment.
