CNBC.COM - Fret not, Olive Garden lovers: The "endless" breadsticks aren't going away.
But new management has big changes in store for the
casual dining chain, which touts family-style Italian food and has
struggled with declining sales.
The chain's president, Dave
George, told investors on Tuesday the changes include creating a new
logo and toning down its the "Old World Style," the Tuscan-style
stonework and wooden archways that have been a signature part of Olive
Garden restaurants since 2000.
"You're not going to see stainless steel showing up tomorrow in a Tuscan Farmhouse," George said, according to the Orlando Sentinel.
George,
who became Olive Garden's president in January, said the look would be
"more relevant." Olive Garden is part of the Orlando, Fla.-based Darden
Restaurants (DRI) chain that includes Red Lobster and LongHorn Steakhouse.
The chain also plans to make its menus more varied and affordable.
Darden Restaurants CEO Clarence Otis said that the changes are being
made to be "more responsive to the financial realities of our guests,"
according to the Tampa Bay Times.
Among Olive Garden's
changes: smaller plates, cheaper items, and lower-calorie meals. New
offerings, placed on the menu in October, include a 420-calorie lasagna
primavera with chicken, and a lunch calzone and sandwich combo that
costs $6.95. Two weeks ago, all new uniforms were issued - a more
contemporary black button-down shirt and black slacks, a shift from the
wide ties and white shirts.
The overhaul comes after same-restaurant sales fell 1.2 percent in
the 2012 fiscal year that ended in May. For Darden, same-restaurant
sales are a year-over-year comparison of sale volumes for restaurants
open the last 16 months.
"We became overly confident," read a line in George's presentation. "Our historical competitive advantage has narrowed."
"We were slow to react to changing guest needs," another slide said. "The experience takes too long."
RJ
Hottovy, a senior restaurant analyst at Morningstar, said Olive Garden
isn't alone. The casual dining market has become tougher in recent
years, he said.
"The core casual dining patron finds itself in a much more difficult
position than a decade ago -- that's put pressure on traffic trends,"
Hottovy said.
He said the rise of fast casual restaurants like Chipotle (CMG) and Panera (PNRA) has also encroached on Olive Garden's market.
Dining
experience aside, Darden Restaurants said it also was hurt by reports
in November that the company planned to cut employee hours to avoid
paying for health insurance as mandated for large companies by the
Affordable Care Act. The company has since said it would not reduce the
hours of full-time workers.
"That's a theme we're seeing across
the restaurant industry, not Olive Garden specifically," Hottovy said.
"I think that may have been a little bit overblown ... but I think it
will be something that ends up pressuring margins for a lot of
restaurants next year."
Olive Garden menus are largely the same at its 818 restaurants,
although prices vary. At a restaurant outside of Seattle, a grilled
chicken Caesar salad costs $11.95. At the same restaurant, a bowl of
minestrone soup costs $5.95, and a plate of spaghetti with meat sauce
costs $12.95. (Those previously mentioned doughy breadsticks come with
every entre and are so popular that they have a Facebook page with 1.5
million "likes.")
