Olive Garden’s pilot with Uber Eats is going well, according to Darden CEO Rick Cardenas. One of the biggest tells is feedback from operators.
“As the pilot went forward, what we heard from our operators was this should be in every Olive Garden,” the executive said during a fireside chat at the ICR Conference in Orlando. “And you know when operators say ‘go’, that it’s actually doing really well and it’s not very complicated. Because generally, the operators—if it’s got any complication—they’ll say we shouldn’t do this.”
The positive reception has allowed the brand to roll out the service quicker than anticipated. The test began with 100 restaurants in October. Originally, Uber Eats was projected to reach all 900-plus company-operated restaurants by May, but that was moved up to the end of Q3 or late February.
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Olive Garden uses Uber Direct, which means delivery orders come through the chain’s own channels and are then transported by third-party delivery drivers.
“The orders come through our system,” Cardenas said. “There’s an integration with Uber so that we actually don’t have to worry about double keying like a lot of other brands have to do when somebody goes to the marketplace. They get the order and then have to key it into their own point of sale or they have to use a third party to do that. And the systems communicate very well with each other. The other thing is we can keep our pricing where it is and just charge a delivery fee. So the consumer, it’s very transparent what they’re paying to have food brought from our restaurant to their house.”
Cardenas believes operations will be fairly straightforward because the brand already uses curbside delivery for customers; Uber drivers will do the same and pick up orders in parking spaces instead of coming inside the restaurant. Without any marketing, the Uber channel represents about 6 percent of the to-go business, and order volume has increased each week. The average order size is bigger than the average carryout size.
“So for the manager, it’s very seamless,” Cardenas said. “And we want to just make sure the system works. And it turned out it worked really well, really quickly.”
Olive Garden is waiting for restaurants to smooth out operations before turning on marketing and making the public fully aware of the chain’s new delivery capabilities. Uber has some marketing funds for Olive Garden to spend, and the brand will augment that with its own dollars.
The company is in the process of determining how to best tell the consumer that the service is available. One major option is messaging Olive Garden’s eClub, which has tens of millions of members.
“We have other ways that we can get out there,” Cardenas said. “We’re not going to talk exactly about what we’re doing. We’re still working on those plans, but rest assured, when it’s rolled out and when the operators have a chance to work with it, we will talk.”
The continued launch comes as Olive Garden sees improved guest sentiment compared to the past couple of years. Cardenas said consumer confidence increased in November after the presidential election, particularly in the $50,000 to $100,000 income bracket. Previously, Darden’s casual-dining brands saw fewer visits from those guests, but now that’s flipped.
Darden, however, has not seen that change yet from customers with household incomes above $150,000.
“We’re going to see how that continues to play out,” Cardenas said. “It’s only one cohort that actually flipped, but it’s flipped in the cohort that matters a lot to casual dining. And we’ll continue to provide whatever great value we can to get all of the consumers to want to come back to us some more. But as we think about that, yes, consumers are starting to get a little bit better, but we want to see a little bit more trends to really say that.”
Part of Olive Garden’s plan going forward is to win guests with new product news. Following up the return of the Never Ending Pasta Bowl in the fall, Olive Garden brought back its Steak Gorgonzola and Stuffed Chicken Marsala in early December. Cardenas described these as not necessarily deep discounted items, but “fairly priced items that are a little bit above our average menu price.”
But Olive Garden also wants to ensure customers understand the brand’s value proposition. So it brought back its Manicotti at a $12.99 price point for a limited time.
“You’ll probably see a little bit more of that as we go through the rest of this fiscal year—talking about a compelling price point item,” Cardenas said. ” … [The Manicotti], remember, it comes with unlimited soup, salad, and bread sticks, and it comes with the service and the experience of an Olive Garden. And so we think that’s a compelling price point. Others may have a little bit higher price point depending on what it is, or others might have a lower price point, but not everything is going to always have a price point. And so you have to be sure to understand that we’re not going to be always on air with a price. We’re on air with a price at the times that matter, but it’s not the same kind of really deep discount that others are doing because we still believe that we need to grow the same-restaurant sales profit. And we think this is the best way to do it and we proved that.”
Olive Garden saw 2 percent same-store sales growth in the second quarter, an improvement from the 2.9 percent and 1.5 percent declines in the first and fourth quarters, respectively. Olive Garden’s systemwide sales rose to $1.29 billion, up from $1.25 billion, and segment profit increased to $277.1 million, up from $262.5 million.
