What unlimited breadsticks tell us about the economy
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Darden Restaurants, owner of Olive Garden, Longhorn Steakhouse and The Capital Grille, among others, is set to release its quarterly results Thursday morning before the opening bell — and these results can offer insight into more than Darden’s bottom line.
Darden is able to capture multiple demographics across its properties, said Christopher Muller, a professor at Boston University’s School of Hospitality Administration. With high-end steakhouses and seafood restaurants, the company attracts “mostly urban, lots of expense-account kind of things and special occasions,” said Muller.
On the other hand, with its Olive Gardens and Bahama Breeze-type restaurants, Darden’s portfolio caters to “families and people who are looking for a nice outside-the-home dining experience, but also looking for a high value,” said Muller.
That mix of properties means Darden’s performance can reveal insight into how several consumer groups are spending.
B. Hudson Riehle, senior vice president of the research and knowledge group at the National Restaurant Association says consumers still want to eat out. The industry group predicts restaurant sales will reach $863 billion this year, although Riehle himself expects growth to be moderate.
In addition to stiff competition as more and more restaurants open their doors, “the top challenge for restaurant operators, at the moment, is recruitment, retention of labor as well as labor costs,” Riehle said.
“From the restaurant operator perspective, it has been several years now where those higher labor costs have put substantial pressure on their margins,” he said. “Looking towards the future, it certainly doesn’t look like labor cost will suddenly drop to the bottom of challenges.”
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