Retailers, consumers and prices
Check out what Americans like to eat. Apparently, it may be an endless bowl of pasta.
Olive Garden owner Darden Restaurants posted a weaker-than-expected increase in same-store sales in the most recent quarter.
But the 1.1 percent increase was better than what the restaurant industry has shown overall and sales at Olive Gardens open at least 16 months rose 2.7 percent.
Chief Executive Clarence Otis said Olive Garden saw increased traffic in July and August.
Papa John’s and Olive Garden got top marks in their respective restaurant categories in the University of Michigan’s 2010 American Customer Satisfaction Index, while McDonald’s and Chili’s Grill & Bar were laggards.
Papa John’s took the lead in the limited-service category from Domino’s Pizza. Notably, this year’s win for Papa John’s came as Domino’s was getting a sales bump from its reformulated pizza recipe and crowing about how its new pies were beating rivals in taste tests.
Check out the latest raft of earnings and outlooks kicking off the holiday-shortened week in the consumer world.
Kraft Foods, which makes Oreo cookies and Velveeta cheese, posted quarterly revenue that fell short of expectations, but said its recent acquisition of British chocolatier Cadbury would accelerate long-term growth.
After a much heralded “shift to thrift” during what has become the longest and deepest recession since the Great Depression, diners are now saying they plan to spend less money at cheap fast-food chains and more at some pricier eateries like Darden‘s Red Lobster and Olive Garden chains, Chipotle and Maggiano’s Little Italy from Brinker.
“Trading up is supported by fewer customers saying they’re ordering less expensive items, skipping beverages and choosing less expensive restaurants,” RBC Capital Markets analyst Larry Miller wrote in a client note. Miller regularly polls diners about their spending plans.
When it comes to getting the most bang for a buck at sit-down restaurants, Olive Garden, Cracker Barrel, Golden Corral, Applebee’s and Chili’s get top marks, according to 5,000 diners recently polled online by BrandIndex.
Brands with the worst perceived value were Ground Round, Benihana, Bahama Breeze, Landry’s Seafood House and Hooter’s.
Whether it is “value menus,” Applebee’s two dinners for $20 deal or Ruth’s Chris Steak House’s “Summer Classic” three-course meal for $39.95, restaurant operators long have been depending on specials to woo customers during a long recession that has driven unemployment to a 26-year high.
Now, one high-profile restaurant executive says he has seen some rivals’ deep discounts disappear over the last few weeks.
Frozen seafood is never as tasty as fresh, a problem Red Lobster, whose menu hosts various fried frozen fish dishes, is trying to overcome.
Following a quarter of disappointing sales at its Red Lobster restaurant chain, Darden is trying to change the ”perception that the menu at Red Lobster is primarily comprised of frozen seafood prepared in a fried manner and not having a lot of interesting innovation, flavor profiles, culinary expertise,” said Darden’s CEO Clarence Otis on a call with analysts.