Darden Restaurants CEO Notes Consumer Shift From Costly Fast Food to Casual-Dining Chains

Darden Restaurants CEO Rick Cardenas revealed on an earnings call on Thursday that customers, frustrated by rising fast-food prices, are now turning to casual dining chains.

Darden Restaurants, the parent company of casual-dining brands such as Olive Garden, LongHorn Steakhouse, and Yard House, also owns upscale chains like Ruth’s Chris Steak House, The Capital Grille, and many more.

Although Darden Restaurants hasn’t yet reaped the rewards of this shift, competitors such as Brinker International (owner of Chili’s) and Dine Brands (parent company of Applebee’s) have effectively revived their rivalry with fast-food chains. Chili’s launched an advertising campaign targeting the high prices of fast-food burgers like the Big Mac. In May, Dine Brands CEO John Peyton said that Applebee’s has been focusing on special deals to attract fast-food consumers.

During the earnings call, Cardenas informed analysts that industry data shows a noticeable shift from quick-service restaurants to casual-dining competitors.

In May, Department of Labor data showed that prices on full-service menus increased by 3.5% over the past year, as opposed to a 4.5% increase in limited-service eateries. Over the same period, the overall consumer price index increased by 3.3%.

During more than two years of continuous price increases, individuals across the board are feeling the impact, including at fast-food chains. Despite these venues traditionally benefiting from economic downturns as consumers opt for more affordable meals, both full-service restaurants and grocery stores are now underscoring their value proposition. This includes competitive pricing and a focus on delivering superior dining experiences and food standards.

In a statement, George Felix, Chili’s CMO, told Restaurant Business, “We know diners are experiencing sticker shock from the rising cost of fast food, with little change to the actual quantity or quality of fast food combo meals.” He mentioned that Chili’s selection of combo meals “offers better value than you’ll find in any drive-thru.”

In recent years, fast-food prices have skyrocketed.

According to insights shared by an industry analyst, annual price increases in the fast-food sector, which typically averaged around 2%, surged into the double digits at select restaurants during 2022 and 2023.

In an effort to stay competitive during inflationary pressures, fast-food giants like McDonald’s have introduced temporary value meals catering to cost-conscious customers.