How higher prices are helping Olive Garden's business

Chicken scampi olive gardenOlive GardenOlive Garden has always lured customers through its discounted plates.

Olive Garden is moving away from promotions.

The company is steering away from attracting customers through major discounts, according a recent earnings call.

In the past, Olive Garden has offered a number of discounted promotional plates below $US11.99.

“Our strategy all along was to introduce and get everyday value back on the menu, become less reliant on, what we would refer to as, a lot of deep-discounting to drive the traffic,” said Gene Lee, the CEO of Darden Restaurants.

Selling items at a discount can erode brand value in the long term because customers come to expect cheaper prices.

“We want to continue to migrate over to more brand building, more advertising around the food that people really love,” Lee said.

Darden Restaurants, the parent company of Olive Garden, reported strong fourth-quarter sales of $US1.88 billion yesterday.

Stock increased 4%, and Olive Garden continued into its tenth consecutive month of same-store sales growth.

Many would see reducing the number of discounted plates as a method that would drive away consumers, but Lee has found the opposite.

“I do think the consumer is looking for less discounting activity today than they were a year ago, or two years ago,” he said.

Fortunately for pasta lovers, the company does not plan to do away with its never ending pasta bowl.

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