"The consumer, it's no secret, is financially constrained," says Salli Setta, executive vice president of marketing at Red Lobster. "When they do go out to eat, price is much more of a factor."
Darden, based in Orlando, Fla., has been slow to emphasize affordability at its chains. At Olive Garden, the company says the "Taste of Tuscany" promotion earlier this year was a flop because it didn't underscore value enough. And a $1 price hike for its "Festival of Shrimp" at Red Lobster didn't go over well either. Sales figures fell 1.8 percent and 3.9 percent for the chains respectively in the quarter.
The company's results have suffered, too. In its latest quarter, Darden said profit rose 4 percent primarily because new locations boosted revenue. But sales at restaurants open at least a year — a key indicator of health because it strips out the impact of newly opened or closed locations — fell 2.6 percent from a year ago.
Darden has since vowed that affordable prices will play a bigger role in its marketing. During its road show of new Red Lobster menu items at 40 restaurants across the country, the company tinkered with prices to see which ones might stick; they found that $15 was an important psychological threshold.
"There's a difference between $14.99 and $15.50 and the difference is more than 51 cents," says Dave Pickens, the company president.
Of course, the chain is betting that there are times when customers are willing to pay a little extra: The NY Strip Steak & Rock Lobster Tail still costs $32.99. And a new "Four-Course Feast" comes with a soup, salad, entree and dessert; the meal cost $15.99.
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