- Chain will sell 10 times as many of the passes this year
- Restaurants relying on promotions to cope with industry slump
Olive Garden, facing a restaurant industry awash in deals and promotions, is making a bigger bet on its most outlandish offer: the unlimited pasta pass.
The deal, which lets customers pay $100 and eat as much Olive Garden pasta as they want for seven weeks, will be available Thursday for a third straight year. But the Darden Restaurants Inc.-owned chain is selling 21,000 passes this time around -- a more than 10-fold increase from the 2,000 offered in September 2015. Last year, the passes sold out in seconds.
Sit-down chains have had to work harder to stand out in recent years, hurt by competition from fast-casual restaurants and heavy discounting by fast-food rivals. That’s prompted them to get more creative with menus and specials. Olive Garden’s unlimited deal, known as the Never Ending Pasta Pass, doesn’t generate much revenue on its own: At $100 a pop, the passes will ring up about $2.1 million. But the hope is that its most voracious fans with help bring in other customers.
“Last year, we saw our Pasta Pass holders use their passes an average of 28 times over the seven-week promotion -- often bringing along groups of friends,” said Jose Duenas, executive vice president of marketing for Olive Garden. “We were able to generate new excitement for a fan-favorite promotion while tapping into our most loyal guests and allowing them to serve as brand ambassadors.”
The passes come in the form of a credit card-style piece of plastic, with the customer’s name printed on it. Those diners can show up to Olive Garden any time they like between Oct. 3 and Nov. 20, and then consume as much pasta, soup or salad, breadsticks and soda as they can handle.
Olive Garden, Darden’s biggest chain, is looking to extend a comeback that began with a shake-up two years ago. Activist investor Starboard Value led a proxy fight in 2014 and overhauled the Orlando, Florida-based company after replacing its entire board. Since then, the restaurant has rolled out a back-to-basics menu and revamped its kitchen operations. The campaign was largely successful, and the Italian chain has turned in seven straight quarters of positive same-store sales.
Starboard, meanwhile, has been moving on from Darden. The investment firm’s chief executive officer, Jeff Smith, left Darden’s board earlier this year after Starboard reduced its stake.
The broader restaurant industry is under pressure from shaky consumer spending and lower grocery-store prices, which have made it cheaper to eat at home. Competitors such as Ruby Tuesday Inc., Chili’s Grill & Bar and Bravo Brio Restaurant Group Inc. have recently reported quarterly same-store sales declines.
To drum up business, Olive Garden also is running its never-ending pasta promotion this fall. That deal doesn’t cover multiple visits: Customers just pay $9.99 to get an unlimited supply of certain dishes on one occasion. Darden, which also owns LongHorn Steakhouse and Bahama Breeze, has about 840 Olive Garden locations.