Welcome to Extreme Investor Network, where we bring you the latest insights and trends in the world of business news. Today, we’re diving into the shifting landscape of casual-dining chains and the battle for customers who are seeking value in their restaurant choices.
According to Darden Restaurants CEO Rick Cardenas, casual-dining chains are seeing an uptick in customers who are growing frustrated with the higher prices at fast-food restaurants. While Darden itself hasn’t directly benefited from this shift, competitors like Brinker International (owner of Chili’s) and Dine Brands (parent company of Applebee’s) are capitalizing on this trend by reigniting their rivalry with fast-food counterparts.
In an effort to lure in customers, Chili’s introduced an ad campaign calling out the prices of fast-food burgers, while Applebee’s has been focusing on deals to attract fast-food diners. This strategy seems to be paying off, as industry data shows a shift from quick-service restaurants to casual dining.
Full-service menu prices have risen 3.5% over the last year, slightly trailing behind the 4.5% increase seen in limited-service eateries. Consumers are feeling the impact of these price hikes, prompting both restaurants and grocers to emphasize their value in comparison to fast-food options, whether it’s through pricing or the overall dining experience.
Even fast-food giant McDonald’s has faced backlash for its higher prices, prompting the company to introduce a $5 value meal and free French fries on Fridays for mobile app customers. Meanwhile, Darden has focused on television advertising and competitive pricing, which has helped the company maintain flat same-store sales growth despite a challenging consumer environment.
Despite facing pressures from rivals and a weaker consumer environment, Darden executives remain optimistic about the performance of their restaurants compared to the broader casual-dining segment. This confidence was reflected in a more than 1% increase in the company’s stock price on Thursday, despite a 6% decline for the year.
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