Olive Garden’s CEO revealed one awful truth about dining out that’s bad news for Chick-fil-A

Jun 26, 2024

The restaurant industry is facing unprecedented upheaval from the inflation crisis.

Now everything could be changing from some of the most popular fast food chains.

And Olive Garden’s CEO revealed one awful truth about dining out that’s bad news for Chick-fil-A.

The rising price of fast food has sent customers to casual dining chains

Fast food prices have exploded since inflation began running rampant under President Joe Biden.

The days of a dollar menu or value menu are long gone.

Combo meals at many of the biggest fast-food chains in the country cost more than $10 now.

Darden Restaurants CEO Rick Cardenas said that rising fast food prices are causing their customers to turn to casual dining chains.

Cardenas told investors on an earnings call that industry numbers show “a little bit of a shift” of customers from fast food chains to casual dining.

Darden is the parent company of Olive Garden, Longhorn Steakhouse, and Cheddar’s Scratch Kitchen, among other famous chains, like Ruth’s Chris Steak House.

“The consumer is really focused on what price they’re paying [everywhere], not just in restaurants,” Cardenas said.

A recent study by LendingTree found that a whopping 78% of consumers now see fast food as a “luxury” buy.

Fast food used to be the big winner in a tough economic environment as customers downgraded their meals to save money.

But the value that it once provided is gone for most chains.

Business Insider reported that fast food prices have increased well into double digits at many chains over 2022 and 2023.

That’s why casual dining chains are going after fast-food customers.

Chili’s and Applebee’s offer value meals to lure fast-food customers 

Chili’s released a 3 for Me combo meal this year aimed directly at stealing customers away from McDonald’s.

Customers can get an entrée like a hamburger, fries, starter, and a fountain drink for $10.99.

The chain released a new hamburger in April, The Big Smasher, that’s nearly identical to the McDonald’s Big Mac.

The Big Smasher comes with identical toppings to the Big Mac – lettuce, onions, pickles, and a Thousand Island dressing – but with a bigger hand-smashed half-pound hamburger patty.

A Big Mac combo meal at McDonald’s costs more than $10 in most of the country now.

Chili’s CMO George Felix told Nation’s Restaurant News that the 3 for Me combo offers customers better value than fast food.

“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,” Felix said. “We believe that Chili’s 3 For Me offers better value than you’ll find in any drive-thru and, with the all-new Big Smasher burger, we just made the 3 for Me even better. We believe our guests can enjoy better quality, better pricing and a better experience every time.”

McDonald’s reported a sales decline last quarter but Chili’s saw sales climb by 31% after the 3 for Me promotion was introduced.

Applebee’s is using its 2 for $25 promotion – two entrees and an appetizer – to draw in customers. 

Fast food restaurants have lost their value proposition for customers and that’s opening the door for new competitors.

A sit-down meal at a casual dining chain could be cheaper than the drive-thru in many parts of the country.

*Read All About It Poll*

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