Many Americans still love their heaping portion at restaurants, but a growing number are looking for a little less on their plate — and it looks to be a sales driver.
Olive Garden has proven to be a trailblazer in this unexpected revenue stream. The company, last quarter, began offering smaller portions for lower prices on seven of its dinner entrees. That resulted in a 15% jump in the company's internal affordability metric, it revealed on a recent earnings call.
Ultimately, people prefer a full wallet to an overfull belly, it turns out.
The new offerings also seem to be drawing back people who have cut dining out from their budget. “Maybe our consumers finally evolved that you don’t need to have uneaten food on the plate to feel that you’ve gotten good value,” said Rick Cardenas, CEO of Olive Garden parent company Darden $DRI Restaurants, on the earnings call.
The importance of pricing is a lesson fast casual chains and fast-food chains are learning. Last year, McDonald's $MCD went into damage control mode following reports of $8 chicken sandwiches and $18 Big Mac meals. (McDonald’s CEO Joe Erlinger issued a public letter to counter what he called the “viral social posts and poorly sourced reports that McDonald’s has raised prices significantly beyond inflationary rates.")
Whether true or not, consumers believed fast food had gotten too expensive — and not just at McDonald’s. That led to a price war that’s still being fought among fast food chains.
Olive Garden isn't the only company experimenting with less for less. P.F. Chang's has begun offering different portion sizes for its entrees and select appetizers. And The Cheesecake Factory has expanded its "Bites" menu, which offers smaller portion sizes at a lower price.