How much do Olive Garden staff really make? Are unlimited breadsticks at risk?
And why doesn't the restaurant clean its carpets? Keep watching to find out!
Providing diners with never-ending bowls of pasta and endless breadsticks comes at a cost.
As a result, Olive Garden's parent company Darden Restaurants has had to find some
creative ways to cut costs without driving up prices. According to Darden CEO Gene Lee,
they're cutting back on how often they clean the carpets. Lee explained to ABC News:
"There's a protocol that you clean carpets once a month. If you do it more than that,
you end up actually destroying the carpet and really not a whole lot of benefit there."
"So you might want to suspend that five second rule at The
Olive Garden. If it falls on the floor, leave it."
It might sound like they're cutting a pretty important corner, but don't go
calling the local health department just yet. A Darden spokesperson did clarify:
"The restaurants are continuously cleaned and vacuumed throughout each and every day."
Olive Garden's parent company Darden Restaurants announced that they plan to raise the minimum
wage across all their restaurants to $12 an hour starting in January of 2022.
This includes employees like hostesses, busboys, and servers who also earn gratuities.
Darden expects that with this pay raise plus tips, their entry-level employees
will earn an average around $20 an hour. In other words, Olive Garden hopes to cut
costs by allowing the customers to fill in the gaps by hopefully tipping well.
This isn't unique in the restaurant industry, although the practice of
tipping has come under fire in the last few years. For example, preliminary research has
shown that people tip white servers better than Black servers. Wages garnished by tips
also means workers can't really rely on a steady income. Even Darden's CEO Gene Lee
admitted that employees' wages can vary widely because tips vary depending on where you live.
Back in 2014, one of Darden's chief investors, the hedge fund Starboard Value,
created a slideshow outlining all of the ways they wanted the company to cut costs.
One of their main issues was Olive Garden's famous unlimited breadsticks,
which Starboard claims had worsened in quality and likened them to "hot dog buns."
Starboard argued that the signature breadsticks were also a huge source of food waste
and estimated they'd save roughly $5 million a year by changing this Olive Garden staple.
But before you get all worked up, the plan wasn't to axe breadsticks altogether, but to rethink how
they're served. Since most customers don't eat all of the breadsticks, they apparently
get stale after about seven minutes sitting on the table. The investors argued that they'd save
a lot of wasted carbs by implementing a plan to serve one breadstick per customer at the table,
plus one extra. Of course, if customers want more they can ask for them, and this ensures
that they waste less food and save money, which should mean lower prices for consumers.
The breadsticks weren't the only thing Olive Garden investors took issue with.
Starboard Value pointed out that Olive Garden's signature endless salads were
also contributing to food waste and profit loss since servers were often bringing over-dressed,
giant salads to the table in an effort to reduce the number of times they went
to and from the kitchen to fetch more salad. This resulted in a lot of salad in the trash.
"Have you tried their never ending pasta bowl? It never ends."
The same could be said of Olive Garden's Never Ending Pasta Bowl promotion, which they haven't
offered since 2019. It's understandable that offering customers unlimited bowls of pasta,
as well as unlimited breadsticks and unlimited salad or soup for
$10.99 wasn't exactly making the company money.
Unlike a lot of restaurants during the last two years, Olive Garden was seeing record
profits as of 2021. So how did they manage to not only survive a pandemic that shuttered so
many eateries, but actually thrive? The secret is take out. Olive Garden was already set up
to provide take-out before the pandemic so that wasn't a massive business model shift.
But even more importantly, they didn't ever use third-party delivery apps like DoorDash,
PostMates, or Uber Eats, which famously take a very large commission.
Of course, a lot of restaurants are shifting those third-party costs onto their customers
by raising food prices. However, since Olive Garden has such a devoted customer base,
the brand is finding that people are willing to make the trek to pick up their food,
even if it's less convenient than delivery.
Part of Olive Garden's appeal is that you can get a big meal for not a lot of money.
And that is partly because their chief ingredient is pasta, which is really cheap.
That means Olive Garden doesn't have to charge an arm and a leg to turn a huge profit.
An entire pound of fettuccine costs roughly $1.50, and the other main ingredients are
parmesan cheese, which you can buy a whole tub of for less than three dollars,
some heavy cream, butter, an egg, and seasoning. For around ten dollars,
you could make your own fettuccine Alfredo to feed an entire family.
Considering Olive Garden charges roughly $15 for the same dish,
it's easy to see how they make a huge profit off these very basic ingredients.
Costs are rising pretty much everywhere right now. And unfortunately, the same might be said
for your beloved breadsticks and chicken piccata. Despite all the things Olive Garden has done to
keep costs down, it looks like prices are still going to rise. Thanks to inflation causing a 9%
increase in food and beverage costs over this last quarter,
Olive Garden's parent company Darden announced that they'll have to raise prices by 4%.
Considering they also saw a 9% increase in worker wages over the last quarter,
it's understandable that food prices are rising. As businesses and the economy recover
from the pandemic, Olive Garden isn't the only restaurant being impacted by inflation. Still,
Olive Garden's parent company is hoping that the slight increase won't deter customers too much.
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