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Olive Garden luring diners with cheaper prices


NEW YORK (AP) — If the free breadsticks and unlimited soup and salad aren’t enough, Olive Garden is hitting the gas on other promotions to get customers through its doors.

Darden Restaurants Inc., which has been struggling to hold onto customers in recent years, said deal offers like “2 for $25” dinner special helped drive up customer traffic at its flagship Olive Garden and Red Lobster chains in the latest quarter. The company said it will keep stressing the affordability of its food in the year ahead to attract more diners.

The strategy raises concerns among some investors, who worry that it’s a short-term fix that only hurts profit margins.

But in a call with analysts, CEO Clarence Otis said that boosting customer traffic is a priority for the company, even if it means sacrificing profit margins for a time.

Darden’s struggles to hold onto customers partly reflect the shifting restaurant industry. Casual dining chains were hit hard by the economic downturn, which made people more careful about eating out. And Darden has conceded that it was slow in emphasizing value. Since 2008, its customer traffic is down about 8 percent.

At the same time, casual dining chains are also contending with changing eating habits. Darden is also trying to update its menu choices to better reflect the type of food people want.

For the quarter, Darden said net income fell 12 percent on rising costs and expenses to $133.2 million, or $1.01 per share, compared with $151.2 million, or $1.15 per share, a year ago.

Revenue climbed 11 percent to $2.3 billion, topping the $2.27 billion Wall Street expected.

For the year, Darden earned $411.9 million or $3.13 per share. Adjusted earnings were $3.22 per share.

Annual revenue increased 7 percent to $8.55 billion.

The company, based in Orlando, Fla., also raised its quarterly dividend 10 percent, to 55 cents per share.


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