What Red Lobster could learn from Olive Garden

In early June, after it was announced that Red Lobster was filing for Chapter 11 bankruptcy, Public Enemy rapper and television personality Flavor Flav posted a picture of himself at one of the chain’s locations. While wearing dark glasses and his signature clock necklace, he posed with his arms extended (with a cheddar bay biscuit in-hand) over two tables worth of food: hushpuppies, rings of calamari, a few steaks and some solo mounds of mashed potatoes. Amid several plates of lobster claws, there’s one full lobster, alongside a black plastic cup of melted butter, serving as a kind of centerpiece. 

“Ya boy meant it when I said I was gonna do anything and everything to help Red Lobster and save the cheddar bay biscuits,” he wrote on X, formerly Twitter. “[O]rdered the whole menu,!!!” 

The post — which inspired a sizable portion of social media users to reminisce about Flavor Flav’s past experiences at the chain, notably as a date spot on his superbly messy VH1 dating show “Flavor of Love” — quickly became a meme, much in the way Red Lobster’s money-losing endless shrimp promotion did after the restaurant declared bankruptcy. 

The restaurant’s financial situation is pretty complicated; in 2014, the company relinquished many of its real estate assets to finance an earlier owner’s acquisition of the chain, CNN reports, essentially turning the company into a renter, which put them on shaky footing heading into the industry wide tumult of the pandemic. Soon, though, the story quickly sharpened into a tidy punchline: “Red Lobster went bankrupt from giving away too much shrimp.” 

And while, again, that’s a little too simplistic, the reality is that the promotion, which let diners order all-they-can-eat shrimp for $20, didn’t help Red Lobster’s already-tenuous grip on solvency. The chain estimates it lost $11 million in the third quarter of 2023, which means it’s probably safe to categorize the move as a mistake — one that Olive Garden doesn’t plan on making. 

Much like Red Lobster, Olive Garden holds a unique spot in the American chain restaurant landscape. With the average check coming in at around $22 per person, it’s accessible enough for casual diners, but also feels upscale enough for special occasions, like dates, anniversaries and prom night. (Back in high school, I was a hostess at a suburban Chili’s located in the same parking lot as an Olive Garden; their restaurant had six proposals during the time I worked, while we had none.) 

Yet while the entire casual-dining segment has struggled during the pandemic, Olive Garden’s leadership team has made a concerted effort to stay away from some of the discount messaging and promotions towards which their competitors have turned. 

In September of last year, Fast Company declared that “Olive Garden is having a moment.” That was the same month that Olive Garden’s parent company, Darden, reported an 11% sales increase for its last quarter, with revenue of $2.74 billion, and same-location sales up 5% across all its properties.

“And in its most recent earnings call, Darden executives emphasized that they would avoid discount-focused promotional strategies,” Fast Company’s Rob Walker wrote. “Marketing strategies ‘will not be at a deep discount’ designed to boost foot traffic, CEO Rick Cardenas said on the call, but will balance ‘value’ with ‘profitable growth’ from its customer base. While it brought back those Never Ending Pasta Bowls and other no-limit menu items, initial servings likely satisfy most appetites and serve more to lend a feeling of luxurious indulgence to the proceedings.” 

“Whatever we do is going to elevate brand equity,” Cardenas later said. 

While similar to Red Lobster’s endless shrimp promotion, Olive Garden’s Never Ending Pasta Bowl is different in a few distinct ways. While Red Lobster made their all-you-can eat event a permanent fixture in order to drive traffic, Olive Garden’s came with some stipulations: The promotion lasted only eight weeks (though those with Lifetime Pasta Passes have yearlong access) and includes unlimited breadsticks, salad or soup and pasta for $14.99. Some toppings, like crispy chicken fritta or meatballs, are extra. 

In December, Nation’s Restaurant News reported that Olive Garden’s sales performance was buoyed by the Never Ending Pasta Bowl promotion, which was brought back at the same price point as the year prior. 

“This made it an even stronger value,” Cardenas said in a call. “Guest demand was higher this year.”

Cardenas also noted that the Never Ending Pasta promotion helped drive Olive Garden’s sales past the $5 billion mark on a trailing 52-week basis for the first time in the company’s 41-year history.

Now, Olive Garden has announced it is actually raising its prices slightly — about 3% over the next four quarters “to be more in line with inflation” — and is still eschewing deeper discounts even as data shows casual dining has slowed among lower-income customers. 

“I'm proud of our ability to stay disciplined and control what we can control,” Cardenas said in an earnings call on Thursday.. “This continued focus enabled us to have a strong year in what became an increasingly weaker consumer environment especially for consumers below the median household income.”

Meanwhile, Red Lobster is eying another promotion to try to entice customers back to their remaining locations. The chain has partnered with Flavor Flav to advertise the return of Crab Fest. Starting at $20, guests can try selections like creamy crab carbonara or snow crab-topped steak. “We love seeing our fans show up and rally for us, so when Flavor Flav reached out, we answered the call and invited him to join us in reminding fans we’re here to stay,” Sara Bittorf, Chief Experience Officer at Red Lobster, said in a release. 

However, the chain seems to have learned a lesson from the endless shrimp debacle — portions for Crab Fest top out at one pound per customer.