Olive Backyard is rolling out cost-saving menu modifications, and the lower-priced decisions cannot come quick sufficient.
Does this sound acquainted? I just lately went to dinner with my spouse and one other couple. It was nothing fancy—an informal dine-in brew pub-style eatery. Three of us had salads with protein. The fourth had a fish and chips dinner. Toss in grownup drinks, and our invoice was over $200, together with tip.
5 Greatest U.S. restaurant chains
- Olive Backyard
- Applebee’s
- Denny’s
- Texas Roadhouse
- IHOP
- Supply: Market cap by Gross sales; Euromonitor/Goldman Sachs, Company SEC filings.
That is some huge cash — or no less than it feels that approach relative to what it might have price earlier than Covid dealt a sledgehammer to the restaurant trade, forcing closures, and Covid-era stimulus despatched inflation skyrocketing.
Common menu costs for meals away from residence had been up 31% between February 2020 and April 2025, in line with the Bureau of Labor Statistics inflation knowledge. In September 2025, consuming out costs at full-service eating places rose 4.2% 12 months over 12 months.
Meals away from residence inflation by 12 months
- 2024: 4.1%
- 2023: 5.8%
- 2022: 7.7%
- 2021: 3.9%
- 2020: 3.4%
- Supply: USDA Financial Analysis Service (ERS) utilizing BLS CPI knowledge.
The excessive price of consuming out makes Olive Backyard’s transfer to increase its menu emblematic of a significant drawback within the restaurant trade. Visits are flatlining as cash-strapped shoppers search for less-pricey options, together with eating at residence.
To this point, Olive Backyard’s lower-cost menu decisions are solely accessible in restricted places. Nonetheless, if demand is excessive (and I believe it will likely be), the offers will assist enhance foot-traffic traits as they unfold to many extra of its 933 U.S. places, placing it in a greater place to capitalize on an trade that raked in $1.52 trillion in 2024, in line with the USDA.
Eating places are struggling
The failure charge of eating places is excessive. In line with the Bureau of Labor Statistics, 17% of latest eating places fail within the first 12 months, and about half fail to outlive longer than 5 years.
Olive Backyard is testing smaller portion, lower-priced menu gadgets at its places.
UCG/Getty Pictures
These figures make it fairly spectacular when a restaurant has a lot success that it grows right into a nationwide chain that is been round for many years, like Olive Backyard, which was based 42 years in the past and now boasts places in all 50 states.
Nonetheless, success is not assured, as many long-time large restaurant chains have found over the previous few years. Crimson Lobster and TGI Fridays declared chapter in 2024, and Pleasant’s, as soon as boasting over 800 shops, solely has 4 remaining places. These are just a few examples—chapter courts are plagued by filings of small and mom-and-pop eating places which have gone below.
Extra Eating places
- Native pizza chain instantly closes all places after 50 years
- Seafood chain retains closing eating places; solely 18 left
- Beloved soul meals restaurant closes after 66 years
It definitely hasn’t been barn burner enterprise for the trade. The highest 500 restaurant chains posted gross sales development of simply 3% in 2024, in line with Technomic,
“The restaurant industry faced significant headwinds in 2024, including higher prices, shifting consumer spending patterns and increased competition,” mentioned Technomic senior director of trade analysis, Kevin Schimpf.
It hasn’t gotten a lot better in 2025, in line with Wall Road.
Financial institution of America’s restaurant analysts just lately aggregated the financial institution’s credit score and debit card knowledge and found that same-store gross sales development at unbiased eating places “slowed from +5.3% in August to +0.8% in September.”
It was worse at restaurant chains, which noticed a contraction of -0.9% in August and -1.9% in September.
“We have also grown more cautious [on the industry], given the widening of macro pressures beyond the low-income cohort that had previously been the primary source of pressure,” wrote Financial institution of America in a observe to shoppers shared with TheStreet.
Olive Backyard bucks buyer development
Financial institution of America’s findings counsel that belt-tightening is spreading past lower-income prospects, which is unsurprising given latest layoff and job market knowledge.
The BLS hasn’t reported the September unemployment charge due to the shutdown in Washington, DC, nevertheless it was 4.3% in August — the very best since 2021. In the meantime, Challenger, Grey & Christmas studies that U.S. employers have laid off 946,426 employees this 12 months, up 55% from 2024.
Olive Backyard information at a look
- Income FY2025: $5.2 billion
- Areas: 933 in 50 states.
- Staff: > 99,000
- Supply: Olive Backyard, Darden Eating places, Goldman Sachs.
The stress on shoppers has led many to rethink eating out, shifting their spending to venues that give friends extra perceived bang for his or her buck.
Olive Backyard has been one of many beneficiaries. Foot site visitors to Darden Eating places (DRI), the corporate behind Olive Backyard and different common manufacturers, together with LongHorn Steakhouse, rose 2.4% within the second quarter, in line with Placer.ai knowledge.
Visits have been rising since April, apart from a slight dip in June, regardless of the decline within the total eating sector.
Placer.ai.
In August, Olive Backyard, which accounts for over half of Darden’s buyer visits, noticed visits to places open no less than one 12 months rise a whopping 4.7%—fueled no less than partly by the return of the unending pasta bowl, which returned on the similar $13.99 value level it was when it launched years in the past.
“While Olive Garden traffic lagged peers across the casual dining space for the majority of 2024, we saw a strong rebound in calendar year 2025 with observed traffic tracking positive and outpacing the majority of its peers following the return of the brand’s Never Ending Pasta Bowl starting at $13.99 (price unchanged vs. 2022 launch of the offer) at the end of August in addition to the ongoing $6 take home pasta offer,” wrote Goldman Sachs in a observe to shoppers on Oct. 20.
Olive Backyard’s development starkly contrasts Placer.ai’s estimate {that a} -1.8% drop in foot site visitors was skilled industrywide at large chains in August.
September was equally sturdy, provided that Placer.ai will get Olive Backyard’s site visitors up 3.4% 12 months over 12 months within the calendar third quarter.
Olive Backyard rolls out value-conscious menu
The success of the unending pasta bowl has emboldened Olive Backyard to check different value-oriented menu gadgets, resulting in its launching a take a look at of many lower-priced decisions on menus in 40% of its shops.
The worth-priced menu additions embody seven decisions which might be smaller, less-expensive meals.
Olive Backyard value-priced meals accessible in 40% of shops:
- Rooster Parmigiana, $13.99
- Eggplant Parmigiana, $12.99
- Lasagna Classico, $13.99
- 5 Cheese Ziti al Forno, $12.99
- Cheese Ravioli, $12.99
- Spaghetti & Meatballs, 13.99
- Fettuccine Alfredo, $12.99
The meals, together with limitless breadsticks and a soup or salad, might assist Olive Backyard safe much more market share as middle-income shoppers, shocked by greater costs (and the ensuing improve in ideas paid), embrace options.
Olive Backyard’s target market has a family earnings (HHI) of round $75,000. Goldman Sachs factors out that, in contrast to some rivals who skew extra towards lower-income ranges, Olive Backyard is not as uncovered, placing it in a candy spot for development regardless of trade challenges.
“Store zip code analysis in collaboration with GS Data Works suggests that [Darden Restaurants] DRI’s key brands have less than 8% exposure to low-income consumers with <$50K annual HHI and with skew towards the middle-income consumers," wrote Goldman Sachs analysts in a research note.
In a survey of 2,000 consumers, Goldman Sachs reports that while people expect to lower spending at fast food restaurants over the next three months, spending at casual dining will increase.
“We imagine a part of the resilience relative to quick meals/quick informal comes from its comparatively smaller publicity to decrease earnings shoppers which were below extra stress,” wrote Goldman Sachs.
Goldman predicts that middle-income consumers will see the best growth in discretionary income in 2026, and that Olive Garden’s expanded menu choices could drive more traffic, given management comments to them suggesting “visitor response has been encouraging.”
As a result, the investment bank targets Olive Garden’s same-store sales growth of 3.7% in fiscal 2026. Goldman Sachs has a buy rating with a $225 share price target, up roughly 20% from current levels at last check.
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