Dive Brief:

• Olive Garden increased its off-premise business, which includes takeout and catering, by 9% during the 2019 fiscal fourth quarter ending May 26. Off-premise now makes up 14.5% of sales at Olive Garden, Darden CEO Gene Lee said during the June earnings conference call.
• The company is testing a new prototype in its hometown of Orlando, Florida, that has an entire area dedicated to off-premise.
• Off-premise is becoming an increased focus and Lee said some restaurants are now doing well over $1 million in off-premise business.

Dive Insight:

Even though off-premise continues to grow at Olive Garden, Lee said the company has no plans to offer delivery beyond its catering business. And he said that not offering third-party delivery isn’t negatively impacting the business.

"Where I want us to focus and I want our teams to focus on is creating a compelling in-restaurant experience that people want to come and visit," he said. "I think when you do that, that helps create the demand for the off-premise visit."

The lack of delivery certainly hasn't had an impact on sales. Olive Garden's sales increased sales by 5% during the year ending May 26 surpassing $4.2 billion in sales, according to an earnings release. Profit also increased by 7.8% for the year to $884 million.

The same focus has translated in Darden's LongHorn Steakhouse restaurants. About 40% of the its restaurants now have a dedicated to-go area and the restaurant has been focused on ensuring that the to-go experience matches the dine-in experience, Lee said. LongHorn's sales increased 6.3% to $1.8 billion and its profit increased 7.7% to $324 million during the year ended May 26. 

"This ongoing focus [at LongHorn] has resulted in improvements and overall experience with high guest satisfaction scores for order accuracy and timeliness," he said.

Catering, which has been growing faster than the entire restaurant industry, is also becoming a growing line of business at Olive Garden, especially since many of these meals are out the door before 11:30 a.m. and have little impact on prime mealtime hours, Lee said. The company also adjusted its catering program by decreasing its minimum free delivery amount from $100 to $75 and shifting its order cut off from 24 hours before to 5 p.m. the day before. Catering orders average about $300, which is higher than the industry average of $275 for business catering orders.

"[Catering] is highly rated from a satisfaction standpoint event and we want to focus on that more than trying to move a $15 entree," Lee said.

Olive Garden isn't the only casual brand making a dent in the catering segment. Cracker Barrel, Red Robin, Chuy's, BJ’s Restaurants have all made pushes to expand their catering platforms. Catering represents 1.2% of Red Robin’s first quarter company results and grew 220% compared to last year.