Wednesday, October 07, 2009

Darden in BrandWeek: “No discounting.” But if the menu’s big bucks...

It is the convergence of events that’s arresting, rather than the events themselves. As with the feature article by Elaine Wong in BrandWeek yesterday, combined with today’s arrival of The Capital Grille promotion from American Express that you see above.

BrandWeek is interviewing Drew Madsen, Darden Restaurants’ president and COO; the piece is titled “Why ‘Deep Discounting’ Is Not Always the Winning Recipe.” In the second paragraph, Darden goes on at length:

We’re also seeing a [bit] more pressure on our higher price, higher check [restaurant dining] concepts, so brands like The Capital Grille—a fine dining steakhouse that’s priced at $90 or so a person—have seen a bigger impact than Olive Garden, which is [around] $15 a person, and we’re seeing a little bit of a decline in the overall check…a big part of the check erosion is due to all of the deep discounting that’s going on with competitors trying to get more people [eating at restaurants]. That discounting is essentially sacrificed per person per check. That’s not the case at Darden.

There you go: No deep discounting at Darden Restaurants. It’s holding the line, maintaining “the integrity of our brands and the strength of our business model long-term.” Unless the menu’s so expensive that half a C-note doesn't count as...deep.

This is a company with great brands, but Darden [NYSE: DRI] is only performing “fair” in the current economy. The company’s seen negative EPS growth this past year; it’s just reported a decline in same-store sales in five brands in the quarter that ended August 30, 2009.

Maybe there was a timing gap between the actual interview and its publication. Maybe it’s just an oversight; or the difficulty of knowing about single little promotion. I really did have to laugh, though, since the AMEX $50-off postcard arrived in the mail just 15 minutes after I read what Madsen had to say.

Give the interview a look. Madsen talks a good brand-value game. But he concludes his interview this way: Everyone can talk about having value and do what’s right or wrong when times are growing, but when things are tough, that’s when your values are put to the test.

I won’t be testing The Capital Grille’s values even with my “$50 gift certificate” promo – the menu’s still too pricey. Barbara has coupons for Red Lobster instead.


Richard Laurence Baron said...

BTW, the Amex $50-off promo's good 'til November 1. If you want to use that postcard, let me know.

Elaine Wong said...

Hi thanks for reading, you’re right, there was a timing gap between when we conducted the interview and when we ran it.

Mary Jo Martin said...

Another person who'd totally out of touch with reality...No, not you, RLB. The Darden guy.

Richard Laurence Baron said...

"The wise man knows that timing is everything." The COO's comments, Mary Jo, may have been overtaken by later events. See reporter Wong's note above. (And thanks for the feedback.)