Olive Garden sees success with smaller, cheaper portions as diners try to save money

By James Rogers

The restaurant is offering a 'lighter portion' section of its menu in an attempt to drive more customer traffic

Olive Garden parent Darden says that the restaurant chain is testing smaller, cheaper portion sizes

Olive Garden is testing smaller, cheaper portion sizes in an attempt to boost the affordability of its menu, as parent company Darden Restaurants Inc. looks to drive more traffic to the restaurant chain.

Giving consumers the option of smaller, less pricey meal sizes is a significant move in an industry where portioning is frequently a hot topic. Salad chain Sweetgreen Inc. (SG) recently increased portion sizes of tofu and chicken, which it says is boosting customer satisfaction. And last year, Chipotle Mexican Grill Inc. (CMG) was slammed over inconsistent portioning; in response, the company vowed to "ensure correct and generous portions."

Speaking during a conference call to discuss Darden's (DRI) first-quarter results Thursday, Chief Executive Rick Cardenas explained that Olive Garden is testing a "lighter portion" section of its menu, featuring seven existing entrees with reduced portions and lower prices. The restaurant chain is offering the smaller meals, which are being tested at 40% of its locations, at dinner and all day on weekends, and they come with Olive Garden's first course of unlimited bread sticks as well as unlimited soup or salad.

Cardenas explained that the move is "strengthening affordability" at Olive Garden. "There's still abundant portion sizes, but it also adds price breadth to the menu," he said. Consumer response to the smaller portions has been encouraging, according to Cardenas, who noted that they were launched without any fanfare.

The smaller-portion meals are expected to boost foot traffic to the restaurant chain. "We do believe, in the long run, this is a traffic driver," Cardenas said. He acknowledged that if people trade from a larger-portion item to a smaller-portion one, it will impact check size. "But we believe that's the portion that those guests want," he added.

Darden - which is also the parent of the LongHorn Steakhouse chain and more upscale "fine-dining" restaurants including Capital Grille, Ruth's Chris Steak House and Eddie V's - said the smaller portions are just an additional option for Olive Garden customers and are not replacing any items on the restaurant's menu.

Similar to Olive Garden's restaurant pricing, pricing for the lighter-portion entrees varies by market - although a slide that accompanied the company's results showed that a 630-calorie Chicken Parmigiana was priced at $13.99, and a 920-calorie Fettucine Alfredo was priced at $12.99. For comparison, a 1,020-calorie Chicken Parmigiana cost $20.79, while a 1,220-calorie Fettucine Alfredo cost $16.79.

Cardenas said that other Darden brands could potentially follow Olive Garden's lead with reduced-portion meals. "If other brands think that it makes sense for them and they get the learnings from Olive Garden, maybe they will implement," he said. "But right now, the focus is the Olive Garden, and it's the Olive Garden team that's driving it."

But KeyBanc Capital Markets analyst Eric Gonzalez thought the move was risky, citing accelerating food inflation. While higher beef prices may not impact Olive Garden's income statement very much, Darden's consolidated margin will likely experience some near-term pressure as the company remains committed to passing on as little as possible to the consumer, according to Gonzalez's latest note to clients.

Set against this backdrop, KeyBanc Capital Markets lowered its Darden price target to $225 from $240 but maintained its overweight rating. "We continue to view Darden as a diversified portfolio of brands that is uniquely positioned to take share of a fragmented full-service industry," wrote Gonzalez.

Darden's shares ended Thursday's session down 7.7%, weighed down by an adjusted first-quarter profit that missed Wall Street's expectations. The company's adjusted earnings, which exclude nonrecurring items, were $1.97 per share, below the FactSet consensus estimate of $2 per share.

Revenue rose 10.4% to $3.04 billion, in line with the consensus estimate of analysts surveyed by FactSet.

During the first quarter, total same-restaurant sales, or sales of restaurants open for at least 16 months, rose 4.7%, topping the FactSet consensus estimate of 4.4%. Olive Garden's same-restaurant sales rose 5.9%, while LongHorn Steakhouse's rose 5.5%. Same-restaurant sales at the company's fine-dining business fell 0.2%.

Darden also raised its full-year sales guidance, which includes a 53rd week, and now expects total sales growth of 7.5% to 8.5%, up from its prior forecast of 7% to 8% growth. The company also narrowed its outlook for same-restaurant sales growth to between 2.5% and 3.5%, from 2% to 3.5%.

Shares of Darden were up 3.2% in 2025 through Thursday, while shares of Applebee's parent Dine Brands Global Inc. (DIN) have fallen 20.8% this year. The S&P 500 index SPX is up 12.8% on the year.

-James Rogers

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09-19-25 0740ET