In the midst of this industry news of Olive Garden releasing its second-quarter financials is a rather interesting conclusion: Olive Garden rolls back its deals and promotions when the economy is doing well. While Wall Street analysts prognosticate with spreadsheets and trading futures, perhaps we could find out how the economy’s doing by looking at something as simple as Olive Garden’s Never Ending Pasta Pass.
Gene Lee, CEO of Olive Garden’s parent company Darden Restaurants, tells Restaurant Business that management recently made a conscious choice to to walk back price promotions and special deals because consumers’ overall financial pictures looked better: “Right now, we think the consumer is in a really good place.”
Because unemployment is low, Lee notes, customers don’t feel as anxious about their budgets. Therefore, Olive Garden ran only two promotions during Q2 2018: the Never Ending Pasta Pass, and the Buy One Take One, where a meal purchased in the restaurant gets customers a second serving to take home for free. Should the economy take a turn for the worse, Lee says Olive Garden would be quick to bring more deals and promotions back.
Because I got a C in college macroeconomics, this logic—let’s call it the Five-Cheese Ziti Al Forno Theorem—is a tangible, digestible (literally) method for thinking about overall economic health and consumer confidence. Economy good? Fewer pasta deals. Economy bad? Free breadsticks for everyone! Look, if a Big Mac Index is good enough for The Economist, why not this?