"When you're here, you're with family," promises the scribbled message on Olive Garden's daily specials board in New York City's Times Square. That's all Clare and Doug Geoffray, two weary tourists from San Jose, California, needed to read. They've visited Olive Gardens before and know what to expect: good food, reasonable prices, friendly service. The couple had no disappointments this time, either. Clare, 35, dined on chicken parmigiana; her husband, 36, chose cannelloni stuffed with cheese. And don't forget the salad, Clare points out: "We love the bottomless bowl."
The Geoffrays aren't eating alone. "Casual dining" restaurants, as Olive Garden and its ilk are known, have become a $37 billion business, eating up 16 percent of the total restaurant industry during the past 20 years. You know the lineup: T.G.I.Friday's, Chili's Grill & Bar, Applebee's, Outback Steakhouse and so on. Holding the title of master chef in the industry is Orlando, Florida-based Darden Restaurants, whose founder, Bill Darden, virtually invented the casual dining concept in 1968 with his chain of Red Lobsters. Picked up by General Mills in the '70s and spun off again in 1995, today, Darden Restaurants racks up $3.3 billion in annual sales and owns a 10 percent market share, with more than 1,100 Red Lobster and Olive Garden outlets worldwide. The company hopes its next big splash will be the Caribbean-themed Bahama Breeze. As it's done in past ventures, Darden will start small with the new chain; only six are slated to open by May 1999. "Darden has tracked with the general 'casualization' of America," says Janice Meyer, a restaurant analyst at Donaldson, Lufkin & Jenrette. "They understand that people want to go out for good food, but don't want to get dressed to do it."
So how did Darden do it? With a pinch of vision-and a healthy dollop of research to support it. Back in the early '80s, Darden chairman and CEO Joe Lee asked his development team to investigate the potential for a national chain of Italian restaurants. With Lee's blessing, Blaine Sweatt, president of the new-business development division, and Roger Thompson, senior vice president of strategic marketing, set off with their staff to do their "skunk work," free from the day-to-day bureaucracy of the office. "Lee is our chief climatologist," Thompson says. "He knows when the controls need to be loosened, so the ideas can percolate."
Combining field work and old-fashioned data crunching, the team identified several social and demographic trends that suggested a promising future for the casual-dining industry: the rising number of people employed and the corresponding boost in disposable income, as well as the growing ranks of women in the work force, leaving less time for cooking. In addition, a Yankelovich trend analysis indicated that Americans were searching for a lost sense of family, generated in part by rising divorce rates and a more mobile society. The Darden team also ran focus groups-and pestered their next-door neighbors as well-to learn what connections consumers made with Italian restaurants. The answer: a warm and homey place for family gatherings. Oh, and lots of food, too.
Darden's marketing strategy for Olive Garden directly reflects these attitudes and demographic trends. Their ads depict large Italian families laughing and eating at tables overflowing with pasta and wine. Early on, the company even included the words "Italian restaurant" under the logo because nearly two-thirds of the people they questioned associated the name "Olive Garden" with other Mediterranean countries like Spain or Greece. Thompson and his crew, pretending to be customers, would also hold impromptu focus groups in restaurant lobbies to find out why consumers were willing to wait an hour for a table, as was common when the restaurants first opened. Their research paid off: More than 150 million customers now dine at Olive Garden each year, comprising 41 percent of total sales at Darden.
Is it any wonder that other restaurants are trying to emulate Darden's success? Outback Steakhouse, for example, saw its sales jump 27 percent from 1996 to 1997, in large part because its marketing team has paid close attention to who the customers are-and what they eat. The company has regionalized its menus, adding Alaskan king crab in the Northwest and catfish down South, for example.
Still, it's not easy to stay fresh in the casual-dining market, especially when a new competitor opens in a nearby strip mall. Learning how to adapt is key, says restaurant analyst Michael Fineman of Raymond James & Associates. "Some [chains] don't even know who their target market is until customers walk in the door," he says. According to Darden's Thompson, the company has taken pains to adjust its strategy at Olive Garden as its customer base has changed over the years. They've lost a portion of the young singles market, who have moved on to the next big thing, Thompson says, but have maintained a strong hold on the baby boomers. To appeal to this segment, Olive Garden recently introduced a service called Vino Reserva: Customers are automatically offered a carafe of wine when they are first seated, and pay according to the number of glasses they consume.
Keeping Red Lobster current has also posed challenges for Darden. For years, the granddaddy of the casual-dining market had little competition in the $15-to-$20 entree price range. Then came new entries to the market, such as Romano's Macaroni Grill and Outback Steakhouse, with hip looks and updated menus. Suddenly Red Lobster looked tired, and Darden execs knew it was time to refocus the chain's strategy. So far, Red Lobster has added fresh catch-of-the-day specials to the menu lineup, and started offering dishes popular in large markets-baked fish with a cracker-crumb crust in New England, for example. A test unit in Jacksonville, Florida, featuring a raised bar and a sleek, open kitchen, also gives a hint at the direction in which the chain may be headed.
What can we expect from casual restaurants in the future? Thompson won't reveal Darden's secret recipes, but says flavorful foods will be a key ingredient to future success. As boomers age-and their taste buds dull-they'll look for dishes rich in herbs and seasonings but still low in fat, Thompson says. Maybe Thai? Vietnamese? Or Portuguese? Who knows? Whatever the winner is, it's sure to be a matter of taste.
* 23.3 percent of casual diners have a household income of less than $30,000;
45 percent make $50,000 or more.
* Nearly 55 percent of casual-dining patrons eat at an outlet three or more times a month.
* More than 44 percent of diners are 25-44 years old; 9.3 perce nt are 65 and over.
* 17.5 percent of casual-dining customers went there with friends for a fun evening; 5 percent were there on a date.
* 79 percent of diners skip dessert.
Source: Casual-Track, Sandelman & Associates