CABIA President Tom Manzo appeared on “Fox & Friends” to discuss how the minimum wage increase is affecting the fast-food industry at a time when thousands of people are out of work.
Darden Restaurants CEO Rick Cardenas said fast-food chains’ sit-down restaurant prices are driving some customers to avoid drive-thrus in favor of a true casual dining experience.
Cardenas noted that Darden, which owns popular franchises such as Olive Garden and LongHorn Steakhouse, has not yet benefited from the trend, but competitors such as Brinker International, which owns Chili’s, and Applebee’s parent company Dine Brands have begun marketing to fast-food customers with bargain prices.
As Darden released its quarterly earnings Thursday, Cardenas said industry data shows a “slight shift” away from fast-food restaurants and toward sit-down competitors.
Ticker Securities Last Change Percent Change DRI DARDEN RESTAURANTS INC. 153.26 -1.03 -0.67%EAT BRINKER INTERNATIONAL INC. 71.26 -0.15 -0.21%DIN DINE BRANDS GLOBAL INC. 38.02 -0.51 -1.32%
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Customers enter an Olive Garden restaurant in Pittsburgh, California, USA, Friday, December 9, 2022. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
“Consumers are really paying attention to the prices they’re paying, not just at restaurants, but everywhere,” Cardenas said.
His comments come after a recent survey by LendingTree found that 78% of consumers consider fast food a “luxury item” due to its high price.
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Chain restaurants like Applebee’s are increasingly offering great deals to lure customers away from pricier fast-food restaurants. (Scott Olson/Getty Images / Getty Images)
Half of those surveyed said they are struggling financially and therefore consider fast food a luxury, a trend that is especially prevalent among Americans making less than $30,000 a year (71%), parents with young children (58%), and Gen Z (58%).
Financial strains are causing fewer people to use drive-thru restaurants: Survey results show that while three in four Americans typically eat fast food at least once a week, 62% of respondents said they are eating out at fast food restaurants less often because of the cost.
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Chili’s has launched the Big Smasher Burger, made with diced red onion, lettuce, pickles, Thousand Island dressing, American cheese and a roughly half-pound hand-smashed burger patty for just $10.99. (Chili’s Grill & Bar)
Some franchises have responded with temporary bargain sales: McDonald’s added $5 value menu items in June, and Wendy’s introduced $3 breakfast deals, both for a limited time only.
Casual dining restaurants have come up with their own innovations to make inroads with disgruntled fast-food shoppers: Chili’s recently introduced the Big Mac-inspired “Big Smasher” burger, which has twice the meat in its value package and costs just $10.99 — just a dollar more than you’d pay at McDonald’s.
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Dine Brands CEO John Payton told CNBC in May that Applebee’s was rolling out a range of separate set menu options specifically designed to compete with fast-food chains.
FOX Business’ Breck Dumas contributed to this report.
