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Sit-down restaurant prices at fast food chains are pushing some customers to skip the drive-thru in favor of the genuine casual-dining experience, according to Darden Restaurants CEO Rick Cardenas.
Cardenas said Darden, which owns popular franchises including Olive Garden and Longhorn Steakhouse, has not yet benefited from the trend, but noted competitors like Brinker International, which owns Chili's, and Applebee's parent Dine Brands have begun to market towards fast food customers with cheap deals.
On Darden's quarterly earnings call on Thursday, Cardenas said industry data shows "a little bit of a shift" from fast food joints to sit-down competitors.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DRI | DARDEN RESTAURANTS INC. | 164.62 | +2.04 | +1.25% |
| EAT | BRINKER INTERNATIONAL INC. | 123.70 | -0.97 | -0.78% |
| DIN | DINE BRANDS GLOBAL INC. | 32.73 | +0.21 | +0.65% |
OLIVE GARDEN RAISING MENU PRICES AGAIN
Customers enter an Olive Garden restaurant in Pittsburg, California, US, on Friday, Dec. 9, 2022. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
"The consumer is really focused on what price they're paying everywhere, not just in restaurants," Cardenas said.
His comments come after a recent survey conducted by LendingTree found 78% of consumers now consider fast food to be a "luxury" purchase based on high prices.
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Chain restaurants like Applebee's are increasingly offering deals to attract customers away from fast-food restaurants that have high prices. (Scott Olson/Getty Images / Getty Images)
Half of those polled said they view fast food as a luxury because they are struggling financially. This is especially true among Americans who make less than $30,000 a year (71%), parents with young children (58%) and Gen Zers (58%).
The financial strain means fewer people are visiting the drive-thru. The findings show three out of four Americans typically eat fast-food once a week, but 62% of respondents said they are eating it less frequently due to the cost.
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Chili's has introduced the Big Smasher burger, made with diced red onions, lettuce, pickles, Thousand Island dressing, American cheese and a nearly half-pound, hand-smashed burger patty, all for just $10.99. (Chili's Grill & Bar)
Some franchises have responded with temporary bargains. McDonald's added a $5 value menu in June, and Wendy's has introduced a $3 breakfast deal, both for a limited time.
Causal-dining restaurants have come up with their own innovations to take a bite out of the dissatisfied fast-food consumer base. Chili's recently introduced a "Big Smasher" burger inspired by the Big Mac that boasts twice the meat at just $10.99 when included in a value meal — which is just about $1 more expensive than going to McDonald's.
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Applebee's has separately rolled out various meal deals specifically intended to compete with fast food chains, Dine Brands CEO John Peyton told CNBC in May.
FOX Business' Breck Dumas contributed to this report.