Urban Political Economy

    During the mid-1980s, General Mills combined the concepts of Italian cuisine with affordable prices to create Olive Garden.  This casual-dining chain came to be known for its value and décor1.  Entrées were generally priced below ten dollars and offered large portions.  And, Italian village scenes could be seen on the restaurant's white, stucco walls.  In the early 1990s, the economic growth of Olive Garden began to slow, and General Mills announced its plans to spin off its restaurant division into a new public company, Darden Restaurants, Inc. The motivation for this split was to turn "a corporate hodgepodge into two clearly defined and sharply focussed businesses"2.  In 1996 this split occurred, and Darden took control of The Red Lobster, Olive Garden, and China Coast restaurants.
    In the last four years, Olive Garden has improved its business by about $.6 million annually per restaurant3.  And, it has accomplished this improvement by increasing its guest count, not by raising prices. Historically, Olive Garden attracts customers and creates repeat business by producing a particular experience; recently Olive Garden has been able to make adjustments to this particular experience in order to attract a new clientele without repelling its old clientele.
    One method of increasing its number of customers has been to create a more authentic Italian-dinning experience.  Olive Garden, in partnership with its major olive oil and wine suppliers, opened a training center and restaurant in the heart of Tuscany's Chianti region in October of 2000.  It is estimated that 150 to 200 Olive Garden chefs, unit managers, and servers each year will fly to northern Italy for five days to immerse themselves in Tuscany's culture and replicate aspects of the "Tuscan kitchen, pantry, wine cellar, and lifestyle"4 into their Olive Garden restaurants. This Tuscany restaurant and training center has had the immediate impact of adding to Olive Garden's menu; items developed in Tuscany such as Chicken Vino Bianco and Tortellini di Fizzano are among the new additions.
      Olive Garden has also expanded its wine list and is following a more aggressive wine policy.  The number of wine offerings has increased from 19 to 34--including bottles of wine from California and Italy that cost upwards of $100.  In the waiting room, free wine sampling is provided on busy nights and printed on each menu are suggested wines to complement different dishes. 
In addition, Olive Garden is pursuing a system-wide refurbishment program.  The physical environments of each unit are being built and remodeled to incorporate elements of a Tuscany farmhouse.  This refurbishment coupled with the Tuscany training center and expanded wine and food menus, is meant to lure a more sophisticated clientele without discouraging the existing one.  "We're still a casual dining restaurant.  We're just trying to broaden our base," remarked company representative Steve Coe.5
    Through these changes, Olive Garden has not forgotten what initially made it a successful business.  Olive Garden' s success still comes from the ability to blend the hospitality of a neighborhood restaurant with the efficiency of a chain.  It maintains a level of community involvement through local charity endeavors.  In the past Olive Garden has worked with Boy Scout troops to collect and provide donations for food banks, raised money for the Leukemia Society of America, and each year in Milwaukee it prepares food for the police and firefighters who have to work on Labor Day.  This involvement integrates the company's chains into the local society, relieving social tensions that can occur between chain restaurants and local communities.6
Olive Garden also has maintained its image as a family restaurant.  This image is echoed in its advertising with the mantra, "When you're here, you're family."  TV advertisements show a large northern Italian family sitting around a dinner table with glasses of wine and large dishes of food engaged in conversation.  Research conducted by Darden reveals that consumers do actually view Olive Garden as a place for reconnecting with their families, and also as a way to take part in the "mythic Italian family"7.  This view that Olive Garden is a family restaurant helps to defuse potential social conflict that may arise from local community members upset with the presence of a large, corporate chain in their area.
    Poughkeepsie's Olive Garden is located right off of Route 9.  It is about a quarter mile from the mall and surrounded by other casual-dining restaurants.  The clustering of restaurant firms create the effect of agglomerate economies.  This area will attract customers who want to eat at casual-dining restaurants, and Olive Garden may get customers who did not initially intend to eat at its restaurant.  Also, Olive Garden will probably not lose customers whose initial intentions were to eat at an Italian restaurant; Olive Garden is the only Italian restaurant in the area.
The only major problem with this Olive Garden's location is that it is only accessible by motor vehicle.  This restaurant would be extremely difficult and dangerous--due to the speed of the traffic--to travel to by foot.
Olive Garden is currently considering establishing itself in untapped urban markets.  It has already established a restaurant in New York City's Time Square and is contemplating adding other units into downtown areas of Chicago and Boston.
Since the conception of Darden Restaurants, Inc., Olive Garden has consistently expanded and grown economically without losing sight of its original message.  "There's a lot of places left for us to go, so we feel the best is really yet to come,"8 commented the chain president Bradley Blum.  If Blum can continue to produce Olive Garden's Italian family mystic, while not straying from its original concepts of value and community involvement, this restaurant chain will continue to be successful.


______________________________

1 John Harris, "Dinnerhouse Technology" Forbes July 8, 1991 (98).
2 Richard Phalon, "Amicable Divorce" Forbes May 8, 1995 (70).
3 Milford Prewitt, "Upbeat Olive Garden breaks 3-year lull, debuts Tuscan-style prototype"  Nation's Restaurant Review April 10, 2000 (8).
4 Prewitt 8.
5 Theresa Howard, "Garden Fresh" Brandweek August 7, 2000 (22).
6 Charles Bernstein 'Like politics, chains have discovered, all marketing is local:ads are just part of the mix when it comes to influencing customers' dining-out votes" Restaurants & Institutions Feb. 15, 1995 (62).
7 Howard 22.
8 Jack Hayes, "Olive Garden's Blum is Operator of the Year" Nation's Restaurant News Oct. 9, 2000 (41).



Back to Index