New York City — Even unlimited breadsticks at Olive Garden and wooden rocking chairs at Cracker Barrel can’t entice baby boomers to return.
Because of the Covid pandemic, many restaurants have closed their doors for more than three years, and customers have opted to eat more meals at home. Now, some older customers are still staying away, exacerbating the restaurant chains’ foot traffic problem.
“We just haven’t recovered the visits… to the extent we thought we would, really since the pandemic,” Cracker Barrel CEO Sandra Cochran said during a call with analysts earlier this month.
She claims that older consumers have been dealt a double whammy. They initially stayed away due to health concerns. Then, due to inflation, they stayed away.
“The over-65 age group is particularly value-conscious,” she says. “And so we just haven’t seen the recovery of that group.”
The drop comes at a time when Cracker Barrel’s traffic is down overall.
“Our traffic declines were widespread.” “They were up against all age groups,” Cochran said, adding that “the younger cohort held up better than the over 65.” Other restaurant chains, such as Burger King, have also reported a drop in customer traffic as a result of higher prices.
Darden Restaurants (DRI), which owns Olive Garden, Longhorn Steakhouse, Cheddar’s Scratch Kitchen, and other brands, said on a conference call with analysts Thursday that it, too, is seeing a decline in visits from older customers.
“55-plus, especially 65-plus, is still below pre-Covid and actually a slight decline from last quarter to this quarter,” Darden CFO Raj Vennam said on the call. Darden’s traffic is down compared to pre-Covid levels, according to Vennam.
Customers 65 and older “were a little bit more spooked on the Covid side,” CEO Ricardo Cardenas explained. “We value all of our customers, including those over 65, and we’d love to see them come back more frequently,” he said.
Darden, headquartered in Orlando, Florida, is also embracing the change.
“We can use our eClub to talk to them and say, ‘Hey, come back to Olive Garden,'” Cardenas said, referring to an online membership program that provides customers with discounts. “But I don’t think we’ll do anything drastic because we’ve seen a significant increase in our younger consumer.”
In the fiscal year ending August 27, sales at Darden restaurants open at least 16 months increased 5% to $2.7 billion. Other signs of health included the company’s income remaining constant at $195 million for the quarter and more than 100 new company-owned restaurants opening in the last year, including 19 new Olive Garden locations for a total of 906 Olive Garden locations.
Olive Garden, by far Darden’s largest franchise, is all about “more and more and more,” as Cardenas stated on Thursday. “Come on in to Olive Garden for more, more food, more value, and more refills.” The stock price of the company has fluctuated since the pandemic, and it is up about 4% for the year, but it fell about 2.5% on Thursday.
The pullback from older customers is more significant for Cracker Barrel, which has also been attempting to attract younger customers but has traditionally catered to an older clientele.
In the three months ending July 28, sales at Cracker Barrel locations open at least a year and a half increased 2.4% year on year. However, this was due to higher prices. In retail, sales were down 6.8% year on year. Cracker Barrel (CBRL) stock has also fluctuated during the pandemic, dropping nearly 27% this year.
Cracker Barrel, based in Lebanon, Tennessee, operates 660 restaurants in 45 states, selling its brand of comfort food such as biscuits and gravy in an old country store motif. Customers waiting for a table can purchase holiday decorations, brain puzzle games, wooden rocking chairs, and other items from its retail stores.