Tsering Gawa, 19, recently visited the Times Square Olive Garden to try the restaurant’s Never Ending Pasta Bowl, a promotion that allows customers to order unlimited pasta, soup, salad, and breadsticks for $13.99. The Brooklyn college student said she ordered three rounds of pasta, and although it wasn’t very appetizing, it was a good deal.
“I’m a broke college student,” she said. “You get endless pasta for a good price.”
Gawa isn’t alone. A TikTok search for “never ending pasta bowl” yielded more than 100 posts, Gawa’s among them, with customers sharing videos of themselves eating four, five, six, even seven bowls of pasta. One customer reported that her party of two spent only $34 plus tip on two bowls of salad, two breadsticks, and five bowls of pasta.
“We were both pleasantly surprised by the total,” said the poster. “It was definitely worth it.”
The promotional buzz underscores how Olive Garden’s parent company, Darden Restaurants Inc, is leaning on a value- focused strategy that’s resonating with customers looking for affordable dining options at a time when consumer spending is weakening, especially among lower income earners. The strategy, designed to keep traffic up, is in direct contrast with the company’s strategy in the aftermath of the 2008 financial crisis, when rising prices drove many customers away and led to trouble for the company.
Darden’s cautious approach to price increases “reflects lessons learned from the firm’s experience in the aftermath of 2007-09, when aggressive price increases led to declining traffic and ultimately an intercession by activist investor Starboard Value,” said Morningstar analyst Jamie Katz in a note to investors.
Darden has increased their prices slightly under the rate of inflation, a strategy it has pursued for several years, Chief Financial Officer Rajesh Vennam said during Darden’s last earnings call. The company is allowing its profit margin to shrink slightly as a result, but hopes that increased traffic will make up the difference.
Darden did not respond to requests to clarify its strategy.
Olive Garden, one of the company’s best-known brands, also introduced a new menu section including seven existing entrees in a smaller portion size at a lower cost while still offering unlimited breadsticks, soup and salad. The change caters not only to budget-conscious customers but also to diners embracing smaller portions, whether for health reasons or due to appetite-reducing drugs like Ozempic, said Darden CEO Rick Cardenas on the company’s earnings call.
“It’s just a wise thing to do in this era of belt-tightening,” said analyst John Staszak.
Pricing restaurant offerings under inflation may seem counterintuitive, since it squeezes profit in an industry whose margins are notoriously thin, but Darden Restaurants is betting that keeping its midrange chains affordable will keep diners coming and may even grow foot traffic enough to grow profits despite the decreased margin. Focusing on its midrange chains also makes sense — Olive Garden and Longhorn Steakhouse make up more than two-thirds of the company’s revenue and almost three-quarters of its profit, according to the latest earnings report.
“Each of those has to work well for the company or the stock to work,” said Northcoast Research analyst Jim Sanderson.
The two chains both saw an increase in same-store sales, or sales from restaurants that have been open for at least a year, in the last quarter, with Olive Garden leading at a 5.9% increase from last year and Longhorn Steakhouse not far behind at 5.5%. Their strength helped to offset weak sales in Darden’s fine dining sector, which includes Ruth’s Chris Steak House, Eddie V’s Prime Seafood and The Capital Grille. Those brands saw same-store sales decline 0.2% in the last quarter.
Focusing on the midrange chains is also a bet to weather an industry-wide headwind from weakening consumer spending as the US labor market slows and President Trump’s trade war adds to economic uncertainty. Lower income spending has grown only 0.6% in the last year through September, compared to 2.6% for higher-income households, according to data from the Bank of America.
When wallets get thinner, even higher-earning consumers still spend but tend to trade down to more budget-friendly brands instead of foregoing discretionary spending like eating out altogether. This is reflected in Darden’s foot traffic in its most recent earnings report. “All our casual dining brands saw an increase in visits year-over-year from guests across all income groups, but specifically those in higher-income groups,” said Cardenas on Darden’s earning call.
In that same quarter, Darden brought in 10% more revenue than the previous year. Its profits rose 24% to $257.8 million, or $2.19 per share, from $207.2 million, or $1.74 per share a year earlier. Analysts estimate that Darden will bring in $13.06 billion in fiscal year 2026, up slightly from their $12.1 billion revenue in fiscal year 2025. The company forecasts $10.60 adjusted earnings per share for 2026, up from $9.55 in 2025.
Still, shares fell 11.5% in the day following the earnings report as investors were concerned by the company raising sales guidance but not earnings guidance, indicating pressure on their margins. The stock has lagged the broader market considerably this year, slumping 2.1% while the S&P 500 Index has gained 16.8%. The stock could fall more if the company can’t meet its forecast for 2026.
If Darden’s affordability strategy doesn’t improve traffic, margins could take a hit and profits could fall. But low traffic is an industry-wide headwind, so this earnings pressure wouldn’t be unique to Darden.
The question for some investors may be whether to remain in the sector at all.
“You can grow your earnings by 5 to 10 percent, which is nice, but maybe some investors will want a company that’s generating 15 to 25 percent earnings growth,” said Sanderson. “That’s [Darden’s] challenge: how do they drive the type of sustainable earnings over time that generates a competitive return on your investment, realizing that in many instances, investors want a little bit higher return.
Some of Darden’s competitors have taken similar value-focused strategies with promising results. The breakfast chain First Watch as well as Brinker International, which owns Chili’s, have “taken that approach of not passing through all the pricing, but then they see that come back to them in better-than-expected traffic, where they can deliver positive traffic while the rest of the industry is down,” said Jim Salera, an analyst at Stephens.
“As long as the consumer is pressured, as long as you see restaurant traffic negative, there are going to be a lot more offerings that are focused on value and price,” he added.