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Olive Garden promises cheaper food, more options | Business

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Olive Garden promises cheaper food, more options
Olive Garden promises cheaper food, more options

(NBC) -- Fret not, Olive Garden lovers: The "endless" breadsticks aren't going away.

But new management has big changes in store for the casual dining chain, which touts family-style Italian food and has struggled with declining sales.

The chain's president, Dave George told investors on Tuesday the changes include creating a new logo and toning down its the "Old World Style," the Tuscan-style stonework and wooden archways that have been a signature part of Olive Garden restaurants since 2000.

"You're not going to see stainless steel showing up tomorrow in a Tuscan Farmhouse," George said, according to the Orlando Sentinel.

George, who became Olive Garden's president in January, said the look would be "more relevant." Olive Garden is part of the Orlando, Fla.-based Darden Restaurants chain that includes Red Lobster and LongHorn Steakhouse.

The chain also plans to make its menus more varied and affordable. Darden Restaurants CEO Clarence Otis said that the changes are being made to be "more responsive to the financial realities of our guests," according to the Tampa Bay Times.

Among Olive Garden's changes: smaller plates, cheaper items and lower-calorie meals. New offerings, placed on the menu in October, include a 420-calorie lasagna primavera with chicken and a lunch calzone and sandwich combo that costs $6.95. Two weeks ago, all new uniforms were issued -- a more contemporary black button-down shirt and black slacks, a shift from the wide ties and white shirts.

The overhaul comes after same-restaurant sales fell 1.2 percent in the 2012 fiscal year that ended in May. For Darden, same-restaurant sales are a year-over-year comparison of sale volumes for restaurants open the last 16 months.

"We became overly confident," read a line in George's presentation. "Our historical competitive advantage has narrowed."

"We were slow to react to changing guest needs," another slide said. "The experience takes too long."

RJ Hottovy, a senior restaurant analyst at Morningstar, said Olive Garden isn't alone. The casual dining market has become tougher in recent years, he said.

"The core casual dining patron finds itself in a much more difficult position than a decade ago -- that's put pressure on traffic trends," Hottovy said.

He said the rise of fast casual restaurants like Chipotle and Panera has also encroached on Olive Garden's market.

Dining experience aside, Darden Restaurants said it also was hurt by reports in November that the company planned to cut employee hours to avoid paying for health insurance as mandated for large companies by the Affordable Care Act. The company has since said it would not reduce the hours of full-time workers.

"That's a theme we're seeing across the restaurant industry, not Olive Garden specifically," Hottovy said. "I think that may have been a little bit overblown ... but I think it will be something that ends up pressuring margins for a lot of restaurants next year."

Olive Garden menus are largely the same at its 818 restaurants, although prices vary. At a restaurant outside of Seattle, a grilled chicken Caesar salad costs $11.95. At the same restaurant, a bowl of minestrone soup costs $5.95, and a plate of spaghetti with meat sauce costs $12.95. (Those previously mentioned doughy breadsticks come with every entrée and are so popular that they have a Facebook page with 1.5 million "likes.")