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Have Americans Lost Their Taste for Italian Food, or Has Olive Garden Done Something Wrong?

John Maxfield
April 23, 2014

Image source: Darden Restaurants

Sales at the once-popular Italian chain Olive Garden are plummeting, and it's not because Americans have lost their taste for Italian food or full-service dining. It appears, rather, to be a case of mismanagement at parent company Darden Restaurants (NYSE: DRI).

During the past few years, it's been widely assumed that the proliferation of fast-casual chains like Chipotle Mexican Grill (NYSE: CMG) has eroded the market share of full-service restaurants such as Darden's Olive Garden and Red Lobster -- click here to read about Chipotle's phenomenal success and the massive opportunities that still lie ahead for the burrito-slinging chain.

According to research from The NPD Group, a consulting company catering to the restaurant industry, annual traffic growth in the fast-casual segment "far surpassed" every other group for the fifth-consecutive time last year. Its data showed that visits to fast-casual restaurants were up 8% in 2013 over the prior year, while there was no growth at all for the total industry.

The implication is that sales in other segments must have fallen. And to a certain extent, of course, this can't be denied. We saw this recently when McDonald's (NYSE: MCD) reported that its domestic same-store sales dropped on a year-over-year basis by 1.7% in the three months ended March 31. And we've seen similar performances from numerous other companies in both the quick- and full-service dining segments.

But whil