Olive Garden finally has something for patrons that don't want the contractual obligations or healthful decisions that go into a gym membership but still want to enjoy a routine regimen for the next few weeks. Darden Restaurants (DRI -0.45%) is selling a seven-week pass to go carb crazy at Olive Garden.
The Never Ending Pasta Pass went on sale for $100 on Monday afternoon, giving patrons unlimited access to its Never Ending Pasta Bowl offering between Sept. 22 and Nov. 9. This is the menu promotion where diners pay $9.99 to go through more than 150 combinations of pasta, sauces, and toppings in any single seating. The casual dining chain's signature unlimited salad and breadsticks are included in both offerings.
Simple math would dictate that if you were planning on hitting up Olive Garden more than 10 times in those seven weeks that you'll come out ahead. It would also likely indicate that you are a glutton for punishment. However, the math gets more intriguing because Olive Garden is also including unlimited Coca-Cola soft drinks for the pass holder as well as anyone else at the table regardless if they have the pass or not. This sweetens the deal for buyers, making it possible to make back that $100 in value in less than 10 trips before Nov. 9.
Olive Garden doesn't necessarily expect this to be a moneymaker. In fact, it's limiting the offer to the first 1,000 buyers. In other words, it's just ringing up $100,000 in revenue here. This is more about turning heads and drumming up publicity, even if it makes life a little more difficult for servers that will hope that patrons tip based on the market value of the meal.
Source: Olive Garden.
Darden can use all of the help that it can get. Its CEO announced this summer that he would be leaving by the end of the year, but he's not the only one heading for the exits. Olive Garden has posted negative comps for four consecutive quarters, and it wouldn't be a surprise to see that streak stretch to five when Darden reports fresh financial results on Friday morning.
Olive Garden was always a big part of the Darden snapshot, but it's really moving the noodle -- err, needle -- now that Red Lobster has been sold off. Olive Garden accounted for 57% of Darden's non-Red Lobster revenue in its latest quarter. The balance of Darden's revenue comes from a half-dozen concepts that are holding up better than Olive Garden in terms of growth and comps, but they're still too young to make a difference.
Olive Garden has its problems, but one can also argue that pasta in general is in a bit of a funk. When it comes to wet noodles investors are starting to see them as wet noodles. One of last year's hottest IPOs was Noodles & Co. (NDLS -5.60%). The fast casual chain serves up quality pasta in enough international variations to make a globetrotter proud. Noodles & Co. went public last year at $18, and it was a hot dish. The stock topped out above $50 a few weeks later. Why not? Noodles & Co. was expanding rapidly, and it had posted positive comps in 28 of the 29 previous quarters.
Well, that wasn't sustainable. Noodles & Co. has proven mortal as a public company. It clocked in with negative comps in its most recent quarter, and now its stock has fallen below $18 to make it the latest broken IPO of the 2013 class. That's not pretty, but Olive Garden's store-level performance has been even worse.
Darden may think that offering a seven-week meal pass will generate plenty of cheap publicity, and it's right. Ever since USA Today wrote about it on Sunday we've seen other outlets -- including this article -- talking up the meal pass. However, more often than not the Never Ending Pasta Pass is likely to wind up the butt of social media and late-night talk show jokes. It won't just be the pasta that's unlimited when the audience is having a laugh at your expense.
