New York
CNN
—
Even the unlimited breadsticks at Olive Garden and wooden rocking chairs at Cracker Barrel can’t seem to lure back the baby boomers.
It’s been over three years since many restaurants closed their doors and customers opted to eat more meals at home because of the Covid pandemic. Now, some older customers are still staying away, exacerbating a foot traffic problem faced by restaurant chains.
When it comes to customers over 65, “we just have not yet recovered the visits … to the extent we thought we would, really since the pandemic,” said Cracker Barrel CEO Sandra Cochran during a call with analysts earlier this month.
Older consumers have been hit by a double whammy, she said. At first, they stayed away because of health concerns. And then, they stayed away due to inflation.
“The over-65 group is particularly value-conscious,” she said. “And so we just haven’t seen the recovery of that group.”
The dip is coming at a time when Cracker Barrel’s traffic is down across the board.
“Our traffic declines were broad-based. They were against all of the age cohorts,” Cochran said, but pointed out that “the younger cohort held up better than the over 65.” Other chains, like Burger King, have also reported a dip in restaurant traffic as customers pull back due to higher prices.
Darden Restaurants (DRI), which owns Olive Garden, Longhorn Steakhouse, Cheddar’s Scratch Kitchen and others, noted during an analyst call Thursday that it, too, is seeing declining visits from older customers.
The customer group that is “55-plus, especially 65-plus, is still below pre-Covid and actually a slight decline from last quarter to this quarter,” said Darden CFO Raj Vennam during the call. Darden’s traffic is down compared to pre-Covid levels, Vennam said.
Customers aged 65 and older “were a little bit more spooked on the Covid side,” explained CEO Ricardo Cardenas. “We value all of our customers, including those over 65, and we’d love to see them come back more frequently,” he said.
But Darden, which is headquartered in Orlando, Florida, is also embracing the shift.
“We can use our eClub to talk to them and say, ‘Hey, come back to Olive Garden,’” Cardenas said, referring to an online membership that offers customer perks. “But I don’t think we’re going to do some dramatic things because we’ve actually seen a pretty big increase in our younger consumer.”
Sales at Darden restaurants open at least 16 months grew 5% to $2.7 billion in the quarter ending August 27, compared to the year before. The company reported other signs of health such as income holding steady at $195 million for the quarter and more than 100 new company-owned restaurants opening in the last year including 19 new Olive Garden restaurants for a total of 906 Olive Garden locations.
The largest of Darden’s franchises by far, Olive Garden is about “more and more and more,” as Cardenas said Thursday. “Come in to Olive Garden for more, more food, more value, more refills.” The company’s share price has fluctuated since the pandemic and is up about 4% for the year but dipped about 2.5% on Thursday.
For Cracker Barrel, which has also been trying to attract younger consumers but has traditionally appealed to an older clientele, the pullback from older customers is a bigger deal.
At Cracker Barrel locations open for at least a year and a half, sales grew 2.4% from the year before in the three months ending July 28. But that was driven by higher prices. In retail, sales fell 6.8% compared to the year before. Cracker Barrel (CBRL) shares have also fluctuated during the pandemic and have fallen nearly 27% this year.
Based in Lebanon, Tennessee, Cracker Barrel operates 660 of its restaurants in 45 states, using an old country store motif to sell its brand of comfort food like biscuits and gravy. Its retail stores offer holiday decorations, brain puzzle games and wooden rocking chairs and more to customers waiting for a table.
