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Darden Marketing Plan


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Darden Marketing Plan

  1. 1. Darden Restaurants, Inc. Darden Restaurants, Inc. D a rd e n R e s t a u ra n t s , In c . Ma rk e t in g 1 0 1 1 2 / 1 / 2 0 1 4 Marketing 101 This Marketing Plan for Darden Restaurants, Inc. includes an executive summary, situation/SWOT analysis and suggestions, growth strategy, STP analysis, marketing mix, and works cited.
  2. 2. Teliski 1 Darden Restaurants, Inc. Table of Contents Executive Summary……………… pg. 2-4 Situation/SWOT Analysis………... pg. 5-10 Growth Strategy………………….. pg. 11-12 STP Analysis………………………pg. 13-18 Marketing Mix…………………….pg. 19- Works Cited………………………..
  3. 3. Teliski 2 Darden Restaurants, Inc. Executive Summary In 1938, Bill Darden opened his first restaurant, The Green Frog, in Waycross, GA, promising “Service with a Hop.” Thirty years later Bill Darden opened the first Red Lobster in Lakeland, FL, where he mentored Joe R. Lee who became Red Lobster’s president in 1975. In 1995, Lee was named the first Chairman and Chief Executive Officer of Darden Restaurants, Inc. (DRI), which then became a publically traded company on the New York Stock Exchange. As of 2014, after selling Red Lobster to Golden Gate Capital for $2.1 billion, Darden Restaurants, Inc. owns and operates over 1,500 restaurants in the United States and Canada. DRI retains seven brands in its portfolio: Olive Garden, Longhorn Steakhouse, Bahama Breeze, The Capital Grille, Eddie V's, Yard House, and Seasons 52 (“History”). Darden is committed to building and maintaining a solid, people-focused culture. Since Bill Darden and Joe R. Lee founded Darden Restaurants, Inc. in 1975, DRI credits its success largely to its employees who consistently create memorable experiences for guests, which is why DRI strives to provide a nurturing and sustaining environment for its 150,000 employees. In addition to DRI’s core vision “to nourish and delight everyone we serve,” its goal is also to make working for Darden not just a job, but a place where people can realize their personal and professional dreams. This method of developing people is the cornerstone of DRI’s business model and how DRI encourages superior performance from its employees (“Our Culture”). DRI’s core values have been forged over a 70 year history, beginning with its founder, Bill Darden, when he opened his first restaurant in 1938. As is evident from DRI’s impressive financial success and industry high retention rate, Darden’s strong corporate culture and values give the company a competitive advantage in the hospitality industry. DRI’s core values include:
  4. 4. Teliski 3 Darden Restaurants, Inc. diversity and fairness, respect and caring, diversity, always learning and always teaching, being of service, teamwork, and excellence (“Our Culture”). DRI’s business mission can be further described by the words of Joe. R Lee, Chairman of Darden Restaurants; “We take pride in providing a terrific dining experience to every guest, every time, in every one of our restaurants. That is how we will be the best company in casual dining, now and for generations – to nourish and delight everyone we serve,” (Alchin). On 29 September 2014, Darden released its Fiscal First Quarter Results. The report states: The specialty restaurants' first quarter sales of $322.3 million were 14.5% higher than the prior year, driven by same-restaurant sales increases of +3.9% for The Capital Grille, +2.5% for Eddie V's, +2.3% for Yard House, +1.1% for Bahama Breeze partially offset by a same-restaurant sale decline of 0.3% at Seasons 52. Sales growth for the group also reflected revenue from four new restaurants at The Capital Grille, one at Bahama Breeze, nine at Seasons 52, three at Eddie V's and seven at Yard House (“Darden Reports”). Additionally, in the “Financial Ratios Report” for DRI released on 20 November 2014 by GlobalData, DRI exhibited the following losses and gains from 2013 to 2014: (continued on page 4).
  5. 5. Teliski 4 Darden Restaurants, Inc. 2014 (in millions) 2013 (in millions) Net Loss/Gain (in millions) Earnings Per Share 1.38 1.8 (0.42) Gross Margin 20.62 22.09 (1.47) Net Profit Margin 4.55 6.96 (2.41) Sales Growth 6.16 11.15 (4.99) Return on Equity 13.27 20.0 (6.73) Return on Assets 4.03 5.94 (1.91) Operations Costs (% of sales) 95.03 93.16 1.87 While costs for operating DRI’s restaurants increased by 1.87, stockholders’ earnings per share decreased by 0.42, net profit decreased by 2.41, sales growth stagnated and decreased by 4.99, and return on equity and assets decreased by 6.73 and 1.91, respectively. These ratios alone contributed to a net loss on DRI’s current income statement. GlobalData’s report shows a steady increase in operations costs and steady decreases in the remaining ratios listed above since 2012. DRI has a slew of local competitors within its regions of operations, but DRI’s largest competitors include: Ruby Tuesday, Inc., The Cheesecake Factory, Inc. (GlobalData, “Competitors”), California Pizza Kitchen,Inc., Carrols Restaurant Group, Inc. (Burger King), Cooker Restaurant Corp. (Cooker Bar & Grille), DineEquity, Inc. (Applebee’s, IHOP), and Texas Roadhouse, Inc. (ICD Research, “Competitors”). California Pizza Kitchen, Inc. and Cooker Restaurant Corp. focus on casual, family style “feel good” foods, Carrols Restaurant Group, Inc. focuses on quick service fast-food, and DineEquity, Inc., Texas Roadhouse, Inc. Ruby Tuesday, Inc., and The Cheesecake Factory, Inc. focus on specialty menu items.
  6. 6. Teliski 5 Darden Restaurants, Inc. Situation Analysis – The Marketing Environment Below is GlobalData Ltd.’s “SWOT Analysis” of the marketing environment affecting Darden Restaurants, Inc., released on 24 November 2014. Strengths:  Increasing Liquidity: Increasing cash reserves indicate DRI’s ability to obtain debt to finance acquisitions, capitalize on business opportunities, and meet capital expenditure or other capital requirements in the future. This position is favorable to meet short term obligations efficiently.  Strong Brand Portfolio: DRI operates its restaurants under a strong seven brand portfolio which helps it serve a diverse customer base.  Operational Network: DRI is the largest company-owned and operated full service restaurant company in the world. It operates restaurants in all fifty US states, Canada, Puerto Rico, Mexico, Japan, Peru, and the Middle East. Weaknesses:  Declined Operational Efficiency: DRI has reported a decrease in profit margins and increase in cost structure in the 2014 fiscal year. This was mainly due to continuous increase in operating expenses over the past three years. The increased expenses and losses resulted in decline in net profit and operating margin. Such decline in profit margins could limit the growth prospect of the company.
  7. 7. Teliski 6 Darden Restaurants, Inc.  Concentration of Business: DRI is highly dependent on US operations. DRI’s operational performance is likely to be affected if the US undergoes unfavorable changes in social, economic or political conditions. Instability in the US restaurant market may also affect the overall financial performance of the company. Opportunities:  Growth Potential in Restaurant Industry: The restaurant industry is receiving a boost from the recovery in the US economy and has emerged as one of the prime private-sector employers. Companies in the industry could bank on new opportunities through better understanding of customer needs and patterns, and by providing them with better products and hassle free-services. DRI could capitalize on the industry scenario.  Strategic Initiatives: DRI is focused on implementing certain initiatives to drive growth and profitability. In 2014, DRI opened 70 new restaurants in the US and Canada. In 2015, DRI plans to open 6 Olive Garden restaurants, 15 Longhorn Steakhouse restaurants, 8 Yard House restaurants, 5 Seasons 52 restaurants, and one each of The Capital Grille, Bahama Breeze and Eddie V's restaurants. In 2015, DRI is focused on certain initiatives including continuation of the Olive Garden brand renaissance program, implementation of a new management incentive plan, implementation of new restaurant growth, and improving capital allocation discipline.
  8. 8. Teliski 7 Darden Restaurants, Inc.  Online Initiatives: DRI is focused to leverage online business to improve brand awareness and sales. In 2014, DRI planned to consolidate its brands into a single digital technology platform to strengthen brand awareness and drive sales growth. This new platform will allow its brands to run marketing programs that enhance brand loyalty of the consumers. The company also developed a new online ordering system for Olive Garden and it plans to implement it in 2015. DRI could also benefit from the growing online market. Threats:  Highly Competitive Market: DRI operates across the full-service dining sector. This sector is highly competitive in terms of pricing, service, location, personnel, type and quality of food. Further, it has well- established competitors. DRI competes with national and regional restaurant chains and locally-owned restaurants across the markets it operates in. DRI is also exposed to competition from a trend of convergence of grocery, deli and restaurant services especially in the supermarket industry for convenient meals and side dishes particularly from deli section. Such intense competition could hamper the growth prospects of DRI.  Rising Labor Costs: Rising labor costs could further increase DRI’s operating costs. With the shortage of talented manpower and increasing government mandated minimum wages, the labor costs have been witnessing an increase. DRI is bound to come under pressure due to the
  9. 9. Teliski 8 Darden Restaurants, Inc. pay hikes. The US minimum wage is expected to reach $9.80 in near future with respect to inflation. Any such increase in the minimum wages increases the operating costs of DRI and has an adverse effect on overall profits. Analysis Summary Perhaps one of DRI’s most impressive competitive advantages is its strong and diverse brand portfolio. A recommended business strategy to capitalize on this strength includes procuring additional brands and further expanding the current portfolio of brands, particularly the less common specialty restaurants such as Seasons 52, Eddie V’s, Yard House, and The Capital Grille. Expansion of restaurants such as Seasons 52 and The Capital Grille can further secure DRI’s position in the upscale dining segment of the restaurant industry, which can help offset potential net profit declines at DRI’s more consumer economic elastic Olive Garden and Longhorn Steakhouse restaurants. After earning back investments made on current portfolio expansion, DRI could use increased net profits to acquire brands not currently part of its portfolio. Increased operating costs have slighted the impressiveness of DRI’s gross profit in recent years. These costs have caused net profit to decrease, making it difficult for DRI to achieve current portfolio growth and additional brand expansion. To minimize this weakness there are a number of improvement plans for DRI to reduce operating costs and apply the intended benefits of its increased sales success. Labor costs account for the majority of operating costs for DRI, particularly regarding Olive Garden restaurants (“Darden Addresses”); therefore, DRI should focus efforts on reducing culinary labor hours within the Olive Garden brand by modifying standard recipes and procedures to shorten prep time. Additionally, to reduce
  10. 10. Teliski 9 Darden Restaurants, Inc. another significant contributor to operating costs, food waste, Olive Garden should innovate its menu to include ingredient versatility; ingredients used to create one menu item should also be used in additional menu items. This will reduce costs due to food wastes from spoilage and it will also assist in reducing labor hours because culinary staff will spend less time monitoring inventory, calculating par inventory levels to sales forecasts, and tending to less frequently used ingredients in storage. Although initial investments in sustainable energy and water conservation equipment are pricey, these equipment assets can significantly reduce electricity and water bills. Soon the operating costs savings via utilities exceeds that of the price of the equipment, and the equipment continues to garner impressive returns on investment for periods much longer than that of standard equipment. Should a restaurant become LEED certified, tax breaks are frequently offered to the restaurants to reward energy saving efforts. As a result of a boost in the US economy there is now a substantial opportunity for growth in the industry for DRI. Now equipped with increased personal income, consumers are spending more money dining out. DRI should capitalize on this industry advantage by researching consumers to gain a better understanding of consumer needs, wants, and patterns, and directing new marketing efforts towards consumer segments not currently being served by DRI, not being served adequately by competitors, or not being served at all. After reaching new target segments, DRI can continue to promote its brands to these consumers and work towards attaining consumer loyalty and repeat business. This will allow DRI to grow financially and earn a larger market share. A full-service dining industry-wide threat currently faced by DRI is a highly competitive market. This sector is exceedingly sensitive and competitive in regards to pricing, service,
  11. 11. Teliski 10 Darden Restaurants, Inc. location, personnel, menu offerings, and perceived value by consumers. DRI faces a myriad of national and regional restaurant chains, as well as locally owned and independent restaurants within the markets in which DRI operates. Specifically, during this current era emphasizing convenience and time sensitivity, DRI is forced to compete with quick service deli services and even supermarkets offering convenience meals. Failing to account for this overwhelming segment of consumers in the market could stifle additional growth potential for DRI. DRI consumers may not always choose to purchase meals from convenience food service establishment rather than dine at any of DRI’s brands, but every time consumers do choose a quick service meal over dining at a DRI restaurant the effects are felt via DRI’s sales and revenue accounts. To counteract this convenience service-based threat, DRI should begin researching the potential benefits from creating carryout meal services at its brands. Offering consumers a carryout option fulfills their need for convenience meals while simultaneously delivering the same quality products they would receive if they were to dine in. Convenience conscious and time sensitive consumers will choose to purchase meals at quick service competitors regardless of if DRI implements a carryout service or not; providing a carryout service will retain or possibly increase sales while service staff labor costs are unaffected. DRI must first evaluate the current market to determine if implementing a carryout service would be a financially rewarding investment.
  12. 12. Teliski 11 Darden Restaurants, Inc. Growth Strategy With the goals of increasing revenue and amassing more market share in mind, it is recommended that DRI implement a dual marketing plan specifically pertaining to its Olive Garden brand. –the core brand that drives DRI with over 800 locations and 3.6 billion annual sales (“How to Refresh”). Through product development and diversification, DRI can revamp Olive Garden’s service and menu offerings into a new, comprehensive, and innovative product to attract new customers and recover the fervent loyalty previously experienced by current customers during earlier years of operation. Accumulation of new customers and increased frequency of sales by existing customers will increase revenue and upsurge DRI’s market share considerably. Generation Y is the largest existing generation today; this impressive mass of Millennials is also armed with more spending power than any other generation. These two factors highlight the importance of attracting their business and loyalty to achieve company growth and long-term operational sustainability. Olive Garden does possess a current share of Millennial consumers, but Olive Garden can attract a far greater number of Millennial consumers buy modifying Olive Garden’s total product – both menu offerings and service – to accommodate the unique characteristics of this generation. Traits that are characteristic to Millennials are discussed in detail in the STP section following the marketing strategy. With a tactical focus on Millennial consumers’ characteristics, and a company objective to harness a larger share of Millennial consumers, Olive Garden will create a new health conscious, customizable menu, modify the style of service provided, match prices with perceived consumer value, and implement an online carryout ordering system.
  13. 13. Teliski 12 Darden Restaurants, Inc. The new menu will retain the previous menu’s star items while including a range of new health and nutrition driven entrée offerings that broaden the personalized choice, variety and value it offers customers. Lighter appetizer, salads, soups, and deserts will be offered in addition to the newly expanded customizable entrée items. Menu items will be prepared with cooking techniques that emphasize new flavors to appeal to the evolving palates of Millennial diners. Cooking methods and ingredients used will accommodate the increasingly health conscious diners by reducing net caloric content and providing increased nutritional value. Service staff will be retrained to gain in-depth knowledge of the menu offerings and their preparation, and service methods will take on a personalized style focusing on the guests’ total experience. The online carryout ordering system will accommodate customers pressed for time and seeking convenience meals without sacrificing nutritional values.
  14. 14. Teliski 13 Darden Restaurants, Inc. Segmentation, Targeting, and Positioning Segmentation: the Millennial Generation In the US food and beverage market, “there are some fundamental shifts in how consumers, particularly low and middle-income consumers, address their discretionary spending… going to a restaurant is a nice-to-have and not a need-to-have. There are areas of the industry that are seeing gains, for example, fine-dining and higher-end, ‘polished-casual’ brands. Fast casual quick-service also continues to grow.” (“Washington: Consumer). The same article by US Official News goes on to explain, “The restaurant industry is not going to see the strong growth it did prior to the recession in the near future. Consumer attitudes and behaviors have changed and may have changed for good. Margins are being squeezed and it’s a battle for share, but the fact remains that U.S. consumers still make billions of visits to restaurants each year. It’s a matter of staying in touch with the reasons why they visit and providing them the experience they want when they do eat out.” In essence, food and beverage industry consumers are more mindful of how they spend their money – consumers are placing a higher emphasis on overall value. Total value creation is the key to attracting a larger market share of consumers at Olive Garden restaurants. The most significant segment of the restaurant consumer market to consider is undoubtedly the Millennial generation. In their recent press release, The Science of Business Intelligence stated: “Becoming well-acquainted with the mighty Millennial generation should be part of every business’s marketing plan, whether this modern consumer crowd is a target customer today or within the next five or 10 years. Known for their finesse in the fast-paced tech and social media worlds, this
  15. 15. Teliski 14 Darden Restaurants, Inc. generation of savvy young adults is poised to make its mark on corporate America. For businesses seeking this generation’s acceptance, the impact of Millennials’ flexing muscle will feel more like a sucker punch if they aren’t positioned to offer innovative and meaningful products and services with transparency and in an engaging way. Companies who are well- versed in Gen Y’s motivations and happily embraced by this old-soul generation are likely to remain or morph into Wall Street darlings. Astute businesses that tap into the Millennial psyche and cater to them will fare far better than those who don’t. This generation is assured to breathe new life into established companies, and serve as a revenue lifeline for businesses that have earned a place in the Millennial lifestyle” (Understanding the Millennial”). As listed in the US Official News’ article, “Understanding the Millennial Mindset”, characteristics of Millennials to consider include:  Millennials fly solo longer, focusing on college education first  Fewer are married as they enter their prime spending years.  They’re less likely to be married by the age of 32 than Gen X and Boomers  They’re characterized as well-educated, entrepreneurial, tech-savvy, idealistic, and hopeful  They take on less debt  Millennials crave awards and are achievement-hungry  They are more likely to still live at home, accounting for the smallest percentage of total homeowners and renters  Millennials shop strategically  Millennials are less consistent than Boomers in where they shop, but they’ll pay extra for products they value
  16. 16. Teliski 15 Darden Restaurants, Inc.  Millennials, have a penchant for unique items and tend to shop locally and from retailers with whom they can establish a relationship  They value healthy eating and exercise  They diet less frequently, yet consume fewer calories daily  They’re socially and environmentally conscious  Millennials vote with their purchases - they shop and buy products and services from businesses that prioritize social causes that align with theirs  They represent the most racially diverse generation in American history  They’re the most upbeat generation about the future of our country (the US)  They’re more likely to use text messaging, social media, instant messaging, and blogging to communicate with others about a service, product, or brand  They treat travel as a way to explore the world they see online and network with others for career and life pursuits  Many don’t chase after traditional status and wealth symbols  Millennials consider experiences more important than “things” Furthermore, “Millennials in the 18- to 24-year-old age group have significant discretionary income, while many 25- to 29-year-olds are beginning high-income careers and are entering the heavy-spending life stage of forming households and creating families. With an aggregate income of nearly $1 trillion, adult Millennials can be expected to play a key role in the recovery of the American economy and consequently offer significant opportunities to marketers of a wide range of consumer goods and services” (“Millennials in the US”). Millennials consumers’ habits and practices drastically affect how to market to them. “They are spending money differently than previous generations, preferring to throw cash at new
  17. 17. Teliski 16 Darden Restaurants, Inc. experiences and adventures and to reward socially responsible companies that they can connect with and that they deem authentic. It's easiest to see this change in the food industry, where Millennials are helping to disrupt the landscape of casual restaurants and boosting the earnings of chains such as Chipotle or Panera” (“How Millennials Spend”). As 2013 research from the Boston Consulting Group found, Millennials anticipated spending the greatest amount of money in the coming years on fresh fruits, organic food, and natural products. This generation places a distinct emphasis on health and wellness that DRI will accommodate in its new menu. Additionally, DRI’s Olive Garden brand will cater to Millennial consumers’ preference for unique experiences and authenticity by retraining and focusing service methods on providing personalized guest experiences. Segment Attractiveness : Millennials The segment of Millennial consumers is easily identifiable due to its direct correlation to a set age group of those born between 1977 and 1992 (“Graphic Sociology”). Further, the segment is undoubtedly substantial, accounting for approximately 35% of the adult population (“Annual Estimates”). Because the Millennial segment is notably tech savvy and possesses a strong social media and internet presence, it is definitely a reachable segment. The segment is responsive partially because it is already part of Olive Garden’s current market, and because this segment’s characteristics and preferences align with the product being offered. . Lastly, the segment is profitable due to Millennials’ already impressive and continuously increasing spending power.
  18. 18. Teliski 17 Darden Restaurants, Inc. Primary Target: Millennials - Differentiated Targeting Strategy Olive Garden will use differentiated marketing strategies to promote the new menu and service style, and the online carryout ordering system. Although both new products are being targeted towards Millennials, emphasis on certain attributes will differ according to product. The online carryout ordering system will be marketed specifically towards the most time-poor, convenience driven Millennials (i.e. recent college grads, beginners on the career hierarchy, etc.,) that can benefit greater from a healthy meal from the new menu that accommodates their time and location restraints, as well as their more limited incomes by eliminating dine-in tax and service fees. Olive Garden’s marketing efforts for its new “total product” consisting of the new menu coupled with innovative service techniques will be targeting towards more matured Millennials that have achieved a higher degree of stability than their younger siblings. This group of Millennials is further along the career path and have increased capacity to seek out full dining “experiences” rather than just a quick bite to eat amid a hectic schedule. Positioning – Continued on Next Page
  19. 19. Teliski 18 Darden Restaurants, Inc. Perceptual Positioning Map Nutritional Food 3 1 ☻Olive Garden Reposition in Market # 1 •Olive Garden •Applebee’s •Cheesecake ₒRuby Tuesday 2 Factory ₒTexas Roadhouse 4 •Burger King ₒMcDonald’s ₒWendy’s Non-Nutritious Food Common Products Unique Product
  20. 20. Teliski 19 Darden Restaurants, Inc. Marketing Mix Product: Online Carryout Ordering System – “Italia a Casa” Olive Garden’s “Italia a Casa” (Italian at Home) is a new online ordering system that gives customers the option to place meals online at Olive Garden’s website for pick-up at their local Olive Garden restaurant. Customers can pre-pay online or pay upon pick-up via cash or credit/debit, and they can even redeem coupons while placing orders. Orders can be made for immediate pick-up, pick-up at a later time or even days in advance. Customers that use “Italia a Casa” can create their own online profiles to save recent orders and favorite menu items, and be the first to receive special promotional offers and customer loyalty discounts. “Italia a Casa” is the ideal companion for lovers of authentic Italian cuisine seeking to dine in at home and share a wholesome, nutritious meal over warm conversation with friends and family, or spend an evening dining out on the deck with a relaxing glass of wine and a good book. “Italia a Casa” brings more than just a meal to the customer’s dining table – it delivers a feeling of warmth and togetherness that feeds the soul. Product: New Menu and Service Style, An Italian Experience – “Un'esperienza d'Italia” Olive Garden’s total dining experience renaissance, “Un’esperienza d’Italia” offers guests an innovated, authentic Italian experience including and redesigned menu and service style. Table service has evolved to be more flexible and intimate to anticipate guest needs and make educated food and wine pairing suggestions based on guest preferences. The new menu is driven by a heightened focus on food quality and nutritional value; it boasts over 20 new items
  21. 21. Teliski 20 Darden Restaurants, Inc. that expand choice, variety, and value to guests. There are more options to customize meal experience at both lunch and dinner. New dinner menu highlights include:  "Cucina Mia" Section: a new menu section that gives guests the ability to create their own entree from a variety of six pastas and five made-from-scratch sauces.  Small Plates: Expanding the Tastes of Italy section to include eight small plate dishes for guests who want to explore different flavors.  Lighter Italian Fare: Enhancing variety within the under-575-calories menu section by introducing additional dishes for calorie-counting guests.  Specialty Entrees: Bringing new culinary-forward entrees to the chicken and seafood sections of the menu, enhanced by preparation on a new Piastra flat-top grill for a more evenly cooked, tender and juicy taste.  Antipasti and Caprese Salads: Creating new ways for guests to enjoy Olive Garden's popular signature salad through the addition of antipasti or caprese toppings (“Olive Garden Launches”). Price DRI’s objective to increase market share guides the pricing strategy for its Olive Garden brand’s offerings, leading Olive Garden to pursue Sales Orientation pricing. DRI considers increased market share to be more beneficial than increased revenues due to DRI’s long –term goals to increase the number of existing brands and attain new brands in its portfolio. Lower prices will take away market share from competitors and make it more difficult for new firms to enter the market. Lower, value matched prices will also accommodate target Millennial consumers on both ends of the financial spectrum.
  22. 22. Teliski 21 Darden Restaurants, Inc. Full-service restaurant dining is an elastic product. If prices get too high, consumers can easily turn to less expensive quick service restaurants, a substitution effect, which would detract from DRI’s sales, revenue, and market share, hindering its goal to grow its brand portfolio and market presence. Additionally, because the full-service restaurant industry averages only1-5 cents net profit per $1 sales, Olive Garden must take precautions not to deter consumers by establishing prices too high. Even a slight decrease in total sales can result in a net loss. To accommodate effects of regularly fluctuating consumer incomes, Olive Garden’s redesigned menu offers higher priced items including prime cuts of beef and specialty seafood while simultaneously appealing to the more price elastic consumers with less expensive, yet still quality items such poultry and vegetarian items. To further reinforce the necessity to establish lower, value matched prices, it must be recognized that DRI and its Olive Garden brand are part of a monopolistic competition industry. With little barrier to entry and innumerable firms competing for sales, Olive Garden uses product differentiation to win consumers. Although Olive Garden offers a unique product, it is not a product so unique that Olive Garden can implement premium pricing without incurring a severe decline in sales. Place/Distribution Channel DRI purchases from over 2,000 suppliers in the US and 35 countries around the world. These include seasonal, regional/local, and large consolidated suppliers. All products purchased by DRI come from approved manufacturing facilities. Ana Hooper’s 2009 report, “Darden Global Supply Chain Standards,” states that at the time of the report DRI was the second largest buyer of US beef and the largest food service direct importer of seafood in the US. DRI uses
  23. 23. Teliski 22 Darden Restaurants, Inc. superior IT purchasing systems to purchase products and have them delivered to the right locations at the right times. The appropriate channel structure for DRI’s Olive Garden is an indirect channel with multiple intermediaries to fulfil Olive Garden’s broad range of product needs to create its menu offerings from scratch. The ideal intensity of distribution for Olive Garden and its suppliers is an exclusive intensity. Due to DRI’s impressive share of the market and long standing history of product quality, value, and popularity, manufacturers and intermediaries will benefit from knowing their products will be appropriately represented by the leader of the full-service restaurant industry. Additionally, having exclusive distribution intensity will continue to build solid, lasting relationships between Olive Garden and its suppliers. The ultimate retailer of Olive Garden’s products is Olive Garden alone. Manufacturers or intermediaries that identify with DRI’s corporate culture, values, sustainability efforts, and/or Olive Garden’s brand equity can benefit from selling their products to Olive Garden; these suppliers will be held in the same admirable light as Olive Garden and its product quality standards whereas many other suppliers often fail to scratch the surface of recognition regardless of if they offer industry superior products or not. This recognition can help the suppliers grow via new retail clients, or Olive Garden and other DRI brands could even request exclusive distribution for a large sum of DRI’s over 1,800 restaurants. Promotion Strategy Olive Garden’s new Unique Selling Proposition will be: “Craft your experience of Italia and companionship. Nourish your body. Feed your soul.”
  24. 24. Teliski 23 Darden Restaurants, Inc. o Create an Integrated Marketing Communication plan. You willneed to utilize interactive, offline,online and passive Integrated Marketing Communication strategies. Describe in detail how youwill use each strategy and identify specific media that will be used.
  25. 25. Teliski 24 Darden Restaurants, Inc. Works Cited Alchin, Linda. “Darden Restaurants." Making A Fortune. Siteseen Ltd., August 2014. Web. 20 Nov. 2014. “Annual Estimates of the Resident Population for Selected Age Groups by Sex for the United States, States, Counties, and Puerto Rico Commonwealth and Municipios: April 1, 2010 to July 1, 2013.” The United States Census Bureau. 1 June 2014. Web. 29 Nov. 2014. "Darden Addresses Priorities for Value Creation and Strategies for Growth in Investor Presentation." Indian Banking News. LexisNexis Academic. 3 March 2014. Web. 24 Nov. 2014. “Darden Reports Fiscal First Quarter Results From Continuing Operations.” Daily The Pak Banker. 29 Sept. 2014. LexisNexis Academic. Web. 23 Nov. 2014. “Darden Restaurants (DRI)." Wikiinvest. MediaWiki, 21 Nov. 2014. Web. 24 Nov. 2014. GlobalData. “Company Statement.” LexisNexis Academic. 20 Nov. 2014. Web. 24 Nov. 2014. GlobalData. “Financial Ratios.” LexisNexis Academic. 20 Nov. 2014. Web. 24 Nov. 2014. GlobalData. “SWOT Analysis.” LexisNexis Academic. 24 Nov. 2014. Web. 24 Nov. 2014. “Graphic Sociology: Who Is the Millennial Generation.” The Society Pages. 4 Oct. 2011. Web. 29 Nov. 2014. Grewal, Dhruv.,Levy, Michael. M: Marketing. 4th ed. McGraw-Hill, 2012. 19 Jan. 2012. Web. 29 Nov. 2014. “History.” Darden Restaurants – A Leader in the Full-Service Restaurant Industry. Darden Concepts, Inc., 2014. Web. 24 Nov. 2014. Hooper, Ana. "Darden Global Supply Chain Standards." Darden Restaurants, Inc., 31 July 2009.
  26. 26. Teliski 25 Darden Restaurants, Inc. Web. 30 Nov. 2014. "How Millennials Spend." US Official News. LexisNexis Academic. 10 Sept. 2014. Web. 29 Nov. 2014. "How to refresh Olive Garden; Experts: Rebrand, Be Healthier and More Authentic." USA TODAY. LexisNexis Academic. 14 Oct. 2014. Web. 25 Nov. 2014. ICD Research. “Competitors.” LexisNexis Academic. 28 Feb. 2013 Web. 24 Nov. 2014. ICD Research. “SWOT Analysis.” LexisNexis Academic. 28 Feb. 2013. Web. 24 Nov. 2014. The McGraw-Hill Companies, Inc. “Standard & Poor's Corporate Descriptions, Darden Restaurants, Inc.” LexisNexis Academic. 21 Nov. 2014 Web. 24 Nov. 2014. "Millennials in the US - Trends and Opportunities Surrounding Gen-Y Adults." Right Vision News. 16 Oct. 2010. LexisNexis Academic. Web. 29 Nov. 2014. "Millennials Seen Avoiding Three Big Liabilities." Denver Post. LexisNexis Academic. 19 May 2014. Web. 29 Nov. 2014. “Olive Garden Launches The Most Comprehensive Menu Evolution In Its History.” Darden. Darden Restaurants, Inc. 25 Feb. 2014. Web. 29 Nov. 2014. “Our Culture." Darden Restaurants - A Leader in the Full-Service Restaurant Industry. Darden Concepts Inc., 2014. Web. 20 Nov 2014. "Understanding the Millennial Mindset." US Official News. LexisNexis Academic. 23 Sept. 2014. Web. 26 Nov. 2014 "Washington: Consumer Restaurant Spending Varies by Sector." US Official News. LexisNexis Academic. 26 July 2014. Web. 29 Nov. 2014.