The boss of Olive Garden’s parent company has dismissed concerns that popular weight-loss drug Ozempic could reduce customer demand.
“Full-service dining establishments are driven by the desire to connect with family and friends,” Rick Cardenas, CEO of Darden Restaurants, said during an earnings call last month.
He added that he didn’t expect appetite suppressant drugs to have a “meaningful impact” on the company, which has carefully crafted its menus over the years to give guests a range of options.
“If it suppresses their appetite a little bit, they’re still going to eat,” the CEO said. “So we’ll be there for them when they do.”
His comments come after Walmart CEO John Furner noted that the retailer had seen a “slight decline” in shoppers buying less food, thanks to the increasing popularity of weight-loss drugs such as Ozempic.
Rick Cardenas, CEO of Darden Restaurants, said during an earnings call last month that he doesn’t expect the Ozempic craze to have a “meaningful impact” on customer demand
Darden owns 2,000 restaurants, including LongHorn Steakhouse and Olive Garden (photo)
Known for its ‘never ending’ soups, salads and breadsticks, the Italian-inspired chain offers smaller ‘lunch-sized’ options
Ozempic is the brand name for the diabetes drug semaglutide, which is taken as a weekly injection.
It has proven to be a hit among the wealthy and has reportedly helped Elon Musk and Amy Schumer shed pounds.
Healthcare providers in the US wrote more than nine million prescriptions for appetite suppressants in the last three months of 2022 alone.
This figure is likely to rise even further this year, with a recent analysis showing that as many as 15% of Americans – around 150 million people – have now tried drugs like Ozempic and Wegovy.
Still, Cardenas says he doesn’t believe the drug’s appetite-suppressing effects will hurt restaurant demand.
Olive Garden – known for its never-ending soup, salad and free breadsticks – first experimented with smaller portion sizes in 2013.
That year it introduced dishes such as Parmesan asparagus and tapas with grilled chicken.
The chain currently offers smaller lunch options, but has not announced any plans to downsize in response to the Ozempic craze.
Darden owns nearly 2,000 restaurants, including LongHorn Steakhouse and Ruth’s Chris Steak House, which it acquired in June.
Last month, Darden reported earnings and revenue that exceeded analyst expectations for the first quarter.
Earnings per share were reported as $1.78 adjusted versus $1.74 expected, and first-quarter revenue was reported as $2.73 billion versus $2.71 billion expected.
However, Cardenas added that consumers appear to be pulling back on spending at restaurants, although this was likely a response to inflation.
At casual chains like Olive Garden, customers ordered fewer alcoholic drinks and opted for cheaper entrees.
“Overall, we think consumers remain resilient, but they appear to be a little more selective,” Cardenas told analysts.
John Furner, president and CEO of Walmart US, said customers taking the popular weight-loss drug purchased “fewer units” while opting for foods with “slightly fewer calories”
The retail giant analyzes changes in consumer habits using data from people taking Ozempic and similar drugs
Ozempic has proven to be a double-edged sword for the company as it benefits from pharmacy sales but has seen customers spend less on in-store food
The semaglutide injection is intended to help people with type 2 diabetes control their blood sugar levels, but has become popular as an appetite suppressant
Darden reported first-quarter net income of $194.5 million, compared with $193 million last year.
Olive Garden met expectations with same-store sales growth of 6.1 percent. The company accounts for nearly half of Darden’s revenue.
Concerns about the impact of weight loss drugs have also been raised at major retailers such as Walmart, where US CEO John Furner noted that the company had seen a “slight decline” in shoppers using Ozempic.
He said consumers were buying “fewer units” while opting for foods with “slightly fewer calories.”
Ozempic has its pros and cons for the supermarket giant. Walmart benefits from pharmacy sales, but at the same time, customers spend less on food in the store.
The retailer is analyzing changes in consumer habits using anonymized data from people taking Ozempic and similar drugs, but Furner said it was too early to reach a definitive conclusion.
As Darden Restaurants remains committed to its mission of sustaining diners, other restaurants are reducing portion sizes.
This includes high-end dining establishments such as Florida’s Meat Market steakhouses.
“With so many guests now experiencing suppressed appetites at Ozempic, we have noticed the trend of our signature 4-ounce petite filet mignon becoming increasingly popular,” said owner David Tornek.
He noted that the chain has doubled its inventory to meet the new demand.