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Olive Garden Again

Applebee's, Times Square, New York

Applebee's, Times Square, New York

In a post in late January, I commented on a WSJ article by their restaurant writer Raymond Sokolov in which he compared Olive Garden to the famed Chicago Italian restaurant Spiaggia. As I noted in the earlier post, Olive Garden is one of the six national chains owned by Darden Restaurants, along with Red Lobster, Longhorn Steakhouse, Bahama Breeze, The Capital Grille, and Seasons 52. It remains a mystery to me why Olive Garden and Red Lobster, the two we know best, are so successful. I’m happy enough to eat at them, but I’m probably happier elsewhere.

With this as background, I turn to the topic at hand, which is an article by Andrew Martin on the front page of yesterday’s NYT business section on the difficulty facing restaurant chains now due to the combination of overbuilding and the recession. He writes:

During a decade of easy credit and loose spending, American businesses built too many cars, houses, stores and factories. It turns out the country built too many restaurants, too.

Now consumers are cutting back, and dining out is among the casualties. Finer restaurant chains have been hit hard, and so have the casual sit-down places that flooded suburban shopping centers and tourist districts across the country, aimed straight at middle American tastes.

A few chains have boarded up already. Many others are going into survival mode, trying to renegotiate their loans, cutting staff, offering bargains to customers and closing less profitable restaurants. Analysts predict thousands more restaurants could close in the next year or two.

The very next part of the article is what got my attention:

The pain is evident even amid the neon glitz of Times Square, which draws big crowds of tourists used to eating at places like Red Lobster and Applebee’s.

Zane Tankel opened an Applebee’s franchise there eight years ago. At the time, he said his nearest real competition, an Olive Garden, was about six blocks away.

Now, Mr. Tankel could sit in his restaurant and throw rocks through the windows of a half-dozen competitors, including ESPN Zone, Dave & Buster’s, Chevys and Dallas BBQ.

“We’ll see some weeding out,” he said one recent lunch hour, sitting in a near-empty Applebee’s dining room overlooking 42nd Street. Noting a restaurant above him and another across the street, he said, “One of the three of us is not going to be here.”

So in midtown Manhattan, national chain restaurants have sprouted to meet the needs of “tourists used to eating at places like Red Lobster and Applebee’s.” Can this really be true, that tourists come to Manhattan and seek out Red Lobster for dinner? I can understand the point. I must admit that I have eaten more than once at McDonald’s in Paris. (For good reason, of course.) I appreciate predictability and reliability as much as the next person. But really, with the dizzying array of Italian restaurants in the city, I just can’t imagine why one would go to an Olive Garden.

By the way, later in the article, we learn: “Of course, there are some exceptions to the industry’s malaise, even in the casual dining sector. Darden Restaurants, which owns Olive Garden and Red Lobster, recently announced a better-than-expected outlook for the coming year. In the most recent quarter, same-store sales dropped 3 percent, compared with a 6 percent decline for the rest of the casual dining industry.”

Categories: Economy, Restaurants
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