Olive Garden: A Case Study in Authenticity, Quality, and Popularity
Depending on why you started your company, authenticity and quality may mean everything to you. Or, it may mean nothing. Our bet is that it does matter. You’re a small business owner with skin in the game. Your business is your passion. The heart of the business is your interest and dedication to the product. Combined with that intrinsic love of your business is the desire to grow and share your product. That’s why it’s a business, not just a hobby. Best of all, why not get rich doing something you love?
What happens when things get too big? Popularity is often the death of quality and authenticity. Sometimes this comes from franchising. It’s difficult to keep the same level of interest across multiple locations and employees. Sometimes it stays local. A business might start succeeding in their town and find it difficult to keep up the same level of service and vision that used to characterize the brand. It may be more difficult to maintain your original passion as your business grows, but in reality, it will benefit your bottom line.
The Story of Olive Garden
Let’s talk Olive Garden for a moment. A deeper look into the history of the company reveals a pattern that many businesses fall into. Popularity grows — authenticity and quality shrink. Thankfully, the Olive Garden story ends happy. The chain started in 1982 under the development of General Mills. Although a large corporation started the restaurant, the goal was authentic, Tuscan cuisine. The restaurant’s popularity soared. There had never been a large chain Italian restaurant. People were hooked! The quality was high, and, for all intents and purposes, the restaurant felt authentic. In 1995, Darden Restaurants split from General Mills and formed with Olive Garden as it’s primary money maker. The restaurant continued to grow until 2010. At this point, sales started to dip as the popularity slightly decreased.
What created this dip? According to Starboard Value, a hedge fund with significant stock in Darden, it was the quality. After four years of diminishing sales, Starboard Value created a scathing 294 page presentation criticizing the restaurant. They made a series of recommendations that would help the restaurant return to the same level of quality it once aspired to. Here are some of the most savage critiques from Starboard:
- The breadsticks tasted “similar to hot dog buns.”
- Too many menu items — over 90 in some instances
- “Shockingly, Olive Garden no longer salts the water it uses to boil pasta, merely to get a longer warranty on its pots.”
- Illogical menu items like an Italiano hamburger or a chicken-topped vegetable lasagna.
Understanding and Improving
In essence, Starboard Value detailed the death of any authenticity that Olive Garden possessed. This graph details (in overly simple terms) the relationship between quality, authenticity, and popularity that businesses face as they grow. The relationship for these three might be different for every business.
This story does have a slightly happy ending, however. Darden took note and sent their chefs and top employees to conferences, classes, and even as far as Italy to learn the art of Italian cooking. Darden’s stock is up 47% since the intervention.
What do we learn from Olive Garden?
- Quality and authenticity are related.
- The public is savvy enough to notice changes, both good and bad.
- Popularity lends itself to shortcuts (which in this case led to bad food.)
What About Your Business?
Olive Garden’s struggle for authenticity is a perfect case study for casual sit-down restaurants. Likewise, Chile’s, Red Lobster, Applebee’s, etc. have all struggled with similar issues of quality and branding. That isn’t to say that these companies don’t consistently make millions, and sometimes billions, annually. It does seem to be an X-factor separating great restaurants chains from mediocre ones. Restaurants like Texas Roadhouse can have a reputation of quality and authenticity while maintaining hundreds of franchises.
How does this apply to your small business? While you may never franchise your business, your customers care about how they feel when they walk into your store. They’ve chosen your business for a reason. Remember, popularity doesn’t guarantee satisfaction. If you’re currently growing your business, don’t let success get in the way of quality service. On the other hand, if your business is incredibly popular, reflect on the state of your customer satisfaction. What would a graph like the one above say about your business? Don’t be afraid to take an honest look at where your business is and where it’s going.
Before customers even come to your store, what do they see? Online authenticity precedes in store fulfillment. With JJUMPP, you can secure your online presence so customers see the information you want them to see. To learn more about how JJUMPP can increase your online authenticity, give us a call.
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