Wednesday, April 8, 2015

Hospitaliano? How Olive Garden's Incoherence Damaged their customer base and Profitability


As I read the examples of coherent companies in Paul Leinwand and Cesare Mainardi's The Coherence Premium, I could not help but think about incoherent establishments like Olive Garden. Olive Garden is owned by parent company Darden and is one of the chains that need the most improvement. According to Darden, Olive Garden is "remains committed to its purpose of Hospitaliano! - providing 100% guest delight through a genuine Italian dining experience". The parent company goes on to day that "Italy serves as the inspiration for the brand, from its menus to its award-winning wine list to the Tuscan farmhouse design of its restaurants. Most of all, Olive Garden is inspired by the warmth and genuine hospitality of the Italian people, as well as the importance of family in their culture".

Unfortunately, customers do not share the same sentiment as the owners. Apart from improving simple restaurant processes and adding some salt to the water that they use to boil the pasta Olive Garden needs to rethink its entire menu as well as the experience. As great as the chain’s brick facade is, it’s no longer enough for customers. The introduction of the ‘Italiano Burger’ late 2013 proved to be one of Olive Garden’s worse moves and more importantly highlights the chain’s incoherence. One of the first questions the article asks is whether or not the company is disciplined enough to do what it does best? Olive Garden is supposed to be great at providing customers with an authentic Italian experience. This includes not only the brick façade but the meal that you order there. The Italiano Burger completely conflicts with Italian culture.

According to two authors in the Business Insider who tasted the burger after its premier, the meat was unseasoned, the bread was stale and the french fries reminded them of McDonald’s except with sprinkles of parmesan cheese. Usually one would expect for an Italian restaurant to have freshly baked bread (the purpose of their breadsticks), well-seasoned meat, tasty pasta and the right amount of sauce. So why then did they decide to introduce this burger that tastes and looks nothing like Italian food? The answer is desperation!

Although many restaurants experience sizable losses after the recession, most of them began to see an increase in profits except for Olive Garden. In attempts to publicize themselves and increase profitability, they tried to create new items that would attract many more customers. Unfortunately, managers completely disregarded the need to reflect upon their mission as an entity and more importantly what they are or at least say they are good at. One can assume that most if not all of the equipment housed in each chain’s kitchen served the purpose of preparing pastas and Italian style meats instead of grills for burgers. Because this one item was so farfetched from majority of their other items, I would think that levels of consistency and quality when preparing this meal would be subpar.


The Coherence Premium and the GE highlights difficult decisions that managers have to make when deciding on launching new products to their businesses and which new industries to enter. Companies like GE and Pfizer even went as far as selling various services, products and businesses in order to focus on their goals and what they do best. The big question is when will Olive Garden remove the Italiano Burger and introduce items that are more authentic* Italian, at least for a chain restaurant quality? 





Sources
http://www.businessinsider.com/olive-garden-new-burger-review-2013-12
http://www.newyorker.com/business/currency/whats-deal-olive-garden
http://money.cnn.com/2014/12/16/investing/darden-olive-garden-earnings/

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.