The news: Olive Garden is testing lower-priced entrées with smaller portion sizes, parent Darden said, to woo consumers who are price-conscious as well as those on weight-loss drugs like Ozempic.

• Roughly 40% of Olive Garden restaurants are taking part in the test, which has delivered promising results thus far.
• “They’re the right portion size for the right price for a group of consumers that will eventually drive more traffic,” Darden CEO Rick Cardenas said.

The trends: Driving traffic was not a problem for Darden in fiscal Q1: Same-store sales were up 4.7% YoY across its restaurant portfolio, with the biggest gains at Olive Garden (up 5.9%) and LongHorn Steakhouse (up 5.5%).

But profits are a different matter, as the company’s commitment to keeping price increases below inflation challenges its bottom line.

• Darden is grappling with an unexpected surge in beef prices, as well as higher labor costs, causing it to miss profit expectations for the quarter.
• While Olive Garden’s entrée test is expected to boost traffic, that will come at the expense of average check size.

Our take: Darden’s investments in pricing are helping it win spending from value-conscious consumers, who remain interested in dining out but are looking to get more bang for their buck—and a clear idea of what a night out will cost them.

• Diners want price certainty, Cardenas said, boosting popularity for offerings like Ruth’s Chris Steakhouse’s fixed-price three course menu.
• While keeping prices low may hurt short-term profits, the company is confident that its value focus will position it to boost sales and take share.