Rick Cardenas
President & Chief Executive Officer at Darden Restaurants
Thank you, Courtney. Good morning, everyone. We operate in a very dynamic, competitive industry and we have proven we can successfully navigate challenging environments due to our strategy, rooted in our four competitive advantages and our back-to-basics operating philosophy. While we fell short of our expectations for the first quarter, I believe in the strength of our business. And I am confident that the strategy we developed nearly 10 years ago that the strategy we developed nearly 10 years ago remains the right one for our company. We have talked a lot about Darden's competitive advantages and how they provide a platform for our brands that enables them to deliver their ultimate potential. However, driving strong operational execution is how we bring our brands to life. And we do that through our back-to-basics operating philosophy, anchored in culinary innovation and execution, attentive service, and an engaging atmosphere supported by smart and relevant integrated marketing programs that resonate with our guests.
This morning, I want to spend my time focusing on the work our brand teams are doing in each of these areas. Our brand culinary teams have continued to innovate to be ready when needed, but we have a high bar when it comes to introducing any new item to ensure it drives value for our guests and is simple to execute. While all of our brands are innovating the menu, here are some examples from our four largest revenue brands. The Olive Garden team has been working on new dishes to give their guests another reason to visit in the back half of this fiscal year. This includes the return of two guest favorites, Steak Gorgonzola Alfredo and Stuffed Chicken Marsala, which were removed from the menu during COVID. Both have been recast with higher-quality ingredients and easier execution for their restaurant teams. And both fill a gap on Olive Garden's menu for Center of the Plate Protein-Forward dishes. This announcement received tremendous applause from their general managers at their GM conference in August.
The LongHorn Steakhouse team closed their biggest menu gap with the addition of a healthier chicken dish. Their new Lemon Garlic Chicken has scored extremely well in guest satisfaction ratings. LongHorn also introduced a new Dragon Fruit Margarita during the quarter, made with an exclusive Patron Reposado Tequila that was specially blended for LongHorn. And it has already become their top-selling margarita.
The Yard House team introduced a new pizza platform that has resulted in higher-quality pizzas that are cooked in half the time. And they have seen a significant increase in preference and guest satisfaction as a result. This follows the introduction of other successful new menu items, such as their Cheesesteak Sandwiches and Half-Pound Prime Burgers.
Finally, at Cheddar's Scratch Kitchen, you get a lot for not a lot. They create value by leveraging existing product across multiple menu items through purchasing opportunity buys and limited time offers. As an example, for limited time, they are offering two grilled pork chops topped with caramelized onions and bourbon glaze with two sides, starting at $12.99. Our supply chain team and the Cheddar's culinary team continue to actively search for potential opportunity buys to drive exceptional value for guests, and you will see more examples of their efforts in the back half of this fiscal year.
Additionally, the Cheddar's team introduced a new lunch specials platform earlier this calendar year. That continues to win on price and build guest loyalty. This was thoroughly tested prior to launch and features eight great lunch items starting at $8.59. During the quarter they also reintroduced a guest favorite to the menu that was removed during COVID. The team worked extremely hard to simplify the process and succeeded. Onion Rings are back and guests are loving them. The Facebook post announcing the return of Onion Rings was the best-engaged and most-viewed post in Cheddar's history.
From a service perspective, guests who visit our restaurants continue to have great experiences, which we see reflected in our guest satisfaction scores, but we know the full-service. The full-service category lost focus on pace of meal over the years. In a world that has gotten faster, full-service restaurants haven't kept up. We know we can do a better job of evaluating our guests' time. And that was a central theme of our general manager conferences last month. We believe we have an opportunity to drive incremental sales over time by capturing the quicker meal occasions. The opportunities vary by brand, and it is something each brand team will continue to focus on over the long term.
Providing an engaging atmosphere at each one of our restaurants, where guests enjoy themselves and the occasion, is fundamental to creating exceptional guest experiences. Our facilities and remodel teams partner with each brand's operations team to ensure we are delivering on this promise. Each year, we spend, on average, approximately $200,000 per restaurant for maintenance and remodels. To keep our buildings fresh and inviting.
But atmosphere is more than just the physical restaurant. It also involves the people who bring our brands to life. For example, at the center of every Yard House is their bar, with more than 100 beers on tap, which is the cornerstone for their energized vibe. To strengthen this advantage, the Yard House team held their annual Best On Tap competition during the first quarter. They recertified all 900 bartenders on their bar knowledge and execution and instilled pride about being a Yard House bartender. Congratulations to this year's winner, Andrew Stafford, from the Yard House in Denver, Colorado.
The marketing that supports these priorities comes to life in different ways across our brands. Regardless, everything our brand marketing teams work on fits our marketing filters. First, it must elevate brand equity; second, be easy to execute; and third, not be at a deep discount. Perhaps nothing fits our marketing filters better than never any possible at Olive Garden. We know that in this environment, guests are motivated by compelling offers like Never-Ending Pasta Bowl that provide a strong value during a limited time.
When the Olive Garden team saw their traffic gap to the industry go negative during our first quarter, after years of outperformance, they reacted by moving this promotion up and having it run for a total of 12 weeks, three weeks longer than they had planned, and four weeks longer than last year. To help keep this offer exciting during a relatively long window, Olive Garden will introduce a new garlic herb sauce during the fifth week of the promotion.
Beyond checking all our marketing filters, Never-Ending Pasta Bowl offers guests tremendous value. The starting-at price point hasn't changed in three years, making it an even more compelling value, and Olive Garden is putting additional marketing support behind it. We have said that we intend to price below our competitors and inflation over time. In fact, when you look at Olive Garden, over the last five years, they have priced more than 800 basis points below the full-service industry average and 700 basis points below grocery inflation. The Olive Garden team recognizes the need to do a better job of communicating this value to guests. So their advertising will prominently feature more price points this year compared to last year, when the advertising message was primarily focused on equity building. Dan and his team are intensely focused on their business and prepared to react to market conditions as we move through the rest of this fiscal year.
While Olive Garden has a national television program, they have also used connected TV to reach our guests where they are consuming content. Using learnings from Olive Garden, we have successfully tested CTV across a number of brands, including LongHorn, Yard House, and Cheddars and it's an opportunity we remain focused on. Connected TV and our other digital tests have allowed us to learn and be more effective with our media investments. Digital marketing has proven to be a targeted, efficient way to drive brand equity and incremental sales across all our brands.
Before I wrap up, I want to share some details regarding the exciting partnership we announced this morning with Uber that will begin with a pilot at Olive Garden. As you know, Olive Garden already offers an amazing large party catering experience delivered by their team members. However, their guests have been asking for small order home delivery options and delivery guests in general continue to show they're willing to pay for the convenience. As you also know, we had concerns about the third party model. It was important for us to find a way to address this guest beed state without disrupting the team member or guest experience and without compromising our competitive advantages, simple operating model, and business model. We've had these concerns for some time, but that did not stop us from taking in -- talking to delivery partners about possible solutions over the years. We began having more serious discussions about Uber Direct in April, and our teams began working on the systems integrations in May. It was imperative to us that the solution addressed our concerns.
From a guest perspective, it protects the in-restaurant experience as drivers will pick up orders curbside in the same manner our guests do today. It also enhances the takeout experience by giving guests the option to have someone else pick up their order. This delivery as a service further enhances the takeout experience for our guests, which is why we will have the same everyday value menu price for dine-in, pickup, or delivery. The added cost for delivery will be transparent to the guest. And with Uber's technology platform, guests will be able to track their order all the way to their delivery address.
Second, in terms of the team member experience, our proprietary capacity to management tool will remain in place, allowing us to manage volumes so we don't negatively impact restaurant operations or the in-restaurant dining experience, and our to-go specialists will be able to continue earning tips on these orders.
Third, this partnership allows us to strengthen and defend our competitive advantages of significant scale and extensive data and insights. It enables us to use the scale of Uber's driver network to enhance our scale, and since guests will order through our online portal or mobile app, we keep the data. And last, we believe this partnership will allow us to protect our simple operating model. Our teams execute a great curbside to-go experience today, and we believe there will be no significant changes to our operators.
Overall, we view this as an incremental long-term sales driver. This is a first-party delivery, not third-party delivery marketplace. So it will take time for us to build sales. We intend to roll it out initially only at Olive Garden to learn, and we'll pilot at a limited number of Olive Garden restaurant locations in the second quarter. Assuming a successful pilot, we plan to begin a phased rollout to all Olive Garden locations that currently offer curbside to-go. We expect that to be complete before the end of the fiscal year.
To wrap up, I am confident in the actions all our brand teams are taking to address our guest needs in this environment. Each of these actions fit our operating philosophy and marketing filters. More importantly, they do not compromise our long-term health for short-term benefits. I want to thank our 190,000 team members for the focus and commitment they continue to display. I'm extremely proud that our most recent engagement survey, conducted by Gallup in July, showed our overall team member engagement level reached a new all-time high and is nearly 30 points higher than the Gallup benchmark for U.S. organizations. Thank you for all you do to make our company successful.
Now I'll turn it over to Raj.
