How Restaurants Like Olive Garden And Texas Roadhouse Are Winning The Value War Against Fast Food

With rising inflation showing no signs of slowing down, Americans are tightening their belts by opting to dine in. Though higher costs make eating at home the more cost-friendly option, people will always swing by an eatery when in need of a quick bite. Fast food used to be the go-to spot for cheap food, but casual spots like Texas Roadhouse and Olive Garden seem to be winning more customers.

In general, inflation has increased the price of food, but those aren't the only numbers going up. Texas Roadhouse saw a 5.8% increase in sales during its second quarter, while Olive Garden's fourth quarter saw a 6.9% jump in restaurant sales. The growth isn't limited to just these two eateries, though. Other fast casual spots like Chili's and The Cheesecake Factory experienced a 24% increase in the fourth quarter and 1% yearly increase, respectively.

Meanwhile, fast food spots are experiencing less foot traffic due to customers viewing them as a luxury. This may seem ironic, but the sales disparity comes from how these companies approach business. Deals like Chili's happy hour and weekday BOGO promotions at Applebee's and Ruby Tuesday's are more appealing to customers. Plus, with casual restaurant portions heftier than fast food, at around the same price, consumers value more bang for their buck.

Higher food costs are changing how Americans choose to spend on food, and it seems like fast food restaurants aren't adjusting to the change. With the fast food dollar menu becoming a thing of the past, who wouldn't choose pasta from Olive Garden or wings from Applebee's over a burger that used to be $5?

Wendy's first-quarter sales decreased by 2.1% from the same time last year, and McDonald's recently had its worst quarter since COVID-19. However, the restaurant, along with its peers, is making strides to improve sales. McDonald's just announced that it plans to decrease the prices on all its combo meals.  The company is also introducing a $5 meal deal, most likely in hopes of gaining back the low-income customers it lost.

Taco Bell is also joining the deals spree with its luxury craving boxes at different price points. Although fast food spots are waging a war of their own, casual eateries' elevated ambiance, attentive service, and on-par pricing are still winning out amongst Americans.