Raise a Glass to Darden’s Secret Weapon

By Vladik Rikhter

yard-hosue

Darden Restaurants Inc. is on a roll—a roll not to be overshadowed by breadsticks.

The company’s Olive Garden restaurants recorded higher comparable sales for the fourth straight quarter and saw its first quarter of higher traffic in recent memory, according to this financial article. It’s a big victory for the brand and the parent company, given that Olive Garden generates 56% of the restaurant operator’s nearly $1.69 billion revenue.

It’s certainly good news after Darden’s decision to transfer approximately 430 of its more than 1,500 Olive Garden restaurants to a publicly traded real-estate investment trust (REIT) and lease back the properties.

This recent success has not let Darden rest on its laurels, though. This is a company that pays careful attention to consumer trends, as evidenced by its acquisition of and investment in Yard House. While it’s a modest chain of 59 restaurants, Nation’s Restaurant News named Yard House the sixth fastest-growing chain in the country, ranking No. 91 in the top 100 restaurants of 2015. In this article, NRN outlined the three keys to Yard House’s growth:

  1. Unit Growth – Self-explanatory, with the restaurant chain growing 13.5 percent in the year ended May 2014
  2. Strong Segment – Also self-explanatory given the sustained upward trajectory of craft beer
  3. Vibrant Atmosphere – The food, beer, and music combination

Fun is the key in these types of bar-restaurants. Yard House’s name is derived from its signature “yard” of beer—a very tall glass. The beer menu includes more than 100 beers on tap on a chalkboard. While Olive Garden says, “When you’re here, you’re family,” the Yard House brand says it’s a “modern public house where food and beer lovers unite.” In other words, “When you’re here, you’re here to have a good time!”

Yard House adds some “good-times” diversity to Darden’s upscale portfolio, which also includes LongHorn Steakhouse, The Capital Grille, Eddie V’s, Season 52 and Bahama Breeze.

Human Interaction Over a Brew

When reading about the success of Yard House, I couldn’t help but think of an article I read about Asbury Festhalle & Biergarten in Asbury Park, NJ. For anyone who knows the area, or listens to Bruce Springsteen’s music, this area was economically depressed for decades, but is making a comeback thanks to a younger generation of newcomers interested in revitalizing the downtown.

Just don’t expect to watch any kind of playoff games at Biergarten – there are no TVs! I’ve heard stories of people waiting two hours just to get into the Biergarten on a Saturday night. And it’s all so they could have a good beer, some delicious German food, and actually talk to each other.

According to one Biergarten investors, people are “starving for that human interaction and contact.” Another investor (there’s 17 of them) says the Biergarten prides itself on the “easiness and unpretentiousness” of the place.

Biergarten is the place people want to bring friends. Who wouldn’t want to check out the local place with a beer menu that has 70 percent to 80 percent imports, and an interior design of 1920s Europe?

While exclusivity may be cool, definitely tune into this trend of open and inviting atmospheres. Large, corporate-run chains like Darden Inc. and local ventures like the Asbury Biergarten are both in step with what a younger generation of customers are looking for in a bar/restaurant: top-notch food, a variety of cold beer, and a fun, social environment.

Subscribe to Zenput's Blog