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Olive Garden refuses to make its pasta cheaper, shunning restaurant price war

Olive Garden is refusing to join chains such as McDonald’s Corp. in offering steep discounts to attract struggling consumers, saying it’s a less sustainable way to boost sales.

Darden Restaurants Inc., which owns nine chains including Olive Garden and LongHorn Steakhouse, has kept price hikes below inflation but won’t join peers in promoting value meals as a way to fix a lingering pullback among lower-income diners.

“Couponing, deep discounting and all of those other things, we’re not doing that even at a time that our competitors have ramped up discounting — deep discounting — on television,” Darden Chief Executive Officer Rick Cardenas said on the company’s earnings call Thursday.

The comments amount to a refusal to enter an escalating price war among restaurant chains fighting to attract Americans struggling with inflation and rising debt. McDonald’s and Burger King are both promoting $5 meals, while Wendy’s Co. is offering a $3 breakfast and Starbucks Corp. a $6 breakfast sandwich and coffee combo.

Olive Garden is instead offering “price certainty,” Cardenas said. “We’re focused on profitable sales growth, not just buying sales to show a top-line number.”

Darden’s full-year sales outlook of $11.8 billion to $11.9 billion came in below the average analyst projection of $11.93 billion on Thursday, according to a statement. Revenue in the fourth quarter was $2.96 billion against an expected $2.97 billion.

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