A lettuce production problem cost Olive Garden owner millions

New York

The price of lettuce in Olive Garden’s Endless Salad is skyrocketing.

Darden Restaurants, which owns the casual dining chain, Longhorn Steakhouse, Cheddar’s Scratch Kitchen and other restaurant chains, said the spike in wholesale lettuce prices took a big hit in the quarter ending Nov. 27. .

Darden CFO Raj Bennam said in a conference call with analysts on Friday’s earnings. “It makes sense.”

He cited “worsening growing conditions and weather-related events” as reasons for the price increase.

Agricultural and animal diseases, as well as extreme weather events such as drought and flooding, have squeezed supplies and caused large volatility in food prices this year.

For example, the price of eggs has skyrocketed due to a deadly bird flu that harms egg-laying hens. In Florida, a disease called citrus greening kills orange trees, leading to historically low production projections.

Mr. Darden expected higher prices for commodities such as dairy, grains and poultry, Mr. Venham said. But the lettuce price was a “big surprise”.

A crop disease in California, where much of the country’s lettuce is grown, has hit lettuce supplies and forced prices to rise.

Rabobank fruit and vegetable analyst Almuhanad Melhim previously told CNN. “That led to a drop in lettuce supply and quality.”

The shortage was exacerbated by the usual seasonal shift that occurs in the fall when production moves from California to Arizona, Melhim explained. he said.

Soaring lettuce prices have also hit grocery store consumers.

Recent data from the Bureau of Labor Statistics show that lettuce prices, not adjusted for seasonal fluctuations, jumped nearly 20% in the year to November. Prices rose by about 9% seasonally adjusted from October to November alone.

Consumers are also paying more at restaurants.

Darden (DRI) said its restaurants increased menu prices by about 6.5% in the quarter compared to the same period last year. Still, sales at Darden (DRI) restaurants, which have been open for at least a year, increased 7.3% in the quarter, led by Olive Garden with a 7.6% increase.

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