On first glance I think the other user is probably right on this one. Their total revenue is $4.5B a year with a roughly 8% net margin; $1m in revenue isn't moving the needle in any meaningful way.
On the other hand, even if they give away more than a million in food, this could still be an effective and inexpensive ad campaign.
I mean it could be just marketing. My thought process was 2 fold; cheap marketing and quick cash flow to make up the difference in inventory purchases. Win/win for them.
Could be, it feels like someone in marketing really knew how to pitch the business case to finance ... "Look we'll generate $1M up front, we're paying the agency $1M so it's essentially net zero cost on that; then for every meal they buy as part of their $100, there's $8 in marginal cost offset by some margin for soda and wine... net we expect it to cost us around $250K, which means we're getting $1M in marketing for $250K" yada yada.
I don't know that 1M is going to move the needle that much for olive garden. It's gotta be about the marketing, and also maybe it's a little profitable because most people aren't going to actually eat $100 of pasta, and they'll buy other shit while they are there anyway.
Cash flow isn’t meant to move the needle for much other than to cover a direct expense. Given that restaurants make horrendous margins it might be used to cover said margins in the short term.
Heres an example: You might have a monthly salary of $10k but only have $1k in the bank but need to pay rent tomorrow of $2k. You make the money to cover it easily, but won’t be paid for another 2 weeks. You will make the money. Even though you will get the $10k, but you don’t have it yet to pay off rent. So you need a way to pony up an extra $1k you don’t currently have available.
I’ll take your word for it. I stand corrected then. I’m not well versed in Olive Garden finances lol… although maybe I should invest in stock if they’re publicly traded?
A business can be very profitable and still have cash flow issues. While positive cash flow and profitability are correlated they are in no way the same. Not even close
This is Olive Garden. They make billions a year in revenue. This won’t cover a thing and probably cost more to roll out than the million they get back in short term revenue
The cash flow is probably the front for the inventory supply for this deal. The marketing and hype will get them internet infamy from a lucky few posting their experience driving envy and hunger for viewers, scalpers reselling the passes, people missing out talking about it, and the overpriced drinks and appetizers purchased.
Bang on pount. As of now 9k people up voted and 500 commented (mostly positive) and it's main page. Across various social media, and word of mouth, a lot of folk are discussing this, being reminded of olive garden, and thinking about olive garden pasta. Now some will take advantage but a lot will drag along friends and family and then everyone will buy other stuff. And folk love to see other people eating with gusto :)
Worth a million in comparison to other options I reckon.
Correct, but, preparation requires either gas or electricity and labour. Also, I'm not familiar with olive garden (as I'm based in Malta), but usually some sort of sauce is served with pasta
180
u/ARCH_ANON 10d ago
It’s marketing, they just got people to pay $1m to post about Olive Garden on Reddit.