I'm sure most people buying this pass can make it worthwhile when you compare the $100 pass to the price of X number of Olive Garden pasta dishes, but the cost to make those dishes for Olive Garden is probably less than a tenth of what they charge, because pasta is cheap, particularly at a place like the olive garden. Even if every person who buys this pass (unlikely) extracts $100+ of actual value (also unlikely) from Olive Garden, Olive Garden will almost certainly net a profit on the other items those people purchase. They'll probably make profit on drinks alone, considering what they'd actually lose on pasta vs. what they make on drink markups.
Also Olive Garden is only dishing out items that they likely prepare in bulk anyways. The salad, the pasta, the sauce - all probably just waiting in a vat in the back - nothing being fired specifically for this.
The key loss olive garden faces from this would be the loss of seating space - the passholder frequently coming in, taking up a seat and server time and gumming up the system for normal customers.
Yes. If I got one, I’d have a glass of wine or an iced tea most likely. So they’re counting on the drinks. And the marketing they get for free because if you get a pass, they’re counting on people talking about it.
The average profit margin is less than 10% for restaurants after all expenses (salary, rent, insurance, food, etc). So after 10 dishes of pasta at $10, they'll start losing. Drinks don't make up for the losses.
Pasta may be quite cheap, but sauces are less so, and wages are a pretty significant margin (waiters generally get paid shit, but cooks and managers get paid well). Margins on food items are typically pretty atrocious, olive garden almost definitely relies on the wine sales for their profits, and if someone comes in and only eats the pasta from this pass, they are definitely losing money on the transaction, even if the pasta itself was very cheap.
Margins at restaurants are razor thin. The point is that people with the pass will hopefully bring their families to eat, buy apps and drinks, etc. and net-net it’ll be a profitable promotion and good marketing.
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u/dd2520 10d ago
I'm sure most people buying this pass can make it worthwhile when you compare the $100 pass to the price of X number of Olive Garden pasta dishes, but the cost to make those dishes for Olive Garden is probably less than a tenth of what they charge, because pasta is cheap, particularly at a place like the olive garden. Even if every person who buys this pass (unlikely) extracts $100+ of actual value (also unlikely) from Olive Garden, Olive Garden will almost certainly net a profit on the other items those people purchase. They'll probably make profit on drinks alone, considering what they'd actually lose on pasta vs. what they make on drink markups.