Olive Garden Turns to Tech for a Turnaround

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Olive Garden is ready to stop living in the past. The struggling chain of Italian casual restaurants is ready to incorporate online ordering and test tabletop tablets this year, according to the Orlando Sentinel.

Trends haven't been working in favor of Olive Garden parent Darden Restaurants (DRI) lately. It's been months since it announced plans to sell its rudderless Red Lobster concept or spin it off if it can't find a suitor. No one's biting on the line for the seafood chain. Olive Garden is holding up marginally better, but it too has posted negative store-level sales in recent quarters.

The Internet may not necessarily save Olive Garden, but it will at least give it a chance to remain relevant. Olive Garden will begin rolling out online ordering for takeout orders this month, but the process will drag out until August before the entire chain of 836 restaurants is on board. The more ambitious move will come later this year when it tests the potential of outfitting its tables with tablets for waiter-less ordering.

Take Two Tablets and Call Me in the Entree

Brinker International's (EAT) Chili's and DineEquity's (DIN) Applebee's turned heads late last year when they announced their commitments to breaking in tabletop tablets in 2014.

Applebee's has ordered 100,000 tablets that will be installed at every table of the casual dining chain by the end of the year. Customers will be able to browse the menu, order and swipe their credit cards to pay their bills. The restaurateur's CEO promised that this wasn't a labor play. It will still keep a wait staff to satisfy immediate needs and service for customers who prefer personal interaction. The company providing the technology to Applebee's points out that the average customer in a restaurant incorporating its touchscreen terminals spends more, tips more and leaves earlier.

Chili's announced in September that it would go with Ziosk -- the same company that will provide the tablets for Darden's Olive Garden test. The devices will allow customers to order drink refills and dessert and pay with credit cards. Will Olive Garden's tablets completely automate wait staff functions? Will they merely offer diversions in the form of games? Or are they just a way to order more of those tasty unlimited bread sticks? No matter how far Olive Garden goes, it can only help after a few quarters of declining traffic.

Order Up

Tablets are still relatively new for casual dining chains, but online ordering is something that's been around for years.

Olive Garden is certainly late to this trend despite having a healthy takeout business. The chain's latest TV commercial pitches a "buy one, take one" deal, where patrons can enjoy a meal at the restaurant and get a second complete meal to go for as little as $12.99 for the pairing. One can argue that the last thing that someone craves after eating a large Italian meal is a second bountiful Italian meal, but it speaks to the popularity of its to-go business.

Embracing online ordering at a time when Internet usage and smartphone adoption has gone mainstream can only help. Darden's struggling to turn Red Lobster and Olive Garden around, and those challenges already find it ready to move on when it comes to Red Lobster. Olive Garden has a lot to prove, and hopefully the tech update will breathe new life into this very challenging business.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.



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