Survival Strategy: Michigan Olive Garden Restaurants Say No Discounts

In an era when restaurants are trying to win back customers with discounts, Olive Garden Restaurants in Michigan are taking a different tack:  Survival.

Restaurants such as McDonald's have recently announced $5 promotions in order to regain customers' loyalty during challenging economic times. But your local Olive Garden isn't jumping on the bandwagon.

Why is Olive Garden Shying Away From Discounts?

Rick Cardenas is the CEO of Olive Garden's parent company, Darden Restaurants.

“We’re not doing that,” Cardenas said during an analyst call Thursday. “Even at a time that our competitors have ramped up discounting.”

Not only is the chain bucking the trend, it's actually raising menu prices slightly.

Cardenas tells CNN that offering discounts in order to lure customers in isn't a strategy that will pay off in the long run.

"We think that everyday low value … is more sustainable than deep discounting to try to drive people in," he said Thursday (6/27). "This is a long game for us."

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Discounts Don't Always Pay Off

David Henkes is a food industry researcher. He tells CNN that offering deep discounts is often dangerous and is usually just a short-term fix.

“If you do deep discount …. you have to do even more the next year,” he said. “The way we do it is more sustainable.”

An all-you-can-eat-shrimp promotion is said to have contributed to Red Lobster's recent woes. Three Michigan restaurants could soon be closing as recent economic conditions have continued to plague the sit-down seafood chain.