Darden Restaurants CEO Rick Cardenas got a question on a recent earnings call that even the industry analyst asking it thought was odd.
The analyst wanted to know about what effect diabetes and appetite suppressant drugs such as Ozempic would have on restaurant demand. Cardenas heads the company that owns Olive Garden, home to “never-ending” soup, salad and breadsticks.
“Full-service dining occasions are driven by a desire to connect with family and friends,” Cardenas answered on the earnings call last month, noting he did not expect a “meaningful impact” for his Orlando-based company.
Despite all those breadsticks at Olive Garden, Cardenas said Darden has spent a lot of time over the years developing menus to give guests a wide range of choices.
“If it suppresses appetite a little bit, they’re still going to eat,” Cardenas said. “So we’re going to be there for them when they do.”
Darden has 1,998 restaurants including Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen and Ruth’s Chris Steak House.
But it’s not just at Darden where these kinds of questions are coming up. Walmart U.S. CEO John Furner told Bloomberg that the company has seen a “slight pullback” from shoppers taking those medications.
GLP-1 drugs such as Ozempic are Type 2 diabetes medicines that help with blood sugar and might also help with weight loss. According to the Mayo Clinic, the drugs appear to assist in subduing hunger.
Still, restaurant and retail experts say it’s too soon to know for sure what will happen.
“It’s more of a Wall Street story as opposed to a consumer story because if it becomes a big consumer story it would take so long to work its way through all the different consumers,” San Diego-based restaurant analyst John Gordon told the Orlando Sentinel. “I think it would take years to reach mainstream coverage and adaptation.”
One unknown for restaurants, Gordon said, is if the prescription could mean different things for different kinds of eateries, such as Denny’s versus Darden’s The Capital Grille, a fine dining chain.
“It’s an issue that those that follow stocks day in and day out … might find to be a catalyst, and a catalyst is something that is new news that might drive stocks either up or down,” Gordon said.
But traditional grocers such as Lakeland-based Publix could be more exposed than retailers such as Walmart or Target that offer more than food, said Amanda Lai, a director at Chicago-based retail consulting firm McMillanDoolittle.
“Retailers like grocers that are more food-centric would likely be more impacted if the trend of pulling back on shopping for food as a result of appetite suppressant drugs continues to grow,” Lai said.
Lai also noted shoppers have been tightening their wallets for an entirely different reason: high inflation in recent years.
“Since we’re just hearing some of the preliminary findings from retailers, it’s still fairly early to draw definitive conclusions,” Lai said.
When asked about the comments from Walmart and what, if any, effects Publix had seen or expects to see from shoppers who might be on these medications, spokeswoman Maria Brous said in an email the company did not have “direct data that would correlate or support this theory.”
Publix has more than 1,350 stores in the Southeast and 859 stores in Florida.
Lai said the issue could put “the onus on food companies to continue to innovate their offerings.”