Food Service Case Study: Darden Restaurants Market Segmentation

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Darden Restaurants boasts many of the popular names in full-service dining with a focus on market segmentation. In this lesson, you'll learn more about their segmentation style to reach multiple markets.

Darden's Brands

It's a company that boasts brand names you're probably familiar with; there may even be a favorite or two on your dining out list. The Darden family of restaurants includes some big players in the full-service dining landscape: Olive Garden®, LongHorn Steakhouse®, Bahama Breeze®, Seasons 52®, The Capital Grille®, Eddie V's® and Yard House®. Through these brands, Darden owns and operates more than 1,500 restaurants serving more than 320 million meals per year.

Darden breaks its business down into three primary segments: Olive Garden, LongHorn Steakhouse, and specialty group and other, which includes Darden's remaining establishments.

The dynamic duo of Darden's enterprise are casual full-service atmosphere, not upscale or fine dining and certainly not quick-service or fast-food. Most customers at these restaurants finish their meals with an average guest check between $16 and $20.

The Specialty Group restaurants extend into the upscale or luxury full-service dining experience, and include Capital Grill, Season 52, Yard House, Eddie V's and Bahama Breeze, with guest checks averaging $20 to $80 per person.

What is the purpose of Darden segmenting its various restaurants? Let's talk more about their segmentation strategy, the benefits of that approach, and how the results for their restaurant company have been.

Darden's Market Segmentation

Darden uses various types of segmentation, or dividing its market up into different segments of customers. This can be beneficial for a number of reasons:

1. It can reduce costs. Rather than offering all types of food in one restaurant or marketing a broad menu to a target audience, segmentation can help limit the customer to a finite group who enjoy an Italian meal or a steakhouse atmosphere.

2. It allows a venue for tailored products and new developments. As an Italian restaurant appeals to customers who enjoy pasta and other Italian favorites, segmentation creates a place to focus its products and introduce new menu items to a receptive audience. Introducing a pasta dish into a steakhouse environment may not be nearly as successful.

3. It highlights underserved markets. By structuring its restaurants into certain themes or niches, Darden is able to identify a geographic area lacking a particular type of dining establishment.

4. It provides a focus for the business. Rather than trying to serve all types of meals in one restaurant, each of Darden's well-respected restaurants are able to focus on one particular strength such as steak or pasta. Segmentation helps businesses stand out with a niche offering.

Styles

Darden's segmentation approach can be broken down into a few different sectors.

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