December 2, 2023

Darden Eating places CEO Rick Cardenas received a query on a current earnings name that even the trade analyst asking it thought was odd.

The analyst wished to learn about what impact diabetes and urge for food suppressant medication corresponding to Ozempic would have on restaurant demand. Cardenas heads the corporate that owns Olive Backyard, house to “unending” soup, salad and breadsticks.

“Full-service eating events are pushed by a need to attach with household and buddies,” Cardenas answered on the earnings name final month, noting he didn’t count on a “significant affect” for his Orlando-based firm.

Regardless of all these breadsticks at Olive Backyard, Cardenas mentioned Darden has spent quite a lot of time over time creating menus to offer friends a variety of selections.

“If it suppresses urge for food just a little bit, they’re nonetheless going to eat,” Cardenas mentioned. “So we’re going to be there for them after they do.”

Darden has 1,998 eating places together with Olive Backyard, LongHorn Steakhouse, Cheddar’s Scratch Kitchen and Ruth’s Chris Steak Home.

However it’s not simply at Darden the place these sorts of questions are developing. Walmart U.S. CEO John Furner informed Bloomberg that the corporate has seen a “slight pullback” from buyers taking these medicines.

GLP-1 medication corresponding to Ozempic are Kind 2 diabetes medicines that assist with blood sugar and may also assist with weight reduction. In accordance with the Mayo Clinic, the medication seem to help in subduing starvation.

Nonetheless, restaurant and retail specialists say it’s too quickly to know for positive what’s going to occur.

“It’s extra of a Wall Road story versus a client story as a result of if it turns into a giant client story it will take so lengthy to work its method by means of all of the totally different shoppers,” San Diego-based restaurant analyst John Gordon informed the Orlando Sentinel. “I believe it will take years to succeed in mainstream protection and adaptation.”

One unknown for eating places, Gordon mentioned, is that if the prescription might imply various things for various sorts of eateries, corresponding to Denny’s versus Darden’s The Capital Grille, a fantastic eating chain.

“It’s a difficulty that people who comply with shares day in and day trip … may discover to be a catalyst, and a catalyst is one thing that’s new information which may drive shares both up or down,” Gordon mentioned.

However conventional grocers corresponding to Lakeland-based Publix might be extra uncovered than retailers corresponding to Walmart or Goal that provide greater than meals, mentioned Amanda Lai, a director at Chicago-based retail consulting agency McMillanDoolittle.

“Retailers like grocers which can be extra food-centric would doubtless be extra impacted if the pattern of pulling again on looking for meals on account of urge for food suppressant medication continues to develop,” Lai mentioned.

Lai additionally famous buyers have been tightening their wallets for a completely totally different cause: excessive inflation in recent times.

“Since we’re simply listening to among the preliminary findings from retailers, it’s nonetheless pretty early to attract definitive conclusions,” Lai mentioned.

When requested in regards to the feedback from Walmart and what, if any, results Publix had seen or expects to see from buyers who may be on these medicines, spokeswoman Maria Brous mentioned in an e mail the corporate didn’t have “direct knowledge that will correlate or assist this idea.”

Publix has greater than 1,350 shops within the Southeast and 859 shops in Florida.

Lai mentioned the problem might put “the onus on meals corporations to proceed to innovate their choices.”