Olive Garden CEO Says Lettuce Shortage Cost Company $4 Million to $5 Million, as America's 'Salad Bowl' Faces INSV Virus
By one measure, the price of an average box of iceberg lettuce has gone up some 380% since 2019.
A lettuce shortage cost Olive Garden's parent company a lot of green this past quarter.
Since the fall, lettuce production issues (particularly concerning the romaine and iceberg varieties) have led to lettuce shortages across North America, mostly due to a disease that hit the Salinas Valley in California where half of the lettuce eaten in the U.S. is produced. Now, lettuce shortages are affecting businesses in the restaurant industry of all sizes, including Olive Garden, a company executive said Friday.
In an earnings call Friday, Raj Vennam, CFO of Olive Garden's parent Darden Restaurants, said that shortages of the salad staple cost the company $4 million to $5 million in the second quarter.
The unlimited salad (and soup and breadsticks) chain is hardly the only restaurant struggling with this issue. Taco Bell and Chick-fil-A have recently let customers know about lettuce shortages. Small businesses from local delis to Sweetgreen are reportedly paying more for lettuce while also making changes to menu items based on availability.
According to Restaurant Business Online, the average price of a box of iceberg lettuce was $14 in October 2019. In October of this year, it cost $67 — an increase of some 379%.
One restaurant owner is certainly feeling the pinch. Donald Minerva of Scottadito Osteria Toscana in Brooklyn, New York, told Entrepreneur the price of a unit of lettuce, which typically contains a couple of romaine hearts, has gone up by 60% since last year.
It's difficult because the romaine lettuce is crucial for one of their dishes, a charred, deconstructed caesar salad. "We're just going absorb the increase because it was very well received by our customers," Minerva said.
However, the restaurant did raise prices in September. "We held the line… We should have raised them again, but we didn't," he added.
Darden said it raised prices in its various restaurant chains by about 6.5% compared to the same period last year, per CNN.
Darden, which owns titles including LongHorn Steakhouse and The Capital Grille, reported $2.49 billion in revenue in Q2 and beat analysts' expectations (but the company's stock dropped slightly amid a larger rout last week).
The lettuce shortage has been primarily caused by viruses, including the INSV Virus, which is also known as the Impatiens Necrotic Spot Virus and is often fatal to plants. It has wrecked the lettuce yield of California's Salinas Valley, known as the "Salad Bowl" of America, per New Hampshire outlet Valley News and Ag Alert.
The industry also typically struggles in the fall because production transitions to being produced from the valley to Arizona, one expert told the outlet.
Related: 'If You're Sick, You Need to Come Prove It': Olive Garden Manager Fired Over Disturbing Memo to Employees Asking for Time Off
The shortage could go until January, Stephanie Corda of Peddler's Son, a wholesaler, told a CBS Arizona affiliate.
In addition to the virus, lettuce has become more costly since the pandemic. Volatile market conditions led to farmers planting less lettuce, per Restaurant Business Online.
Restaurants have already been rocked by food shortages this year on everything from eggs to potatoes, in addition to general inflation.
"Everything takes away from your bottom line today," Minerva added. "Lettuce seems to be the one people are focusing in on, but everything is going up."