Darden Restaurants CEO reveals that customers are moving from fast-food to casual-dining chains.

• Some fast-food restaurants are losing customers to casual-dining chains, according to Darden Restaurants CEO Rick Cardenas.
• Casual-dining chains such as Chili's and Applebee's are attempting to attract fast-food customers.
• McDonald's has faced criticism from customers, social media users, and House Republicans over its higher prices.

On Thursday, CEO Rick Cardenas stated that casual-dining chains are attracting customers who are disillusioned with the rising prices of fast food.

Darden has not gained from the shift, but its competitors, such as Chili's owner and Applebee's parent, have been reigniting a rivalry with their fast-food counterparts, and it appears to be working. Chili's launched an ad campaign that criticizes the Big Mac and other fast-food burgers for their prices. Dine Brands CEO John Peyton stated in May that Applebee's has been focusing on deals to attract fast-food diners.

During Darden's quarterly earnings call on Thursday, Cardenas informed analysts that industry data indicates a slight shift from quick-service restaurants to competitors in casual dining.

In May, the Department of Labor reported that full-service restaurant menu prices had increased by 3.5% over the past 12 months, while limited-service eateries experienced a 4.5% rise in prices. Meanwhile, the overall consumer price index also rose by 3.3% during the same time frame.

Despite the more than two years of price increases, consumers have been experiencing the impact of these hikes, even with fast-food chains, which tend to benefit from challenging economic conditions by offering cheaper meals. However, both full-service restaurants and grocers have been emphasizing their own value in comparison to fast-food options, whether it's through lower prices or a better overall experience and quality.

The company's U.S. President Joe Erlinger defended the company's higher prices in an open letter in late May, stating that its prices have only increased by 40% since 2019, and that critics are exaggerating the actual increase.

McDonald's has introduced a new $5 value meal and offers free French fries on Fridays with any purchase of at least $1 through its mobile app.

Darden has shifted its approach to attract customers by focusing on television advertising and maintaining lower prices compared to inflation. Despite reporting flat same-store sales growth and weaker-than-anticipated revenue in its fiscal fourth quarter, the company's earnings surpassed Wall Street's expectations.

Despite facing a "consistently weaker consumer environment," increased discounting and marketing pressure from competitors, executives boasted that the company's restaurants are outperforming the broader casual-dining segment.

On Thursday, Darden's stock price increased by more than 1% in morning trading. Despite this, the company's shares have decreased by 6% this year due to worries about the consumer market.