It has been apparent for quite some time now that Olive Garden isn’t doing well. Interestingly, a hedge-fund with vested interest in the restaurant chain has some pretty straightforward instructions to save the decaying enterprise.
Darden, the restaurant group that owns Olive Garden, is in some pretty serious trouble. Sales have been steadily declining for years. As reported by The Orlando Sentinel , Olive Garden just reported a significant quarterly loss. Despite experimenting with multiple formats and even attempting to get a face-lift, the once-iconic restaurant chain isn’t able to attract regulars. Unfortunately, those who do dare to venture there are treated with lackluster service . Customers have now begun to express their displeasure , and that is the worst nightmare any restaurant can have.
So how does one save Olive Garden? Interestingly, a group of experts in a hedge-fund have drawn up some simple tweaks that they firmly believe will help turn Olive Garden’s bad fortunes around.
Starboard, an activist hedge-fund which holds a 24 percent stake in the company, has been observing Olive Garden’s self-destructive spiral and is pretty unhappy with the way things have been going. After carefully evaluating the situation, Starboard came up with an extensive (read lengthy) 300-page slide deck detailing its dissatisfaction with the company’s performance. In the report, Starboard jotted down the many, many things that it felt should be changed, revised, or scrapped altogether if Olive Garden wanted to rise again.
Starboard wants to begin by completely replacing the board of directors. Apart from that, much of Starboard’s demands are what you’d expect; a new CEO, better use of real estate, capital discipline, and reduced costs. However, the massive 300-slide presentation offers some very specific culinary advice for the company.
Go easy on the breadsticks: Starboard argues that poor training means that restaurants are giving out and wasting too many of the chain’s signature breadsticks. They note a marked decline in quality, describing the flavor as reminiscent of hot dog buns.
Starboard categorically asks the company to curtail the practice of dolling out unlimited breadsticks to customers. This practice could result in the customers stuffing themselves silly on breadsticks and then ordering less. However, Starboard argues that extra breadsticks merely sit on the table and Olive Garden takes a loss.
Salt your pasta water: Every Italian on the planet will strongly demand that the water used to cook pasta must be salted. Surprisingly, Olive Garden doesn’t salt its pasta water and has drawn the ire of many customers.
While these are just some of the many reforms suggested by Starboard, the hedge-fund is confident that Darden can breathe fresh life in Olive Garden if it religiously implements these suggestions.
[Image Credit | Starboard, Steve Helber/AP]
