Olive Garden’s Latest Cost-Cutting Plan: Clean Carpet Less Often

Photographer: David Paul Morris/Bloomberg

Olive Garden’s corporate bosses, who are scrutinizing every expense in an effort to turn around the company, have found a new source of waste: carpet cleaning.

Darden Restaurants Inc., which owns Olive Garden, LongHorn Steakhouse and other chains, has dispatched operations teams to the company’s restaurants to pull “every single invoice” for hints at ways to keep costs down. The effort uncovered that many restaurants are washing carpets twice a month.

“There’s a protocol that you clean carpets once a month,” Chief Executive Officer Gene Lee said Tuesday on a conference call to discuss quarterly earnings. “If you do it more than that, you end up actually destroying the carpet -- and really not a whole lot of benefit there.”

Lee took the CEO job last October after activist investor Starboard Value replaced Darden’s entire board in a proxy fight. The new management team has cut labor costs and other expenses, aiming to save as much as $100 million a year. Darden also announced plans Tuesday to turn its properties into a real estate investment trust. The REIT proposal would help Darden cut its debt load by $1 billion.

Lee and his team are paring expenses with an approach known as zero-based budgeting. The buyout firm 3G Capital has used a similar strategy with Burger King and HJ Heinz Co., going so far as to restrict the use of office supplies and the number of pages employees can print.

“We’re finding things that have creeped in over the years that we’re able to take out,” Lee said.

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