Olive Garden Showed Tiniest Improvement Last MonthBy
Before its annual meeting on Oct. 10, Olive Garden owner Darden Restaurants released September results. It’s a move to convince investors that the company is on the right track and to stop activist investor Starboard Value, which holds an 8.8 percent stake in Darden, from taking control of its board during next week’s vote. Starboard has nominated 12 directors to replace Darden’s existing board.
Olive Garden’s same-store sales were up 0.6 percent last month. Aside from Bahama Breeze, Darden’s other restaurant chains—which together bring in less than half of the company’s revenue—also saw growth:
Gene Lee, Darden’s president and chief operating officer, in a press release called the increases proof that “Darden’s operational improvements are taking hold.”
Lee’s comments follow a public battle between the restaurant company and Starboard, which opposed Darden’s spinoff of Red Lobster earlier this year and last month released a 294-page presentation detailing problems both large and minuscule at Olive Garden (pasta should be cooked in salted water; the breadsticks taste like hot dog buns) and recommending changes. Darden in response said it’s been doing most of what Starboard suggested. Already, Darden Chief Executive Officer Clarence Otis is being replaced.
Considering Olive Garden’s results have been less than impressive for some time now, it’s still early to call September the start of a turnaround. As casual dining overall is struggling to win back customers who are choosing to eat at cheaper fast-casual restaurants, Darden’s rebound could be choppy.
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