Investor calls on Olive Garden to rein in the free breadsticks

Investor calls on Olive Garden to rein in the free breadsticks

After sitting just seven minutes, the breadsticks deteriorate in quality.

An Olive Garden investor, hedge fund Starboard Value, just a released a nearly 300-page report on how to revive the struggling Italian food restaurant chain. Among their many ideas: Don’t give away so many free breadsticks.

Olive Garden serves 675 million to 700 million of its breadsticks every year, according to Vox.com, which averages out to three breadsticks for every guest that comes to the restaurant. In its report, Starboard noted that official Olive Garden policy is to only provide one breadstick per customer at a time, and an additional one for the table. The hedge fund is merely proposing that servers stick to the policy. Giving away too many breadsticks, Starboard contends, leads to waste and cold breadsticks.

“Darden management readily admits that after sitting just seven minutes, the breadsticks deteriorate in quality,” Starboard said in its presentation, according to the Associated Press.

Darden is the parent company that owns Olive Garden, and is currently in a dispute with Starboard over control of the restaurant chain. Shareholders will eventually vote on which company will be in charge of the board, the Wall Street Journal reports.

Meanwhile, Darden insists that the restaurant chain is improving without Starboard’s assistance.

“The Olive Garden Brand Renaissance is well underway,” Darden CEO Gene Lee said in a statement. “The improvements we are seeing in guest satisfaction and traffic trends reinforce our confidence in Olive Garden’s potential.”

The numbers tell a different story though. Reuters reports that Olive Garden’s same-restaurant sales fell by 1.3 percent last quarter. Darden reported a net loss of $19.3 million.

 

 

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