Investor: Olive Garden Giving Out Many Breadsticks

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Investor: Olive Garden Giving Out Many Breadsticks

An Olive Garden investor is disputing how the restaurant chain operates by saying that it is hurting itself by giving out too many breadsticks.

In an almost 300-page critique, Starboard Value hedge fund says Olive Garden restaurants lack the discipline and training and their services bring too many breadsticks to tables at a go. Starboard says that this leads to cold breadsticks and waste.

Fox News reported that the investor notes that the official policy is to give one breadstick a customer and an extra for each table. However, Starboard is saying that servers are bringing more than what is required, leading to breadsticks going stale or uneaten. The investor is pushing for the control of how the breadsticks are served and not for the end of them.

In the presentation, Starboard said, “Darden management readily admits that after sitting just 7 minutes, the breadsticks deteriorate in quality.”

The document, released on Thursday, shows how Darden Restaurant Inc, the parent company of Olive Garden could improve performance. Olive Garden sales in the previous quarter dropped 1.3% in some locations after few clients visited.

According to ABC News, Darden said that the Olive Garden Brand Renaissance is underway. The company reported that it noted that many strategies provided by Starboard were already being used in the company and were bearing fruit.

The growth in popularity of places such as Chipotle is causing problems for Olive Garden as people can get food for less.

Starboard also complained that Olive Garden is not salting the water when boiling pasta, stating that “If you were to Google ‘hot to cook pasta’, the first step of pasta 101 is to salt the water.”

The investor criticized the management of Olive Garden by Darden including the outdated advertising strategy that focuses mainly on television commercial. The issue of the new logo of the chain came up, with Starboard quoting Howard Penney, restaurant analyst, saying it resembled “a second-grader’s cursive practice.”

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To contact the reporter of this story; Yashu Gola at yashu@forexminute.com