An investor has some suggestions for how Olive Garden can improve its performance, down to the way it rations its unlimited breadsticks.
In a nearly 300-page document, Starboard Value criticizes parent company Darden Restaurants Inc. for its management of the Italian restaurant chain. Starboard is hoping to gain control of Darden's board with the election of its own nominees next month. Darden Restaurants says it's reviewing Starboard's plan but notes it's already implementing a plan to improve financial results.
Here are some of Olive Garden's problem, according to Starboard:
—Servers are supposed to provide one breadstick per customer, plus one for the table. But restaurants lack "training and discipline" and servers often bring out more than that, leading to waste.
—Salad bowls are often overfilled and the lettuce is overdressed, both of which drive up costs.
—To get an extended warranty on its pots, Olive Garden no longer salts the water used to boil its pasta. Starboard notes "If you were to google 'how to cook pasta,' the first step of Pasta 101 is to salt the water."
—The chain's to-go bags are made with high-end materials, which make them more expensive than the to-go bags at competitors
—Soup bases could be purchased from outside suppliers, rather than making them from scratch. The change would also lead to greater product consistency and reduce food safety risks, Starboard says.
—Alcohol sales could be boosted, considering how well Italian food and alcohol go together. Starboard notes Olive Garden gets 8 percent of sales from alcohol, compared with more than twice that by other Italian restaurants.
—The menu has become too complicated, with nearly 96 items.
—The advertising strategy is outdated and has become too focused on TV; digital marketing doesn't get enough attention.