Darden Restaurants, Inc. (NYSE:DRI) has issued a statement about activist investment firm Starboard Value’s proposed operational plan. Starboard is the firm that has been demanding new leadership at the restaurant chain operator for months.
Darden conducts initial review of Starboard’s plan
This morning in a press release, President and Chief Operating Officer Gene Lee said they’re open minded about “ideas that support long-term value creation” for the company’s shareholders and that they plan to carefully review the plan.
Value Partners Asia ex-Japan Equity Fund has delivered a 60.7% return since its inception three years ago. In comparison, the MSCI All Counties Asia (ex-Japan) index has returned just 34% over the same period. The fund, which targets what it calls the best-in-class companies in "growth-like" areas of the market, such as information technology and Read More
However, they think, at first glance, that they are already doing many of the things Starboard wants them to do. The strategies mentioned by the firm include branding and cost optimization suggestions. Darden management believes that they’re already seeing results from doing them.
Darden revives the Olive Garden brand
Lee said they’ve already begun improving the Olive Garden brand and that they are seeing higher guest satisfaction and traffic trends. Also he said their efforts to further develop the LongHorn Steakhouse and specialty restaurants’ brands are moving forward as planned.
In this morning’s press release, Darden Restaurants also provided an update on their work on the Olive Garden brand for the first fiscal quarter of 2015. The restaurant chain operator has focused on reigniting traffic growth and expanding margins. In addition, the company has been changing its advertising strategy, improving its service and culinary operations and trying to reposition its image in the minds of consumers.
Darden redesigned its online ordering system for Olive Garden and is in the process of launching its To-Go platform nationwide. The company is improving its take-out business and saw a 13% improvement in take-out business year over year. In addition, it noted higher average online check orders.
The restaurant chain operator is also testing tablets in a number of its restaurants and has seen higher checks as customers purchase add-ons, higher table turns and higher tips for servers. The company is also seeing sales results from its remodeling plan, which has increased traffic by an average of 10% in the three stores that have been remodeled.
Of course Darden also wants to make sure shareholders vote in line with the board’s wishes. The company recommends that shareholders vote for all of its independent director nominees only using the blue proxy card. Darden noted that all votes on the white card are for Starboard’s directors and could revoke previous proxies submitted via the blue card.