Last week, activist hedge fund Starboard released an epic 294-page report attacking Darden Restaurants, and its flagship chain The Olive Garden.
The section that got the most hype was where they took issue with Olive Garden’s free breadsticks strategy.
The media, of course, instantly seized on the narrative of a hedge fund telling Olive Garden to cut back on the unlimited breadsticks. But that really wasn’t a fair characterization of Starboard’s argument.
As we explained already, Starboard did NOT tell Olive Garden to stop serving free breadsticks. Instead it said that the manner in which the free breadsticks were being delivered was problematic and wasteful.
This slide from the presentation explains that the issue is that the waitstaff at The Olive Garden just brings out a huge basket of breadsticks, and that a lot of them go to waste. Instead, says Starboard, Olive Garden should go back to bringing out enough breadsticks for everyone at the table (plus one) and then bring out more on request. Not only would this reduce waste, says Starboard, it would increase the number of interactions between waitstaff and customer, thus improving the experience at the restaurant.
Anyway, Olive Garden is out with its response today to the whole presentation, and they even have a point about breadsticks. But Olive Garden is distorting the debate here. The question is not the “endless” breadsticks, it’s the manner in which they’re brought out. Starboard likes the unlimited breadsticks marketing, it just doesn’t like the way they’re delivered.