Starboard Value, a hedge fund that owns about 8.8% of Olive Garden-owner Darden Restaurants, just published a massive 294-slide presentation outlining ways the company can make more money.
Starboard’s argument walks through an array of financial and restaurant-level suggestions that Starboard has for Darden.
For example, Starboard notes that Olive Garden’s take-out containers are dishwasher safe, which Starboard says requires Olive Garden to, “over-engineer package and drive up costs significantly without necessarily driving any benefit associated with more foot traffic of increased pricing power on customers.”
Olive Garden’s signature unlimited salad and breadsticks offering has been executed inefficiently, and Starboard thinks the company could save up to $US5 million by changing its procedures.
Starboard also critiques Olive Garden’s food preparation, writing that, “According to Darden management, Darden decided to stop salting the water to get an extended warranty on their pots. Pasta is Olive Garden’s core dish and must be prepared properly.”
Through its company-wide margin improvement proposal, Starboard believes Darden can earn up to $US326 million in additional operating earnings. But financial benefits are just a sliver of the overhauls Starboard thinks can greatly help Darden’s restaurants.
You've seen Starboard's presentation on Olive Garden, now see what one investors thinks about the bond market...
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