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Darden's plan for a rosier Olive Garden

Now that Red Lobster is ready to be boxed up and shipped off to Golden Gate Capital for $2.1 billion, Darden Restaurants can focus on its other arterial bleeder, the 800-store Olive Garden chain.  Company brass was pressed during a call with analysts last week for a preview of the renaissance, as the comeback plan is known internally. The main elements:

  • Matching the system’s weakest stores to specific senior operations executives, who will be held accountable for reviving them. Darden president and COO Gene Lee said the critical list would include about 50 units that run 7 to 10 percent below the systemwide sales average.
  • The establishment of a service-time guarantee at lunch to attract consumers during their lunch hours.
  • Tests of tabletop tablets, beginning next month.
  • The rollout of an online to-go ordering system by September. The set-up has generated “significantly higher” checks at test stores, with sales growing “greater than 10 percent” overall, said Lee.
  • “Elevate and intensify our focus on alcohol beverage sales,” in part by concentrating on a few signature cocktails, Lee said.
  • Invest more in social and digital media so promotions can be personalized.
  • Renovate restaurants with a new design package that extends to signage and tabletop elements, including plates. About 300 Olive Gardens were in need of a facelift anyways, said Lee, who noted that the units typically run more than two percentage points between the systemwide sales average.  At the only store that has been given the new design package, sales rose by an increase in the mid single digits, he revealed.

Lee and Darden CEO Clarence Otis were repeatedly queried during the Q&A portion of the call about the renovation program. One analyst asked about an earlier redesign initiative, noting that it failed to offset declines in traffic and sales. She didn’t remind the executives that they’d been similarly bullish about that facelift, touting it as a major part of Olive Garden’s sales revival.

“We paused on [the renovations] because we believe that they really didn’t have the kind of shelf life going forward that we needed, that they didn’t make dramatic enough change,” Otis explained. Hence the new reimaging effort.

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