Olive Garden got a scathing lecture from shareholder Starboard Value last year on the restaurant chain’s failings, including its bloated menu and a lack of salt in pasta water.
Now it’s time for Starboard to prove it was right.
Olive Garden is introducing a back-to-basics menu on June 1 under new management: Starboard’s. After taking over the board of Olive Garden’s parent company, Darden Restaurants Inc., the investment firm is putting its stamp on the casual-dining eatery. And the main message is returning to its Italian roots.
Olive Garden is adding sausage-stuffed giant rigatoni, grilled chicken marinated with Italian spices and vanilla panna cotta. It’s also doubling down on its famous breadsticks by turning them into sandwiches, in chicken parmesan and meatball varieties. That marks a shift away from a menu with everything from hummus to hamburgers -- a lineup that was meant to please everyone but instead alienated Olive Garden’s biggest fans.
The chain is “turning our focus on the core guest, to the guest who loves the Olive Garden,” Jose Duenas, executive vice president of marketing, said in an interview. That means paying more attention to Italian comfort food, while also putting fun twists on its most iconic fare, including the breadsticks.
Starboard led a nine-month battle against Darden management last year, culminating in a dramatic victory at the restaurant company’s annual meeting in October. Starboard persuaded shareholders to replace the entire board, a rare outcome for an activist investor. The investment firm’s CEO, Jeffrey Smith, then became chairman at Darden, which also owns the LongHorn Steakhouse and Bahama Breeze chains.
Before the showdown, Olive Garden had struggled to get its menu right. Sitdown restaurants also have seen an exodus of diners to fast-casual chains such as Chipotle Mexican Grill Inc. After declining 3.4 percent in the last fiscal year, Olive Garden’s same-store sales showed signs of a rebound in the most recent quarter, ticking up 2.2 percent.
The new breadstick sandwiches were created quickly, over just three or four months, said Jim Nuetzi, Olive Garden’s executive chef. They use a modified breadstick for the bun that’s shorter and wider. The idea came from restaurant employees, who said that diners were already making sandwiches out of the chain’s garlic-butter breadsticks.
Sausage-stuffed giant rigatoni, topped with meat sauce and mozzarella, also fit Olive Garden’s renewed focus on Italian comfort food. After trying cannelloni- and shell-shaped pastas, Nuetzi decided giant rigatoni were unique.
“It’s not something that you see at other Italian restaurants,” he said.Read the Full Article