With New Board, Things Are Finally Looking Up for Olive Garden
After a dramatic year of turmoil, things seem to be finally looking up at Olive Garden's parent company. Even just a little bit.
Darden Restaurants reported second quarter revenue of $1.56 billion, almost a 5 percent increase from the second quarter last year, beating out analysts' expectations. Olive Garden, the company's biggest brand, increased same-store sales for the first time in more than a year, with a growth of 0.5 percent.
The improvements come in wake of a shareholder takeover of Darden's board of directors. In October, the company's shareholders elected a completely new board, handpicked by activist investor Starboard Value. The new board has promised to cut unnecessary costs, go back to the basics in terms of food quality and explore new options for Darden's real estate portfolio.
"While it's still early, we believe our renewed focus on operating fundamentals, coupled with our more streamlined support structure, will help us continue to grow and capture market share," interim CEO Gene Lee said in a statement.
Darden has been battling with shareholders since December 2013, when the company announced plans to spin off or sell Red Lobster, while keeping Olive Garden. Starboard opposed the move, and in May announced plans to unseat the entire board shortly after Darden announced the sale of Red Lobster to Golden Gate Capital.
Now that Starboard has succeeded in replacing Darden's board, the hedge fund has to prove that its promises for a brighter future for Darden carry weight. As Lee said in the investors meeting, "There's still a long way to go."