Hedge Funds Seek Split At Restaurant Owner Darden

Oct 10 2013 | 8:30am ET

Barington Capital Group has lost its taste for the Olive Garden and Red Lobster.

The New York-based hedge fund called on the restaurant chains' parent, Darden Restaurants, to split in two in order to hive off those lower-performing brands from its more high-growth properties, The Wall Street Journal reports.

Barington said it was at the head of a larger investor group that has taken a 2.8% stake in Darden, although it did not disclose its partners in agitating for the split.

In addition to the Olive Garden and Red Lobster, Darden owns six other restaurant chains: Bahama Breeze, Capital Grille, Eddie V's Prime Seafood, LongHorn Steakhouse, Seasons 52 and Yard House.

"We believe that Darden has the potential to deliver significantly higher returns to shareholders," a Barington spokesman told the Journal.

The Barington group is also pushing Darden to cut costs and to extract value from its real-estate holdings; Darden owns the land under more than 1,000 of its more than 2,100 restaurants.

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