Barington Would Slice And Dice Darden Restaurants

Dec 18 2013 | 12:19pm ET

Barington Capital Group is turning up the heat on Darden Restaurants just ahead of that company's quarterly earnings announcement.

New York-based Barington yesterday issued its most detailed argument in favor of splitting the restaurant-chain owner, in an 85-page presentation. The hedge fund wants Darden split into three companies: one for its faster-growing franchises, one for its lower-performing brands and one for its real-estate holdings.

The first company would include Darden's six smaller chains—Bahama Breeze, Capital Grille, Eddie V's Prime Seafood, LongHorn Steakhouse, Seasons 52 and Yard House—and would be a growth stock. The second company would hold Olive Garden and Red Lobster and would focus on paying dividends.

The third prong would be a real-estate spin-off, in which Darden would create a real-estate investment trust. Darden owns the land under about 1,000 of its restaurants and the buildings on about 800 leased sites; Barington says that a spin-off or sale and lease-back would better reflect their value, which the hedge fund estimates at $4 billion.

Lastly, Barington wants to see Darden double or triple its cost-cutting efforts, pushing for savings of between $100 million and $150 million.

"We believe that Darden's corporate centralization has gone from providing well-intentioned shared services to being a stifling burden on the chain-level managers that is hindering the company's ability to compete with its more focused and nimble competitors," Barington wrote.


In Depth

Delayed Flash Crash Arrest Highlights Difficulties Detecting Fraud

Apr 23 2015 | 7:19am ET

The five years it took regulators to bring high-profile charges against a UK trader...

Lifestyle

Puerto Rico Woos The Rich But So Far Gains Little

Apr 17 2015 | 2:45am ET

Hedge fund manager Rob Rill grins. He has just had word that U.S. financial regulators...

Guest Contributor

Opportunities Ahead: Asian Fixed Income and Currency Markets

Apr 24 2015 | 6:18am ET

For hedge funds focusing on Asia, the policy uncertainty, unclear interest rate...

 

Editor's Note