Starboard Lays Out Darden Split Plan

Sep 16 2014 | 10:07am ET

Cut the breadsticks.

That’s the message—or at least one part of the message—from hedge fund Starboard Value, which last week laid out in detail how it planned to turn around Darden Restaurants, which owns, among other chains, the Olive Garden. Starboard is seeking to oust Darden’s entire board, furious over its decision to sell Red Lobster without putting the move to a shareholder vote.

With Starboard seen as having a strong chance of taking control of Darden at its annual meeting on Oct. 10, the hedge fund Thursday said it would split Darden into three companies—one for its established brands, like Olive Garden, one for its faster-growing brands and one for its real-estate holdings. It also got a great deal more specific, criticizing how Darden is running each chain, and saying that it should stop delivering millions more breadsticks than customers eat, among other changes, such as ending the use of salted water to cook pasta and the addition of Spanish dishes to the nominally Italian restaurant’s menu.

Darden defended the changes, saying that while Olive Garden is “guided by today’s genuine Italian dining experience,” younger customers want more choices. And it said that the millions spent on breadsticks was worth it as a sign of “Italian generosity.”

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