Darden Board Directors Wait Tables Under Starboard Turnaround

Jun 1 2015 | 1:19pm ET

Activist investor Starboard Value required all new board directors at Darden Restaurants to work one night inside a restaurant, according to the hedge fund CEO and Darden chairman Jeff Smith. The firm said that doing so improved the directors' knowledge of its business.

“It was not undercover -- everyone knew,” Smith told Bloomberg Television. “It was an amazing experience. We felt we could not make the decisions without knowing what was happening in the restaurants.” Smith said he waited tables and ran food during his time inside the restaurant.

Starboard has engaged in a lengthy turnaround of Darden Restaurants and its 840 locations in the United States. In a 300-page report last year, Starboard criticized Darden for being overly generous with its breadsticks, poor conservation of salad dressing, and failure to sell enough alcohol. Now, the firm says that Olive Garden restaurant will embrace a new menu on Monday that includes using breadsticks to make sandwiches. 

In May 2014, Starboard said it would seek to oust Darden’s entire 12-member board after the company announced last week that it would sell Red Lobster to private-equity firm Golden Gate Capital for $2.1 billion. By October, the hedge fund had succeeded, with Darden shareholders voting to replace the entire board. 


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