Olive Garden is defending its practice of giving customers as many breadsticks as they want, saying the policy conveys "Italian generosity."
The remark is part of a response by the chain's parent company, Darden Restaurants (NYSE:DRI) to a nearly 300-page criticism released by hedge fund Starboard Value last week. Starboard took Olive Garden and its management to task for a litany of issues, including its liberal distribution of breadsticks, its failure to salt the water used to boil its pasta and even the length of the asparagus it serves.
Darden's 24-page response doesn't specifically address each of Starboard's criticisms, but states that the company is already implementing a variety of strategies to improve Olive Garden's performance. The company says it has introduced new menu items to underscore value, for instance, and is testing ordering technologies using table-top tablets.
Starboard is lobbying to gain control of Darden's board of directors at the company's annual meeting Oct. 10. Darden, which is based in Orlando, Florida, has struggled to boost sales at Olive Garden with the growing popularity of chains such as Chipotle, where people feel they can get food similar in quality to a sit-down restaurant for less money. Under pressure to boost results, Darden recently sold off Red Lobster, which was doing even worse than Olive Garden. But Starboard and others took issue with the sale and wanted the company's breakup structured differently.
As for its breadsticks, Starboard said last week that Olive Garden was being wasteful because servers weren't sticking to the policy of providing one breadstick per customer, plus an extra for the table. The investor said servers lacked "training and discipline" and were bringing out too many breadsticks at a time, which also led to cold breadsticks. Starboard noted that it wasn't calling for Olive Garden to stop giving away unlimited breadsticks, but simply exercise more control in how they're distributed.
Starboard also said servers were overfilling salad bowls and using too much dressing, which it said drives up costs.
In its response Monday, Darden said that "Olive Garden's salad and breadsticks have been an icon of brand equity since 1982." The company didn't say whether it would change the way salad and breadsticks are brought out, however.