By now you might have seen the news about Olive Garden and the bread stick policy. If you haven’t here’s a quick run down: Starboard Value, which owns 8.8% of Olive Garden’s parent company, Darden Restaurants released a very critical 294 page document to the public detailing the short comings of the Olive Garden brand and practices. The part that everyone seems to be focused on is the part about “No more unlimited bread sticks”. While this is partially true, if you read the report, what it actually says is something more like: “Don’t bring all the unlimited bread sticks out at the same time, they tend to not taste as good after they’ve been sitting for 7 minutes. Bring them out one or two at a time and then keep them coming as requested.” So it’s not about being stingy, it’s about serving quality food. Another choice quote was critical of the Olive Garden practice of not adding salt to the water while boiling the pasta noodles: “If you Google how to make pasta 101, the first step is to salt the water” the Starboard Value report said.
Another key point (of many) was the alcohol and wine in particular. Olive Garden alcohol sales amount to only 8% of sales while other chain restaurants like Macaroni Grill are significantly higher – in the 15-20% range. Alcohol is profitable. There’s no getting around that. Sell more alcohol, make more money.
My insight on the low alcohol sales: The wine list is not good. I’ve been there and tasted the wine, and it’s almost undrinkable. Not that Olive Garden needs to start stocking high end wine, but just a few labels that people recognize and flavor profiles that lend themselves to being paired with the food they serve would be good. The wines I tried a few years back were terribly astringent, flat and generally very unpleasant. There are a lot of wines out there that are rated 90 points plus which retail for under $10 a bottle. They need not limit themselves to Italian wines, just wines that go with the food.
One last thing I wish Olive Garden, and chain restaurants in general, had more of is Gluten Free options. It’s not like its 1999 and these products are super pricey and hard to come by. I can get gluten free corn based pasta in Super Target, so Olive Garden and others should have the ability to prepare gluten free pasta. Think PF Chang’s.
See the report for yourself: http://shareholdersfordarden.com/wp-content/uploads/2014/09/Transforming-Darden.pdf