The hedge fund Barington Capital Group is mounting a campaign to break up the parent company of Olive Garden and Red Lobster, Darden Restaurants, in part because of the abysmal performance of those two chains. Here’s a look at how they fell so far so fast.
Keith Bedford / Reuters
Keith Bedford / Reuters
Not even the breadsticks, it appears, can save Olive Garden from financial turmoil. And its sister chain under parent company Darden Restaurants' umbrella, Red Lobster, doesn't appear to be faring much better. That's why a hedge fund has launched an activist campaign to break up the company.
Barington Capital Group, which holds a 2% stake in Darden, is pushing management to separate into three companies: one consisting of the struggling, or in the hedge fund's words, "mature" Olive Garden and Red Lobster chains; another featuring its up-and-coming, "higher-growth" restaurants like The Capital Grille and Longhorn Steakhouse, among others; and a third that houses its real estate holdings.
In an 85-page presentation released Tuesday, Barington outlines its case, a majority of which details how the sagging financials and weakened brands of Olive Garden and Red Lobster are dragging down Darden as a whole. It's a fascinating look at two high-flying casual-dining franchises that have fallen on hard times. Here's a breakdown of what's going so wrong at Olive Garden and Red Lobster and how Barington plans to save them:
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