Darden’s Conundrum: Yesterday’s Strategy or Demise by Starboard Value LP

While well documented, the declining sales and customer counts at Darden’s flagship Olive Garden don’t seem to be being address by either the current leadership or proposed leadership.  Sure, Darden's sales were only down one percent when last reported.  The simple fact is the un-robust economy is inching forward and Olive Garden continues to lag the economy, the industry, and ilk niche brands.

The Olive Garden current promotion “Buy One Take One & A Movie is a short term tactic that will edify the brand with consumers. We would like to give Olive Gardens team some credit for it, but since they simply copied Maggiano’s Little Italy’ success with their Today and Tomorrow special, we can’t do that.    Copycat marketing and positioning can buy a brand time, not authenticity. Current Olive Garden leadership seemingly has lost the pulse of the consumer, the brand, and food retailing consumer relevance.

New Undercurrents Evolving

The undercurrents of evolving consumer shopping behavior, availability of Ready-2-Eat and Heat-N-Eat fresh prepared food, time-starved consumers, and lack of appropriate cooking skill-set, combined with the fact no one wants to do dishes or empty the dishwasher create what Foodservice Solutions® Grocerant Guru calls “the emerging Grocerant Tsunami”.

It is at that intersection that legacy food retailers will either adapt or get left behind at an accelerated rate.  Olive Garden appears to be near the point they may become a Grocerant Tsunami victim.  That is very close to when Olive Gardens business model will look more like Kodak’s and Red Lobster than Chipotle’s. 

Educational Mix-Up

The 294 side PowerPoint by Starboard Value LP is more akin to a tier one graduate school exercise filled with facts based on legacy metrics.  Metric’s that while relevant in 1980’s, 1990’s, 2000’s collectively are simply not as important today.  The 294 slide PowerPoint is not road map to retail foodservice customer relevance today.

While it’s 294 slides are a great read if you’re a college student and a laudable template for novices food service consultants.  Its lack of focus on the consumer, consumer retail food consumer migration, or Olive Gardens brand promise reflecting an industry naiveté’ that simply-put creates more doubt than answers. Reinforcing the notion, not all graduate school exercises are a harbinger of success.

Without doubt the legacy tactics outlined in the PowerPoint could and can product a substantial positive cash flow and increased EBITDA.  The assumption that combining legacy tactics, using a legacy tier one business school playbook to address today’s retail food environment is more akin to asking the Minnesota Twins to play the Seattle Seahawks in a game a football. It’s not going to happen.

Evolving Consumer

The consumer is dynamic not static.  Olive Garden continues capitulating market share in large part because they are utilizing yesterday’s game plan, yesterday’s tactics.  No matter how many slides or how high Darden’s current leadership stacks yesterday’s tactics the result will be continued brand discontinuity.  While the Starboard Value PowerPoint was filled with intellectual quotient (IQ) it was completely lacking any emotional quotient (EQ).

Starboard Value LP address every legacy operating attribute ever discussed from labor, liquor, to liability with one glaring problem.  They address all with the same metric’s measures of the past that existing management has addressed.  They simply think they can do it better. Yesterday’s tactics will garner for Starboard ilk results.

Today’s Action Not Yesterday’s Playbook

The retail food playing field is not the same as it was 5, 10, 15 or 20 years ago.  The industry and consumer have evolved, consumers continue to evolve.  Yesterday’s tactics don’t stack up to today’s customer relevance. 

Neither current nor proposed leadership has even begun to address how Olive Garden is stifled by footprint malaise, a leaking brand promise, employee discontent, or contemporized customer relevance. Doing more of the same will simply garner the same results.

 It’s our hope that Olive Garden’s competing proposed leadership teams focus on the customers not the each other. The PowerPoint tactics outlined in the short term would unlock some valued. Overriding the short term value it would continue to erode brand value.  Without brand value, the pace of customer migration would only increase.  If leadership is not in for the long term then customers will not either.

Are you trapped doing what you have always done and doing it the same way?  Interested in learning how Foodservice Solutions 5P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization? Email us at: Steve@FoodserviceSolutions.us or visit:  www.FoodserviceSolutions.us for more information.