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Olive Garden investor: Back off on breadsticks

Olive Garden is hurting itself by piling on too many breadsticks, according to an investor that's disputing how the restaurant chain is run.

NEW YORK — Maybe there is such a thing as too many breadsticks.

In a nearly 300-page treatise on what’s wrong with Olive Garden and its management, investor Starboard Value suggests the Italian restaurant chain is being reckless with its unlimited breadsticks. The hedge fund notes the chain’s official policy is to bring out one breadstick per customer at a time, plus an extra for the table.

But Starboard says servers bring out more than that, leading to waste — and cold breadsticks. Starboard notes that it isn’t pushing for an end to unlimited breadsticks, just more control in how they’re doled out.

“Darden management readily admits that after sitting just 7 minutes, the breadsticks deteriorate in quality,” Starboard said in its presentation.

The incredibly detailed document was released Thursday and lays out how Olive Garden could improve its performance. It’s part of Starboard’s push to take control of the board of the chain’s parent company, Darden Restaurants Inc.

The company, based in Orlando, Florida, has come under fire for failing to fix declining sales at its flagship chain. In the latest quarter, Olive Garden’s sales fell 1.3 percent at established locations as fewer diners visited.

Darden said in a statement that its “Olive Garden Brand Renaissance” is already under way. It said it will review Starboard’s plan, but noted that many of the strategies “are already being implemented across our company and are showing results.”

Part of Olive Garden’s troubles stem from the growing popularity of places like Chipotle, where people feel they can get food comparable to a sit-down restaurant for less money.

But Starboard also criticized Darden’s management of Olive Garden, including its “outdated” advertising strategy, which it said focuses too heavily on TV commercials. It also took issue with the chain’s new logo, quoting a tweet by restaurant analyst Howard Penney that said it looked like “a second-grader’s cursive practice.”

Among Starboard’s other complaints were Olive Garden’s failure to salt the water used to boil its pasta and its liberal use of salad dressing, which it said drives up costs. Rather than making its soups from scratch, Starboard also said Olive Garden should save money and improve consistency by using an outside supplier for the bases.

Starboard also noted Olive Garden gets only 8 percent of its sales from alcohol, while other Italian restaurant chains get more than twice that. As for Olive Garden’s popular breadsticks, Starboard noted that quality seems to have declined and compared them to hot dog buns.

Despite the criticisms, Darden can point to at least one recent success: its promotion offering customers the chance to pay $100 for seven weeks of unlimited pasta. The stunt gained widespread media coverage and the 1,000 pasta passes made available online sold out in less than an hour this week.

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