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Olive Garden

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Olive Garden
Company typeDivision of Darden Restaurants
IndustryRestaurant
GenreCasual dining
FoundedOrlando, Florida (1982 (1982))
FounderBill Darden
Headquarters1000 Darden Center Drive
Orlando, Florida, U.S. 32837
Key people
Dave George
(President of Olive Garden)
Dan Kiernan
(Executive Vice President of Operations, Olive Garden)
ProductsItalian cuisine
(pasta • salads • chicken • seafood • bread sticks)
OwnerSamantha Lee
ParentDarden Restaurants, Inc.
Websiteolivegarden.com
File:OliveGardenLogo3.png
Logo used until July 9, 2014

Olive Garden is an American casual dining restaurant chain specializing in Italian-American cuisine. It is a subsidiary of Darden Restaurants, Inc., which is headquartered in unincorporated Orange County, Florida, near Orlando.[1] As of Jan 11, 2016, Olive Garden operates 844 locations globally and accounts for $3.8 billion of the $6.9 billion revenue of parent Darden.[2]

The Olive Garden restaurant in Times Square, New York City

History

Olive Garden started as a unit of General Mills Inc. The first Olive Garden was opened on December 13, 1982, in Orlando. By 1989, there were 145 Olive Garden restaurants, making it the fastest-growing units in the General Mills restaurant division. Olive Garden restaurants were uniformly popular, and the chain's per-store sales soon matched former sister company Red Lobster. The company eventually became the largest chain of Italian-themed full-service restaurants in the United States.

General Mills spun off its restaurant holdings as Darden Restaurants (named for Red Lobster founder Bill Darden), a stand-alone company, in 1995. Olive Garden is Darden's most value oriented chain with an average 2009 check per person of $15.00 (USD) versus over $90 (USD) at its sibling Capital Grille.[3]

Brad Blum, a former president of Olive Garden, said that sales in existing restaurants sharply decreased, with a 12% decline occurring at one point, even though the company was quickly establishing new restaurants.[4] Sandra Pedicini of the Orlando Sentinel said that "Darden reinvented the Olive Garden in the 1990s, from a floundering chain into an industry star."[4]

As part of a February 2011 Darden analyst conference, the parent group announced it intended to add more than 200 Olive Garden locations in the following few years.[5] The announcement came after a previous announcement that the company would be expanding into potential new international markets for the chain, including the Middle East and Asia, due to the maturity of the North American market. The company also announced it would begin licensing franchising partnerships, a new direction for the chain and its parent which had traditionally relied on expansion via company owned locations exclusively.[6]

Parent company Darden also announced it was going to begin co-locating Olive Garden and sibling chain Red Lobster locations. The new format stores are designed for smaller market locations and will have separate entrances and dining areas but operate a single kitchen and support areas. The dining areas of the new format will be half the standard area found in more traditional Darden chains, but the actual building will be larger than stand alone operations of the chain. Menus will also remain separate, with customers only able to order from the location they are seated in.[7] In 2014, Darden Restaurants announced intentions to sell Red Lobster, therefore closing two Olive Garden and Red Lobster co-locations in Georgia and South Carolina, and converting the remaining four co-locations into stand-alone Olive Garden restaurants.

In 2010, Olive Garden generated $3.3 billion in sales. Its closest competitor, Carrabba's Italian Grill, had generated $650.5 million in sales during the same year. By 2012, sales had decreased at Olive Garden. At the final quarter of 2011, sales at established Olive Garden locations had decreased by 2.5%. Chris Muller, the dean of the hospitality school of Boston University and a former restaurant professor at the University of Florida, said "What does Olive Garden stand for now? I don't know what it stands for."[4] The Darden president and chief operating officer, said that Olive Garden at that point was "a beloved, but somewhat expected brand."[4] The company unveiled a three course meal for $12.95 offer in an effort to try to stop the decline.[8]

In 2011, Olive Garden implemented a mandatory tip-out program which enabled them to cut more employees' hourly wage to $2.13 an hour.[9] In October 2012, Olive Garden became one of the first national restaurant chains to test converting most of its staff to part-time, aiming to limit the cost of paying for health care benefits for full-time employees.[9]

On July 9, 2014, Olive Garden launched a new logo and restaurant design. This included the addition of online ordering and smaller lunch portions.[10]

Advertising and marketing

Olive Garden's original slogan was "Good Times, Great Salad, Olive Garden". This was used while their main advertising focus was unlimited salad. When soup and bread sticks were added onto the unlimited menu item, the slogan was changed to "When you're here, you're family". The new company slogan started in early 2013 is "We're all family here".

In the fall of 2013, Olive Garden started a promotion for the "Never Ending Pasta Bowl", where customers can eat all the pasta they want for $9.99. During the event, the restaurant served over 13 million bowls of pasta. In 2014, the restaurant continued the promotion, but added the "Never Ending Pasta Pass", where customers can eat all the pasta they wanted during a seven-week period for $99. This promotion was limited to the first 1000 people to purchase the pass online.[11]

Locations

As of March 22, 2013, the company operates 818 restaurants globally.[12] There are six locations in Canada, which are Winnipeg, Manitoba (two); Calgary, Alberta; Edmonton, Alberta (two); and Langley, British Columbia near Vancouver.[citation needed] In the 1990s there had been at various times between 10 and 15 locations in Ontario, but they were all closed in the early 2000s.

Newer restaurants are styled after a farmhouse in the town of Castellina in Chianti, Tuscany, on the grounds of the Rocca delle Macie winery.[13] The farmhouse is home to the Riserva di Fizzano restaurant adjoining the company's Culinary Institute of Tuscany which was founded in 1999.[3][13][13][14]

In late 2012, two restaurants were opened in Mexico City: Interlomas and Reforma Ave. Currently there are four restaurants in Mexico City, two in Monterrey, Nuevo León, and one in León, Guanajuato.

In 2013 Olive Garden opened in Kuwait. It is located in The Avenues. In 2014 Olive Garden opened in Lima, Peru under the name Olive Italian Restaurant but with the same menu of the original name restaurants, and it is also located in a main avenue.

In 2014, Brazil received its first restaurant, which opened in terminal 3 of the Guarulhos International Airport in São Paulo.[15][16]

In May 2015, Olive Garden opened its first restaurant at Mid Valley Megamall in Malaysia.

Cuisine

Olive Garden serves several types of Italian-American cuisine including pasta dishes, steaks, and salads. The company advertises its bread stick product and centers its lunch menu around it. Additionally, the company advertises that its soups are made fresh in each location daily instead of importing them from a commissary or outside vendor.[14]

In June 2010, Olive Garden began to import parts of menu formats from its sibling chain, Seasons 52; it began selling smaller desserts portions which it called "dolcini". These new products were modeled after Season-52's "mini-indulgences" product line.[17]

Criticism

Tuscan Institute

Despite Olive Garden's advertising that it has a cooking institute in Tuscany, news outlets have reported that, in fact, there is no institute or school. Olive Garden does send a number of managers, trainers, and cooks to Tuscany each year, but they stay in a rented hotel and spend only a few hours at a local restaurant in its off-season.[18][19][20][21]

Activist investor critique

In September 2014, Starboard Value, an activist hedge fund that had acquired a significant portion of Darden's stock and was challenging Darden's management, released a 294-slide presentation assembled by its founder Jeff Smith, that focused on ways the company was wasting money and failing to satisfy customers. Chief among them was the shortcomings of Olive Garden, which earned considerable media attention. Starboard claimed they justified replacing Darden's directors in an upcoming election with a slate sponsored by the hedge fund.[22]

It cited details such as the unlimited bread sticks the chain offered diners, of which too many went to waste since they tended to go stale, Smith claimed, and paying extra for custom-length straws. The chain's menu was too complex, with some of its 96 items[22] making no sense, such as vegetable lasagna topped with chicken ("if you wanted meat on your lasagna, you would order the meat lasagna" the slide read). The chain also had stopped the common practice of adding salt to the water in which it cooked its pasta in order to secure longer warranties on the pots, which had Smith incredulous. "Pasta is Olive Garden's core dish and must be cooked properly." He included photos of poorly executed dishes purchased at Olive Gardens compared with the photos on the chain's website, along with quotes from online reviews posted by disappointed customers.[23]

Darden's management responded with a much shorter presentation two days later. Without going into specifics, it conceded most of Starboard's critique was valid and that the company was already responding to those issues. It defended the unlimited-breadsticks policy as "convey[ing] Italian hospitality" and rebutted another claim the hedge fund had made: packaging for take-out food which the hedge fund had claimed was dishwasher-safe and thus needlessly expensive was in fact, merely microwave-safe.[24] Nevertheless, a month later shareholders voted to replace the company's entire board of directors with Starboard's slate, an outcome described as an "epic fail" that happened very rarely.[25]

See also

References

  1. ^ Darden Restaurants, Inc. (May 29, 2011). "FY 2011 10-K". U.S. Securities and Exchange Commission. Retrieved April 12, 2012.
  2. ^ "Darden FY16 Second Quarter Investor Presentation" (PDF). Darden Restaurants, Inc. 11 January 2016. Retrieved 17 March 2016.
  3. ^ a b Wong, Elaine (6 October 2009). "Why 'Deep Discounting' Is Not Always the Winning Recipe". Brandweek. p. 1. Retrieved 11 September 2014.
  4. ^ a b c d Pedicini, Sandra. "Olive Garden tries to woo back customers after falling into a rut." McClatchy-Tribune Newspapers at Chicago Tribune. January 23, 2012. Retrieved on January 24, 2012. Archived 2012-01-25 at the Wayback Machine
  5. ^ Jennings, Lisa (2 February 2011). "Analyst targets possible Darden acquisitions". Nation's Restaurant News. Retrieved 4 March 2011.
  6. ^ Ruggless, Ron (20 October 2010). "Darden aims for growth abroad". Nation's Restaurant News. Retrieved 11 September 2014.
  7. ^ Pedicini, Sandra (24 January 2011). "Darden Restaurants tests combo Olive Garden/Red Lobster for smaller markets". Orlando Sentinel. Retrieved 11 September 2014.
  8. ^ Pedicini, Sandra (23 January 2012). "Olive Garden unveils $12.95 three-course meal". Orlando Sentinel. Retrieved 11 September 2014.
  9. ^ a b Choi, Candice; Alonso-Zaldivar, Ricardo (12 September 2012). "Darden Restaurants Tests Hiring Of More Part-Time Employees To Avoid Obamacare Costs". The Huffington Post. Retrieved 11 September 2014.
  10. ^ Lanks, Belinda. "Olive Garden's Redesign Bids Farewell to Fake Old-World Charm". Bloomberg Newsweek. Retrieved 11 September 2014.
  11. ^ Bajekal, Naina (8 September 2014). "Olive Garden Introduces the 'Never Ending Pasta Pass'". Time. Retrieved 11 September 2014.
  12. ^ "Darden Third Quarter Report FY13" (Press release). Darden. 22 March 2013. Retrieved 11 September 2014.
  13. ^ a b c Prewitt, Milford (1 November 1999). "Olive Garden plants roots in Tuscany, opens culinary school". Nation's Restaurant News. p. 1. Retrieved 4 March 2011.[dead link]
  14. ^ a b Dickerman, Sara (6 September 2002). "Battle of the Middlebrow Chains". Slate. Retrieved 4 March 2011.
  15. ^ Lorençato, Arnaldo (15 March 2014). "Olive Garden é novidade no Aeroporto de Guarulhos". p. 1. Retrieved 13 August 2014.
  16. ^ "Olive Garden Brasil". Retrieved 13 August 2014.
  17. ^ Pedicini, Sandra (29 June 2010). "Olive Garden menu changes include Seasons 52-style mini-desserts". Orlando Sentinel. Retrieved 11 September 2014.
  18. ^ Travierso, Michele (15 April 2011). "What Actually Goes On at Olive Garden's 'Culinary Institute' in Tuscany?". Time. Retrieved 11 September 2014.
  19. ^ Best, Jason (2011-04-14). "The Truth Behind Olive Garden's "Tuscan" Cooking School". Slashfood. Archived from the original on May 29, 2011. Retrieved 2011-06-08. {{cite web}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  20. ^ "Petty controversy: Olive Garden's 'outrageous' cooking school sham". The Week. 21 April 2011. Retrieved 11 September 2014.
  21. ^ Abramovitch, Seth (20 April 2011). "Olive Garden's Culinary Institute is a Sham". Gawker.com. Retrieved 11 September 2014.
  22. ^ a b Wiesenthal, Joe (September 13, 2014). "We've Just Witnessed The First True Masterpiece Of The Modern Hedge Fund Era". Business Insider. Retrieved October 13, 2014.
  23. ^ Wiesenthal, Joe (September 13, 2014). "Hedge Fund Manager Publishes Dizzying 294-Slide Presentation Exposing How Olive Garden Wastes Money And Fails Customers". Business Insider. Retrieved October 13, 2014.
  24. ^ Udland, Myles (September 15, 2014). "Olive Garden Issues A Response To A Devastating Presentation". Business Insider. Retrieved October 13, 2014.
  25. ^ Patton, Leslie (October 10, 2014). "Starboard Wins All Seats on Darden's Board". Bloomberg News. Retrieved October 13, 2014.
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