Hospitaliano!

Olive Garden, the Italian restaurant chain that had once decided to stop salting its pasta water to get a longer warranty on its pots and its parent company Darden Restaurants is finally emerging stronger from its near-disastrous streak after the blue-eyed activist of Wall St. Jeff Smith and his hedge fund Starboard took them to task in 2014!

For the first time in the corporate history of America, back in September 2014, in an “epic fail” of sorts for the sitting management of Darden Restaurants, Jeff Smith staged a coup when the entire Board of Directors got replaced with those that Starboard nominated; thanks in large part to this 294-slide presentation!

What led to this was Darden Restaurants “fire sale” of its Red Lobster chain of restaurants to PE firm Golden Gate Capital in May 2014 for just $2.1 billion. The smart alecs at Golden Gate in turn sold the properties to American Capital Realty, essentially getting the brand name and restaurant operation cash flow for free!

Darden Restaurants, which is now more careful serving unlimited breadsticks reported better than anticipated results yesterday is looking at 1–2% growth in same-store sales for 2018.

The stock has also hit an all-time high and is up 30% in the last one-year — truly an activist hedge fund turn-around story!

This was originally published as a newsletter on June 28, 2017. To subscribe to the newsletter, click here