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Olive Garden investor: Back off on the breadsticks

By WTOP Staff

CANDICE CHOI
AP Food Industry Writer

NEW YORK (AP) — 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 underway. 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But Starboard also criticized Darden’s management of Olive Garden, including its “outdated” advertising strategy, which it said focuses too heavily on TV commercials.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, noting that “If you were to google ‘how to cook pasta,’ the first step of Pasta 101 is to salt the water.”

It also criticized Olive Garden’s liberal use of salad dressing, offerings such as fried lasagna and the Italiano Burger that aren’t “authentic Italian” and even the length of the asparagus it serves. Rather than making its soups from scratch, Starboard 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 said quality seems to have declined and compared them to hot dog buns.

In an earnings conference call Friday morning, Darden President Gene Lee noted that the company worked on fixing its breadsticks last month, such as how long they’re cooked and how many are served. Lee said the chain’s next focus will be pasta.

Jonathan Maze, editor of Restaurant Finance Monitor, compared such criticisms by activist investors to election campaigns.

“The activist is going to use what it can find to convince shareholders. The company is like the incumbent that has to defend what it’s doing,” Maze said.

Still, Maze noted that level of detail in Starboard’s report was extraordinary. He said that’s likely because Starboard is getting input from its slate of board nominees, which includes Brad Blum, a former president of Olive Garden.

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.

The company’s annual meeting is scheduled for Oct. 10, when shareholders will get to vote on who gets control of the board of directors.

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Follow Candice Choi at www.twitter.com/candicechoi

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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