Tuesday, 14 October 2014

Olive Garden

An odd thing happened Friday when the board of the mother-company over the restaurant Olive Garden met.  They were dumped.

There was a vote at the meeting, and an abundance of investor votes went in a radical direction....fire all of the board members.  What got everyone up in arms revolves around criticism over the menu, the quality of food, and the marginal profit direction seen by most business analysts.

Back around 2012, I made a trip to the local Olive Garden while living in Arlington.  I kinda had high hopes for a real Italian dinner when I walked in.  The salad ended up being a two-star deal with cheap dressing.  The bread-sticks were in abundance....maybe more than what I needed.  And the dinner itself was lacking.  I hate to suggest it.....but I could have brought out a can of Chef Boyardee (pronounced Bama style as "Chef Boy-R-D") and done done as well with the offerings.

The investor crowd wants to shake up Olive Garden and go in a totally different direction.  The stock itself?  It's around $47 a share.  The peak was around $56 a share (Fall 2012).  The current dividend?  Well....it had been around $2 per year, which isn't that bad.

Changing around a restaurant company enough to influence the profit margin?  People tend to go out for two basic reasons today.  First.....the retiree class which eats out five to seven times a week seeking a good deal and a good menu selection. Second....the quick-stop class which simply picks up something on the way home from shopping or work.  These two groups make up the majority of customers.  I personally think Olive Garden is missing the mark by not looking at the retiree crowd and trying hard to offer up menu choices and prices to attract more customers at lunch.

A drastic change then from the board flipping over?  It's hard to say.  You can figure it'll take ninety days for some changes to take place and effects being seen on a daily basis.  Maybe it helps.....maybe it simply snowballs into Olive Garden being sold off to some other chain.  You just can't tell.